Sometimes, you hear a story and think, “Hmm, good column material.” Sometimes you hear a story and think, “They’ve got to be kidding. Hmm, good column material.” And sometimes you hear a story and think, “What? They’ve got to be kidding me. Hmm, good column material.” Case in point: Universal’s big plans overhaul their CD packaging.
The proposed scheme was all over the news yesterday — such is the luck of those who live in Los Angeles — and goes something like this. Universal will offer snazzy new packaging with higher prices on new releases and no-frills packaging with lower prices on catalog product. See, ’cause it’s the jewel boxes that will drive consumers to the stores.
Er, that is to say, the consumers will drive themselves to the stores, but the jewel boxes will motivate them to buy, buy, buy.
Just a few years ago, Universal’s big plan was to entice consumers with lower prices. This was an attempt to woo consumers away from free downloads. Apparently that worked so well that the logical next step is to raise prices. CD sales remain down, though CDs remain the medium of choice for most consumers. Downloads are rising. Yeah, higher prices — good call.
The industry continues with its “nothing but good times ahead” approach to business. Cutting prices on the back catalog, the most reliable sellers on a historical basis, is a great thing for those consumers who don’t already have the Hank Williams backlist. The still-contemplated, long-in-the-works Time Warner-EMI merger is about cutting costs in an industry that has pared staffs to the bone. More shared services will not help the industry: at some point, a long hard look must be taken at business practices. That means pricing, artist compensation, production costs, and, yes, executive pay. Jacking with CD prices until you find the right formula is a band-aid.
Some of the commentary I heard yesterday suggested that the new low prices, and they’re talking about a couple dollars less, is as low as the majors can go. Uh huh. How much does it cost to burn a CD? How much does a blank CD cost? A cardboard sleeve? Shipping, etc? Let’s get real. Catalog is pure profit in many cases. Prices can come way down and record labels would still rake in the money.
I’m not against better packaging — liner notes and photos and even embedded videos are cool — but when I think about how most of the people I know consume music, those elements aren’t primary motivators when it comes to purchasing. Which means that the next time I write about the Universal Music Group, I’ll probably be talking about their new initiative to cut costs or drop prices or both.