New from Apple: The CD Profit Margin Nano

Of the top 25 best selling CDs on Amazon.com, 13 are priced under $10. That’s quite a bit less than the going brick-and-mortar rate, and you can thank Apple for that, because as an industry insider explains to The Big Picture, iTunes has played a large role in motivating CD price reductions. “The biggest thing driving prices to $9.99 is iTunes,” the insider explains. “Physical retailers are pressuring the labels downward on price (of course, Wal-Mart is the biggest culprit) because they don’t want to be undercut by iTunes $9.99 on all single albums. We’re rapidly moving to a $9.99 world on the big sellers (the ones stocked in Target and Wal-Mart and Best Buy). To accomplish this, I am told, particularly on new releases, the labels are doing what they historically did in the physical world and buying into “retail” programs — in essence, paying for price and positioning or other marketing tools on Amazon by giving them functional breaks. … So yes, there is pricing pressure, caused mostly by the success of iTunes and the falling physical sales market. Without iTunes, the downward pressure would be substantially less.”

 
 

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  • Dave

    It’s about time! We were promised cheaper than vinyl prices back in the beginning, and instead, prices stayed high.

  • dermbuilder

    I agree with Dave. All one has to do is price CD blanks and jewel boxes to know that CD prices above $15.00 are not just absurd, they are obscene! It actually cost more in inflation adjusted dollars to produce vinyl records 30 years ago than it does to produce CDs today, and most of the vinyl albums cost $5.00 to $7.00 Also, with today’s technology a garage band could make their own CDs at home without needing any access to the equipment of the big labels. Marketing is really all they have to offer to the artists. And I seriously question whether marketing can really justify the cut that the labels take! They are robbing not just the public, but the artists as well.

 
 
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