More on the CD price cuts
There's much confusion in the aftermath of the first price cut since CDs were released as a format several years ago. Universal was in a strong position to make this price change since it sells some 30% of all music in the US (BTW, interesting stat on CNN yesterday: when a CD was priced at $18, only $1.60 out of that actually made it to the band as music royalties -- yike! That's less than 10% to the preson mainly responsible for creating that album!). According to this New York Times story:
The Universal Music Group's decision to lower the prices of its CD's left the rest of the music industry scrambling to respond, with some arguing that the long-term effects could hurt struggling specialty chains and independent music stores and favor discounters like Wal-Mart.
...Music industry executives say companies like Universal typically offer stores about $1.20 in promotional subsidies for each CD sold to retailers for $12. Now Universal is keeping that $1.20, but lowering the wholesale price to $9 instead of $12.