Music giant plans to drop CD prices

The day after a report suggested the compact disc is heading the way of the 8-track tape, the world's largest music label conglomerate promised a steep cut in music CD pricing.

Universal Music Group on Wednesday said it will slash its wholesale prices and reduce its suggested retail pricing for music CDs to $13, from between $17 and $19. The company, a subsidiary of Vivendi Universal, is home to a number of record labels, including Decca, Deutsche Grammophon, Interscope Geffen A&M Records, Island Def Jam Music Group, and Philips.

"Music fans will benefit from the price reductions we are announcing today," Jim Urie, president of Universal Music & Video Distribution, said in a statement. "Our new pricing model will enable U.S. retailers to offer music at a much more appealing price point in comparison to other entertainment products. We are confident this pricing approach will drive music fans back into retail stores."

The cuts follow the publication Tuesday of a report by Forrester Research that predicted that the market for CDs will succumb to consumers' increasing preference for downloading music--both legally and otherwise. CD sales peaked in 1999 and will tumble by nearly one third by 2008, Forrester researchers wrote.

Consumers should see reduced CD prices as early as October 1, according to UMG.

On Wednesday, the company also pledged to launch a new advertising campaign and to make price cuts on cassettes. "Top line" cassette tape releases will cost $9, under the new pricing model.