Wal Mart Challenges The CD Price

March 5, 2008


Reuters reported
that Wal Mart is thinking about lowering the CD prices. For just $ 10 you will buy the top twenty, for $ 12 the current titels, the backcatalog starts already at $ 5.

Wal Mart was always a price leader in the CD market. They try to get more traffic with music products and maximize their profit with other products. If they want to hold this traffic they have to lower their prices in the current situation.

So music at Wal Mart was always something like a little bit “ad supported” or better said part of a bigger bundle. The problem for the music industry: Wal Mart has 22% market share. The whole market will drop the price. There will be a huge drop in revenues especially in a market segment of people who are not as price sensitive. On top the lower CD price will influence the album download price in the long term.

The pressure on the music industry to find fast a new online solution is increasing again.


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