Universal Music Group will drop the prices on the majority of its new CD releases to between six and 10 dollars. This plan — dubbed the Velocity program — will go into effect in the second quarter of this year.
UMG hopes this plan will at least slow the serious decline in CD sales that has been going on since MP3s and other digital music downloads came on the scene.
While UMG has its hands in music downloads and streaming, too, the profit margins are usually better with CDs. UMG claims that its cheaper CD plan will maintain a 25% profit margin.
Up until now, most new CDs have actually been more expensive than their download counterparts. If the price comes down, consumers will be more likely to purchase the goods. It’s a simple economic principle. But to try to incentivize music fans even further, UMG plans to load the jewel cases with “deluxe” content that you won’t usually get with online purchases.
We’re not going to complain about lower prices. We welcome anything that reduces consumers’ expenses. But do you think this will actually make a difference? A couple of us in the Mashable office haven’t bought a CD in years — if you’re the same, will UMG’s plan turn you around?
[img credit: lrargarich]