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Wal-Mart stirs CD pricing pot with multi-tiered plan


Jahfin

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By Ed Christman

NEW YORK (Billboard) - The major music companies have been resistant to lowering their price on CDs, but now they may be dragged to that point: Wal-Mart, the largest retailer of music with an estimated 22 percent market share, has proposed a five-tiered pricing scheme that would allow the discounter to sell albums at even lower prices and require the labels to bear more of the costs.

According to sources, the Wal-Mart proposal would allow for a promotional program that could comprise the top 15 to 20 hottest titles, each at $10. The rest of the pricing structure, according to several music executives who spoke with Billboard, would have hits and current titles retailing for $12, top catalog at $9, midline catalog at $7 and budget product at $5. The move would also shift the store's pricing from its $9.88 and $13.88 model to rounder sales prices.

Executives at the Bentonville, Arkansas-based discounting giant wouldn't comment on the specifics of their promotion, but Wal-Mart divisional merchandise manager for home entertainment Jeff Maas acknowledged the proposal. "When you look at sales declines with physical product, and you have a category declining like it is, you have to make decisions about what the future looks like," he said. "If you have a business that is declining and you want to turn it around, it really takes looking at it from all angles."

Maas referenced the DVD business as a model for tiered pricing. "(It) has been around for years and has worked very well," he said.

While Wal-Mart's negotiations with the labels have yet to take place, the proposal is already causing agita at the majors. Some consider the proposal a non-starter, others say further negotiations might eventually yield a workable solution, and a few see it as appropriate, given the big picture.

"I don't think this is a Wal-Mart discussion," one top executive at a major label said. "I think this is a future-of-the-business discussion. Right now everyone is paralyzed."

Some executives raised the question of whether the Federal Trade Commission would take issue with such a program were it rolled out only to Wal-Mart. But one executive said, "Making it legal is not the difficult part. The difficult part is coming to terms with it."

Another top executive said, "The decision might come down to: Do we give up 20 percent of our business (i.e., Wal-Mart) in order to not lose the entire business?"

That question assumes that Wal-Mart would either penalize or stop doing business with a major that decides not to participate in the pricing program. Moreover, if all majors take a pass, some speculate that Wal-Mart could pull music entirely from the store.

This type of speculation abounds, although the Wal-Mart proposal was presented only as a starting point. One label executive said, "This sounds like the Hail Mary pass, and if it doesn't work, they could be out of the music business; or maybe they reduce music down to a couple of racks" from the 4,000 titles carried by Wal-Marts with larger selections.

Maas declined to rule out those possibilities, but said he'd rather look at how Wal-Mart can help a declining category. "The customer votes every single day in our stores, and based on what they want is how we merchandise our stores."

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About two or three months ago I saw that WalMart had two of the all time greatest albums of alltime on sale for $7.99 apiece!! Though they have been out for over 20 yrs still incrdible price. guess what the two cds were? Led Zeppelin IV and Pink Floyd's Dard Side of the Moon. Never beat that price ever ever ever.

I recently saw Fogerty's Revival disc on sale at Circuit City for $6.99 and Radiohead's In Rainbows on sale at Best Buy for $8.99. Considering they're new titles I'd say those are pretty damn good deals.

And if you go into an actual record store they will charge you now what they charged you 35 yrs ago.

I don't know what record stores you shop at but I have no problem at all finding CDs on sale at the indies I frequent.

So what it your opinion of Wal Mart?

I shop there sometimes but it's usually out of necessity. If I do, I get what I need and get the fuck out. As for music, I don't usually buy any there since Wal-Mart sells censored product. Not only is it censored but there's nothing whatsoever on the packaging to indicate it's been censored. When it comes to music I do my best to support the indie stores when I can but that's not always possible.

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Yeah, I'm going to have to replaced my Zep cd catalog. I haven't heard half of LZII and most of LZ1 in years because of scratches on the disc along with many other songs. I use to used the compilations and vinyls as way of hearing some songs. I generaly listen to them now on my ipod with bitrates of 1000 in AAC. But alot of the songs still has skips due to scatches. I downloaded How Many More Times from itunes and it sounded like crap. I really wanted The Lemon song again, so i torrented that fucker and i immediately felt shitty about, so i deleted. So Ill prob order on line or in store as many as i can find soon. But what should i do with my old CD's. I replaced Physical Graffiti once and i though i did the right thing by burning it along with some old zep shirts.

Zep is the only band in 992kps everbody else is in 192kbps except for floyd at 320kbps

If im looking for just random crap, i usally go to walmart. Unless i want a certine brand.

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what is an indie store??

Its a store owned by a individual not a corporation.Used to be almost all stores were independant but then came Sears,Kmart now one and the same and of course Walmart they along with bunches of others underprice the smaller stores out of buisness they buy in such bulk that they can get whatever they want really dirt cheap. Drug stores were once the same way cant find many little independant drug stores anymore .

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what is an indie store??

The link below doesn't really provide a definition of what an indie store is but it is all about them as well as including some priceless commentary about how invaluable they are from some familar (and unfamilar) names. One of my favorite quotes:

"You can't roll a joint on an iPod - buy vinyl!"

- Shelby Lynne

http://www.recordstoreday.com

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Interesting link. While scrolling through all the participaing stores I actually found one in my neck of the woods that I have never been to . Called Lakeshore on Park ave in Rochester NY. Think Ill pay them a visit. what have I got to lose?

certainlly not your mind.

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Well Ive always been a fan of the "little guy" so to speak. Hate to see the big bad stores blow the little stores out of the water. Kind of like in Youve Got Mail. But it has happened and there seems to be no stopping it. the problem is that the masses dont seem to care and they have no plan or comunication and are simply easy prey to the corporate giants.

It's not just the big box stores with their "loss leaders" it's downloading (legal and otherwise) as well. I recently read a piece at Rolling Stone.com about some record execs that went to a college campus to talk to students. After the seminar was over they told the students they were welcome to go through a box of promo records they had brought with them. Every student in the room left empty handed. The recent article I posted about Schoolkids Records in Chapel Hill also mentioned a similar problem. UNC has their own service for students for downloading. Foot traffic at the store has been reduced to next to nothing because the students can download all the music they want via the service provided on campus.

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All I know is I picked up the new Eagles double-disc CD for ten or eleven bucks recently at Wal Mart. Lowest price I paid in ages for a 2-CD set.

Not a bad deal but strange bedfellows considering Henley's stance on corporate behemoths such as Wal-Mart in the past. Still, I'm not buying any music from Wal-Mart.

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Never been to Rochester but I've passed through NY on my to Vermont many, many years ago. I also attended Woodstock '94 so I got to see a bit of upstate New York. Pretty country. Otherwise I tend to stick to Southern climes when traveling and have a huge soft spot for the Southwest like Texas, New Mexico and Colorado.

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Oh wait, there was a two tiered pricing program at cd stores, but that was just new releases or not new releases. This seriously should have happened years ago on a broad marketing basis, would have developed alot more true music fans. Otherwise how many kids got into music going out of high school and into college... then never followed music that much again, because cds were too expensive.

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I tried to resond to your link but someone here that is out to get me, jumped on my post and Im sure you couldnt read it. Thanks for the post. i am going to hit the store on the list. Will let you know how they are when I get there. Its in the city of Rochester NY. Dont know if you have ever been here?

Why would he not be able to read it?

Who is out to get you?

As mentioned earlier it's a shame Wal Mart had to be the ones to be behind this. I have serious issues with Wal Mart but this thread is no place for airing them.

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Hello:

I have an interesting story about Wal-Mart and Zeppelin.

The day after the 02 gig, I went searching for papers that might have pics...I bought The Toronto Star because it had some good pics..they weren't in color but they were o.k.

In any case...after cutting out the pics of the band, I read the business section. There was an article about the new CEO for WAL-MART CANADA..He is British and much younger than the CEO who he replaces. He was set to arrive in Canada at the beginning of Feb.

So...I have occasionally been visiting my local Wal-Mart to see if he might be visiting...No sightings yet...

If I do happen to be in a Wal-Mart and hear a British accent and its attached to the new CEO..I will politely introduce myself and welcome him to Canada...

Juliet

PS ALL NEW RELEASES SHOULD BE THE SAME PRICE.....

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I don't like subsidizing walmart's health care for their employees.

The high cost of low prices. Google it.

Wal Mart healthcare benefits are a JOKE...I have first hand experience in that department :angry:

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Exactly, they force them to rely on public health resources for care.

http://video.google.com/videoplay?docid=-3836296181471292925

They also encourage part time workers(virtually everyone in the store apart from management), who by the way don't even qualify for benefits of any kind, to apply for welfare and food stamps.

It's very sad when the rank and file of this countrys largest employer can't afford to feed their families.

they will never get another dime from me

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Do you mean Wal Mart will never get another dime ? I can understand and can see your point. But when a hot June day arrives and I need a fan and I have the choice of paying $10 for the fan at WalMart and $20 for the same fan at Home Depot, what am I to do??? What is the average Joe going to do?

You do whatever you want. I made my stand based on principle. For me this goes far beyond disagreeing with Wal Mart policy but I'm not going to get into the details.

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Walmart does may not provide the benefits that most other jobs may give, but without this policy of theres, walmart would be half as big (target) and Bankrupt (Kmart). It is stupid that the largest company in amercia does not provide benefits, but without them, millions of people will be unemployed. My first day of school for my union, they showed us an anti walmart video and told us not to shop there. The teacher ask me if i would continue to shop there. I said yes, i don't have a problem with there policy. If they and other companies decided to raise their wages, and add benefits. The raise we negotiate as a union won't mean shit, because the cost of living just went up. I know they negotiate wages based on cost of living. but i truly believe a kid should be making more $7hr and for those adults who have family needs, there still gonna drain the govt money, but you can also add them to the welfare/unemployed list also because they would not have jobs. Without walmar, alot of small towns in america would be gone.

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Walmart does may not provide the benefits that most other jobs may give, but without this policy of theres, walmart would be half as big (target) and Bankrupt (Kmart). It is stupid that the largest company in amercia does not provide benefits, but without them, millions of people will be unemployed. My first day of school for my union, they showed us an anti walmart video and told us not to shop there. The teacher ask me if i would continue to shop there. I said yes, i don't have a problem with there policy. If they and other companies decided to raise their wages, and add benefits. The raise we negotiate as a union won't mean shit, because the cost of living just went up. I know they negotiate wages based on cost of living. but i truly believe a kid should be making more $7hr and for those adults who have family needs, there still gonna drain the govt money, but you can also add them to the welfare/unemployed list also because they would not have jobs. Without walmar, alot of small towns in america would be gone.

Those small towns were doing just fine before wallyworld showed up. What is gone tho is all the small businesses that made up the ecomonies of those small towns, which Wal Mart aggressively works to put out of business.

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Those small towns were doing just fine before wallyworld showed up. What is gone tho is all the small businesses that made up the ecomonies of those small towns, which Wal Mart aggressively works to put out of business.

Yes they put out small bussiness, but they usally come into a town when another big business left for china.

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