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Universal fights against downloading
Cuts CD prices

CRAIG WONG
Canadian Press


Thursday, September 04, 2003

TORONTO (CP) - Universal Music Canada is cutting the wholesale and suggested list prices on CD albums in an effort to win back Internet downloaders who have complained about retail prices.

"The consumer has spoken to us that music -- in the research that we've done -- has been fairly high-priced and, therefore, they've been feeling fairly guilt-free about procuring music for free," Randy Lennox, CEO of Universal Music Canada, said Wednesday.

"Without this, the business would flat-line at best because the competitive nature of entertainment products is growing. . . . We feel that this is an absolute necessity."

Universal, home to Canadian artists Shania Twain, Remy Shand and the Tragically Hip, will institute a $14.98 maximum suggested list price on virtually all of its top-line CDs, and a $9.99 price tag for developing new artists.

In the United States, Universal Music Group said it would cut the suggested sale price on a majority of its CDs by $6 US to $12.98 US.

The company also plans to cut wholesale prices on its cassettes and change the suggested retail price to $8.98 US.

Lennox said the music giant will also start offering music downloads in Canada in October from 99 cents a song and $9.99 per album.

"All of our research says even the guys that were taking it for free are saying, 'You know what? For 99 cents a song, I'm in. At least the record companies aren't gouging me here,' " Lennox said.

Apple Computer's ITunes service offers Web downloads for 99 cents US a song and $9.99 US for most full albums in the United States.

The Canadian Record Industry Association says annual sales are down 20 per cent over the last three years. The industry has launched a cross-country anti-piracy campaign urging consumers not to share music files because it is illegal and damaging to the record industry.

In the United States, the recording industry has taken a harder line - filing lawsuits against individual users who share and download copyrighted files over the Internet.

Last year, Universal Music Canada removed a series of deductions the record label was entitled to take from royalties paid to artists for downloads.

The new contract puts downloaded songs in the same payment category as albums, giving artists a 25 per cent higher intake. It also removes a clause that would have permitted the label to charge artists packaging and tech-format fees amounting to about 45 per cent.