How Much Should a CD Cost?

Well, of course, a CD should cost whatever the market says it should cost.  It's a matter of supply and demand, as anybody familiar with the most basic economic principles will tell you.  Oh, wait.  That was in the days before Wal-Mart.  Now, it seems, CDs, like a lot of other products will cost whatever Wal-Mart says they should cost.  And according to new reports such as this one, CD's will now be subject to a five-tier pricing scheme. 

The top 15-20 hottest titles will cost $10; other hits and current titles will cost $12; top catalog CDs will cost $9, midline cataogue CDs will cost $7 and budget CDS will cost $5.  Since Wal-Mart accounts for something like 22% of the retail market in CDs, the big record labels may not have a choice but to agree to the Wal-Mart pricing structure.  Wal-Mart divisional merchandise manager for home entertainment, Jeff Maas, would not rule out the possibility that Wal-Mart might simply stop stocking CDs or greatly reduce the number of titles displayed if Wal-Mart cannot reach some agreement on a new pricing structure with the major record labels.

According to Maas, "The customer votes every single day in our stores, and based on what they want is how we merchandise our stores."  Apparently not enough customers are voting for CDs at the existing prices. 

For those curious about the CD-buying habits over at the ContractsProf Blog, I can disclose that the only popular music I have bought recently is that of the celebrated daughters of my colleagues.  You can cut out the middle man and listen to the music of Sarah Dooley here; you can hear Kate Myers here.  If Wal-Mart begins carrying them, I'll think about shopping there.

[Jeremy Telman]