Deflation in music prices

Once in a while these days, you read about prices falling — although not for gasoline!

Tim Oren’s commentary about Universal Music’s price cuts on music CD’s is an interesting read. Tower Records, the big west coast anchor music chain, is on the block — after struggling financially with falling sales. The local Wherehouse here in Menlo Park closed down about a year ago. Seems like Border’s Books has become the biggest music store in our area — and most of what they sell are books, not music.

With Universal’s price cuts, the pricing advantage that Apple’s iTunes Music Store had (selling most albums online at $9.99) has gone away — Universal’s CD’s are expected to be widely discounted to sell at exactly that same price. So now the convenience factor of purchasing online becomes the primary differentiator. Whether Universal’s price actions result in a elastic expansion of their market will be fun to watch — it’s not a bet I’d be willing to take.

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