Is the traditional music CD in that much trouble? As of today, HMV says it will sell the majority of its music CDs at a 20% lower price point. In some cases, we’ll see up to a 33% price cut. Is this a strategic move on HMV’s part to become the leader in the music CD arena; or a necessary step to keep that part of the business alive?
Music retailer Sam The Record Man just closed the doors to its iconic downtown location this summer, clearly as a result of stiff competition from the online digital music marketplace. It’s no secret that people are downloading music online, but this isn’t to say that there aren’t still people who prefer a store-bought CD so they can enjoy the high-quality sound, and pamphlet inserts. Nevertheless, the number of customers who fit this group have dwindled considerably over the past few years.
HMV has made some pretty smart moves in order to remain profitable in the wake of the changing music landscape. The company has historically been very big in the DVD retailing side, which adds another source of revenue in addition to CDs. Last summer, HMV also added video games and gaming systems to its product roster, recognizing the huge growth in this particular area. This bold, new price reduction strategy can only mean good news for HMV. It will be interesting to see if other music retailers follow suit.