Superstars' CD's sport higher price tags

October 02, 1992|By Cox News Service

Some major record companies have decided rising superstars should command rising prices. So the latest releases by hot acts such as Garth Brooks, Michael Bolton and Madonna carry $16.98 price tags. That's a $1 price increase.

It's also a broken promise.

When the compact disc made its debut 10 years ago at a price of about $25, the record industry promised prices would drop substantially when production technology improved and sales volume increased. While that promise was partially kept -- list prices of new CDs average $15.99 -- record companies have begun to raise CD prices instead of lower them.

Raising prices is even more irritating with a stagnant economy and rising unemployment. Nobody is happy. Especially the record stores that receive consumer complaints.

"I wish it wasn't happening because ultimately it costs the consumer more," said Vicki Carmichael, spokeswoman for the 64-store Florida-based chain, Spec's Music & Video. "We are sale-pricing to be competitive [selling the Brooks CD for $13.99], but we've already heard from one customer and he was not happy. I'm sure there will be more of that."

(The compact disc price increase may also discourage sales of CD players. The music industry trade publication Billboard reported that only 37 percent of American homes have CD players and that player sales have slowed.) Unlike Tom Petty, who in 1981 publicly fought his record company over raising the price of his "Hard Promises" (vinyl) album $1 to $9.98, few, if any acts, seem to care.

While CDs don't cost much more to manufacture than cassettes, record companies have to recoup the multimillion dollar advances they've had to shell out to retain or add superstars such as Michael and Janet Jackson, the Rolling Stones, Madonna, Prince, and Aerosmith.

To close the price gap between CDs and cassettes, record companies also have been raising cassette prices.

"Originally, CDs were supposed to come down," says Debbie Ross, owner of the Record Station in Palm Springs, Fla., "but instead they raised cassette prices. They also took old records by the likes of AC/DC and Led Zeppelin and raised [cassette prices] from $6 to $8 and now $9.98." New music on cassette costs $10 or $11, she adds.

And CDs by relatively unknown acts such as the British group Lush, whose only claim to fame is being the opening act on the Lollapalooza tour, cost $15.99.

To offset those prices and help new acts, some companies have lowered the cost of debut records. Virgin Records, for example, is releasing the debut record by Miami rock band Young Turk with a $12 CD price tag. The industry calls it "variable pricing." It's similar to scaling seats in a theater.

The price increase hurts the independent, or "mom and pop" stores as much as consumers. They're already paying higher wholesale prices than the chain stores because they can't buy as great a quantity.

"It's just one more kick in the head," says Matt Reynolds, owner of Sound Splash in West Palm Beach, Fla., adding that a Garth Brooks record is "something that doesn't make money but you keep in the store to bring in customers."

His store emphasizes records by alternative bands on smaller independent labels that sell for $9 to $13. Mr. Reynolds says he complements instead of competes with the nearby record store chains.

The failure of CD prices to drop more in line with cassettes also has created a strong market for used CDs. "The fact that the used CD market is booming is a reflection of how unfair prices are to the consumer," Mr. Reynolds says. "People are willing to go to extra trouble to get them because they feel they're being extorted." He adds that used vinyl records are also selling briskly.

"It's crazy," he said. "I'm finding people are going back to buying turntables, so I'm selling turntables, too."

Though few think the price increase is justified, most admit if an act is hot enough, fans will pay the price. Mr. Reynolds cites people paying $20 for the now notorious "Body Count" record by rap singer Ice T when it was announced the controversial song "Cop Killer" would not be included on future copies of the record.

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