Low Prices Won’t Last by Zoe Piel

Though students might be jumping for joy now over the low price of CDs, don’t expect it to last. Stores such as Best Buy that employ “loss leaders,” (cheaper products to get customers into the store where they might buy expensive products) can’t keep up the practice forever. Even stores that specialize in music sales have been dropping prices in the last few years – Tower and Newbury Comics are two of the most prominent examples. These stores sell CDs only slightly above their cost from the manufacturer. The theory behind this is that increased sales will make up for the losses from lower prices. However, Tower is near bankruptcy – sales never did catch up enough to compensate for lower prices. As for Newbury Comics, CEO Mike Dreese has repeatedly told industry insiders that he will eventually phase out music from his stores, leaving only the chain’s profitable t-shirts, comics, toys and other products. For two years, I worked at a record store chain that kept its CD prices high enough to make a profit. Customers constantly complained, saying that they could go to Best Buy or Newbury Comics and get it for less. In five years’ time, that will probably not be the case. The chain I worked for is currently the only major CD store chain that is making a profit. Tower, Newbury Comics, and Virgin stores are all in debt from their pricing practices. The low prices made them popular, but, well – that and $15 will get you a Mariah Carey album. Unfortunately for the customer, higher CD prices may be the only way that your local music retailer will stay in business. It may be nice to pay $10 a CD for a while, until you go down to the music store, aching to buy a new album on release day, and discover that the store is out of business or doesn’t sell CDs anymore. When you pay higher prices, you are paying for the longevity of the store.