As ever, Mark Mulligan from Jupiter Research gets right to the point about UK record sales:
UK music sales picked up after a slump not just because of good artists, but because CD prices dropped. And they dropped significantly. It is no coincidence that UK music sales were at their weakest when album prices were at their highest…
by 2004 we had 9.99 and cheaper chart albums. Lo and behold sales went up.
But instead of recognizing that they had found the optimum price point / sales margin balance, the big retailers took the increased sales as a cue to hike up prices again. So now if you walk into HMV or Virgin you’ll pay 13.99 again for a chart album. Yet the cheaper alternatives remain cheaper, for example I paid 6.99 for the Editors in Tesco and it was 13.99 in Virgin.
All that will be achieved by higher prices in the high street is driving people away from buying music again.