Mark Mulligan on post-Brits backslapping: “It’s the price, stupid”

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.

11 thoughts on “Mark Mulligan on post-Brits backslapping: “It’s the price, stupid”

  1. Carlton says:

    I tend to find myself wandering into HMV every now and then. If I see something worthwhile I’ll leave, go the extra quarter mile to Fopp and see what its priced at. Mentally I’m thinking “Maybe I should be checking CDWow too”.

  2. Gary says:

    I’m exactly the same. the only time I ever buy CDs from the high street is in the sales; otherwise it’s Amazon et al. Why pay double when you don’t have to?

    There is an exception in Glasgow, which is indie chain Missing – who manage to sell CDs for considerably less than the big names without going bust…

  3. Squander Two says:

    I continue to find it amusing that people think that the normal functioning of the pricing mechanism is a sign of things going wrong.

    > UK music sales picked up after a slump not just because of good artists, but because CD prices dropped.

    You mean, like, supply and demand?

    > 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.

    You mean, like, supply and demand?

    > All that will be achieved by higher prices in the high street is driving people away from buying music again.

    You mean, like, supply and demand?

  4. Gary says:

    I think Mulligan understands basic economics pretty well, but the people he’s talking about don’t – whenever record sales fall, the BPI et al immediately blame piracy rather than supply and demand. And when sales go up, it’s not because of supply and demand. Oh no.

    What’s quite interesting (to me at least) is that the perceived value of music has dropped over the years. People are prepared to pay considerably less for music than they used to, possibly because it’s bloody everywhere now.

  5. Squander Two says:

    > the people he’s talking about don’t

    Doesn’t matter. The beauty of the pricing mechanism is that it still works even if the people working it have no idea why they’re doing what they’re doing.

    The examples Mulligan gives of record labels getting it all wrong are in fact merely a description of the way that almost every product and service on the planet fluctuates in price. It’s not distinct to the record industry, and it’s not even slightly unusual.

  6. Tony Kiernan says:

    I really feel the need to enquire when you were last in Missing, Gary? Their attempt to take on the big boys was near fatal to them. Now the one store in Glasgow (dunno if they still have the stall in Pollok) has returned to purely second hand stuff. They don’t even have the small but excellent indie section that actually built their market in the first place.

  7. Gary says:

    > I really feel the need to enquire when you were last in Missing, Gary?

    Couple of months ago in the Byres Road one. The stuff didn’t appear to be second hand…

  8. Tony Kiernan says:

    Yeah. Missing was on Gt W Rd – a few years back. Fopp have been having some trubs recently too. Although, hiring most of HMV’s financce department seems to have warded that off (and slowed expansion, caused a bit of rearranging, selling property etc)

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