Apparently, Universal Music Group is at least starting to hear what their customers have been saying. In an effort to bring the consumers back, they are actually cutting prices for the first time since the CD format was released.

The deep price cut — the only one to apply to new CD's since the format was introduced in the early 1980's — represents a gamble by Universal that more consumers will buy more CD's once the price dips below $13.

"We need to invigorate the market, and as an industry leader we felt we had to be bold and make a move."

Under the new pricing scheme, Universal would lower its wholesale price on a CD to $9.09 from $12.02. The company said it expected retail stores to lower CD prices to $12.98, from the $16.98 to $18.98 they now charge, and perhaps to as low as $10. When CD's first arrived on the market they cost $15.98, and have climbed from there.

They also blather on about piracy hurting the industry and stolen music, etc. The Times actually gets something right, though:

But the move will put even greater pressure on Universal's profit margins at a time when the company is experiencing sharp revenue declines. And some music industry analysts caution that high prices and piracy are not the only reason CD sales have dropped off.

Some of the research on older consumers shows that "not finding what they want is more of a reason for not buying than pricing," said Russ Crupnick, vice president of the NPD Group, a market research firm. "They still need to put out content that's appealing to people," he said, referring to the record companies.

It's a GIANT step in the right direction, though and UMG risking the move should prompt the other biggies to follow suit.

Several other major record labels said they had no comment on Universal's price cuts. But industry analysts said it was probable that others would follow the company's lead.

It may be a gamble, but it's a gamble that will probably pay off for UMG (and prolly the other biggies as well).

Here's the best line in the article (emphasis is mine, of course):

But some analysts said the price cut signaled a long-awaited recognition that the music industry needed to adjust its business model to fit a world where music can be sold or copied song by song.

They got part of it. Sure, the songs can be sold or copied song by song but as a service industry, they are at the mercies of their consumers. The market they cater to has changed significantly and they now must change with it. I've discussed before that they need to conform to what the customers want (easy availability at reasonable prices and quality releases). This is a nice first move to rebuilding the bridges they've burned.

"This is a step toward realizing the reality of what business conditions are today," said Hal Vogel, author of "Entertainment Industry Economics"(Cambridge University Press, 1998). Mr. Vogel said that some estimates indicate that the record industry's revenues worldwide had declined to $30 billion from $40 billion a year in the late 1990's. "The cuts are going to put a squeeze on profit margins but it will allow them to start building a relationship with the public again," he said.

Thanks to Scott for the heads-up.

More: Blogcritics.org: Universal Music Group Goes Crazy With the Cheeze Wiz