BMG Plans to Have It Both Ways

The most common complaint about record companies: CD prices are too high. In fact, many blame Napster's runaway success on the insistence of "greedy labels" on pricing discs at $15 or higher. Apparently BMG Direct, a division of BMG Entertainment, has put two and two together and found it equals $9.99.

Last week, the company announced that it has launched OnePriceCDs, a new website that BMG claims offers more than 12,000 CD titles from a variety of music genres for a single price of $9.99 each, and multi-unit CD sets at $8.99 per CD. All prices include shipping and handling.

But is this second-rate cut-out material? BMG says that "OnePriceCDs offers only first-quality CDs from more than 70 music genres, including pop, rock, classical, country, and R&B. The site responds to the consumer demand for the best overall CD value and complements it with a simple, straightforward, and secure shopping experience."

So what's the catch? In order to become a "member" of OnePriceCDs, BMG requires a consumer to first enroll on the site, purchase at least one CD, and subscribe to regular e-mails from OnePriceCDs for ongoing member promotions. In this way, BMG feels, OnePriceCDs can "maintain an effective, ongoing relationship with its members, which keeps them coming back to the site."

According to BMG Direct, this is the first time the company, known for its record-club mail-order business BMG Music Service, has developed a business strictly for online users. BMG's Elizabeth Rose explains that "keeping our members happy with an easy-to-navigate site, low and consistent pricing, and no surprises at checkout is the key." The only question left is how online music retailers, such as CDnow and Amazon.com, will compete if all the labels jump in with direct sales at near-cost pricing.

Last week also saw BMG Entertainment announce details of its commercial digital downloading program for the US, which launched October 10. BMG says that the launch initially includes a total of more than 100 singles and albums from BMG artists across a number of musical genres and labels, including Christina Aguilera, Toni Braxton, Jennifer Day, Dido, Eve 6, Giselle, Whitney Houston, Lit, Sarah McLachlan, Brad Paisley, Pink, Carly Simon, Patti Smith, Santana, Carl Thomas, Tyrese, and Vertical Horizon, among many others.

BMG adds that it will make its current hit artists' music available for download on an ongoing basis, and that the number of titles will increase substantially in the coming months. Beyond its initial offering, the company plans to make as many as 2500 albums and singles available from its catalog for the holiday season.

The releases will be available to consumers through a network of traditional and online retail affiliates, says BMG, beginning with Lycos and comprising TheStore24, ARTISTdirect, Best Buy, GetMusic, Musicland, RollingStone.com, Trans World Entertainment/TWEC.com, Tower Records, and Wherehouse Music/Checkout.com. BMG says that pricing for digital downloads is between $1.98 and $3.49 for singles, between $9.98 and $14.98 for single CDs, and between $11.98 and $20.98 for double CDs.

BMG's Kevin Conroy states that "commercial transactions are much more complicated to implement than free transactions. With that in mind, BMG has taken the time necessary to develop a level of integration that we believe will lead to a vastly superior consumer experience, which is essential to building a legitimate digital music market. In addition to our digital downloading activities, BMG is actively exploring a number of new digital commerce models, including subscription services and secure peer-to-peer distribution."

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