Memorex Announces CD-R Media Price Increases

One argument for the record industry's disappointing sales last year is a combination of high prices for official CD releases coupled with cheap prices for computer-based CD recorders and CD-R blanks. It doesn't look like retail CD prices will be coming down anytime soon, but luckily for the music business, CD-R prices are going up.

Memorex, one of the largest suppliers of CD-R blank media to the retail market, revealed last week a number of reasons that it says are responsible for inevitable CD-R price increases expected later in 2001. Along with the traditional excuses, such as increased blank media manufacturing costs, Memorex cites a significant tightening of CD-R worldwide supplies at the same time that worldwide CD-R media manufacturing has been consolidated, and notes that patent holders are beginning to strictly enforce royalty fees.

Memtek Products, the US distributor of Memorex branded recording media, says that its prices will increase June 1, 2001, citing the overall effect of the aforementioned market dynamics. The company points out that, in the short term, per disc cost has increased by over 30% over prices paid at the end of the year 2000. With the enforcement of royalty fees, Memtek says that CD-R disc prices are scheduled to increase again.

Last year, slightly over 1 billion blank CD-Rs were imported and sold in the United States, with 1.46 billion units forecast to be sold in 2001. However, since the beginning of the year 2000, many small- and medium-sized manufacturers have closed their doors. Last year, manufacturers without a consistent channel for their CD-Rs sold their inventory on a "spot" type market, resulting in excess inventory often sold drastically below production cost (see previous story).

CD-R patent holders say they will now more aggressively enforce their licensing agreements and collect their royalty fees. Due to the enforcement of royalties, Memtek says that major overseas manufacturers are unwilling to produce discs without executable purchase orders in hand. The company's Michael Golacinski adds that, in spite of the price increases, "we fully expect to build upon our retail market leadership in the CD-R media category in 2001."