Edition: U.S. / Global

Virgin Assails Universal’s CD Price Cuts

Published: October 30, 2003

The Virgin Entertainment Group issued a statement yesterday assailing Universal Music over the details of its plan to lower the prices of its compact discs.

No other major retailer has publicly criticized the plan. Many retailers have complained less publicly about the plan because Universal, the largest music company, is asking them to forgo certain marketing subsidies and sell its CD's at a lower profit margin, betting that reduced prices will generate enough new sales to make up the difference. But speaking against lower CD prices risks alienating consumers, who love the idea.

Responding to an article in yesterday's New York Times about retailers' mixed reaction to the plan, Virgin said, "We will not be told what we should sell or how we should sell it to our customers, but rather will continue to offer them what they want, at a fair price."

The statement also said that if the plan were to remain unchallenged, it would ultimately be damaging to the music consumer, though it did not say how.