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Universal Music Group Reduces CD Prices

Vivendi Universal’s (V) Universal Music Group plans to sharply lower the consumer cost for compact discs, in an effort to bring customers back into retail stores and boost music sales.

The move comes as the music industry grapples with a continuing decline in retail sales in the face of rampant piracy and other problems.

In a press release Wednesday, Universal Music said it will reduce wholesale prices and implement a $12.98 manufacturer suggested retail price on virtually all of its top-line CDs in the U.S.

The plan will eliminate MSRPs of as much as $18.98, and the company believes retailers will start offering the cheaper CDs as soon as Oct. 1.

Universal Music’s labels also plan to significantly increase direct-to- consumer advertising to raise awareness of artists and their music.

The company, whose artists range from U2 to Reba McIntyre, will also cut wholesale prices on cassettes so its MSRP for top-line releases will be $8.98.

The pricing policy will also apply to the company’s historic catalog of recordings, which include artists like Abba, Ella Fitzgerald and Nirvana.

“We strongly believe that when the prices are dramatically reduced on so many titles, we will drive consumers back to stores and significantly bolster music sales,” said Universal Music Chief Executive Doug Morris in the release.

The company, with $6 billion in annual revenue, isn’t part of Vivendi’s entertainment assets that are slated to be merged with General Electric Co.’s ( GE) NBC.

Vivendi removed the music assets from its auction process in July, in part because the French conglomerate feared selling the business when music valuations were at such low levels.

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