NPD PriceLab: Retail's 'Missing Link' for CD Pricing Information; New Data Provides Insights on Competitive Music Retail Pricing and Value Proposition

Business Wire, March 29, 2004

Entertainment Editors/Business Editors

PORT WASHINGTON, N.Y.--(BUSINESS WIRE)--March 29, 2004

NPD Music, a division of The NPD Group, today announced the launch of PriceLab, the first comprehensive source for music pricing information and insights. PriceLab collects pricing information at the title level for all major music retailers on a continuous basis from members of NPD's online consumer panel of more than 2.5 million registered members. PriceLab also probes consumers on how important price was in making their purchase decision and how they felt about the value proposition at retail.

"Until now retailers and distributors had to spend a lot of time and energy, if they wanted to understand how pricing affected CD sales relative to their competition as well as to their own internal goals," said Russ Crupnick, president of NPD Music. "PriceLab is the first information resource derived from a large, statistically representative sample of consumers. It is retail's 'missing link' for pricing information on specific music titles, retailers and even musical genre. It brings together a range of CD pricing factors together into one comprehensive package."

With information delivered to subscribers on a monthly basis, and history back to January 2002, NPD's PriceLab provides the first view of music pricing that enables subscribers to monitor changes in average selling price (ASP). PriceLab enables businesses to see the effects of pricing in relation to the following criteria:

-- Artist

-- Top-selling titles

-- Retailer

-- Channel

-- Distribution company

-- Label

-- Genre

"Next to peer-to-peer (P2P) file sharing, CD pricing has been the most talked about issue in the music industry," Crupnick said. "PriceLab gives subscribers the edge in the highly competitive, and price sensitive, music market. It allows the industry to monitor changes in pricing across the industry, and helps companies understand the impact of pricing on consumer perceptions."

PriceLab In Action: CD Prices drop slightly in 2003

According to NPD's PriceLab service, the average full length CD sold for $13.47 in the fourth quarter (Q4) of 2003. This average price represents a two percent reduction from the same period in 2002 and a four percent reduction from 2001.

"It's important to note that just looking at the average price for music doesn't tell you the entire story," said Crupnick. "There are many other factors to be considered when one determines the price for a particular title, including the age of the album, its relative popularity, the target audience and so on. That's the power of PriceLab: It allows a multiplicity of data views that help companies make better, more-informed business decisions."

PriceLab also illustrates the extent of the variance in music pricing, depending on the sales channel shopped. For example, consumers could purchase the top selling Speakerboxx album by Outkast for $17.46 at the average CD/Record store in Q4 2003. That same consumer could have saved by shopping for the same album at an electronics specialty store, where the average price was only $15.19. In addition, PriceLab shows that many major retailers tend to sharply discount new titles in the first few weeks of release.

"It might seem counter-intuitive from a marketing perspective, but according to PriceLab in 2003 consumers could buy an Outkast album at many retailers for $11 in September when it was first released, but if they had waited two months they would have had to pay $18 for the same album at the same retailer," Crupnick said. "The goal with many new releases is to generate traffic and sales as early as possible, in order to leverage consumer interest. The margins can come later for albums that have staying power."

Source: NPD MusicWatch PriceLab collects pricing information at the title level on a continuous basis from members of NPD's online consumer panel of more than 2.5 million registered members. An average of 1,000 music buyers are surveyed each week.

About The NPD Group, Inc.

Since 1967 The NPD Group has provided reliable and comprehensive sales and marketing information for a wide range of industries. NPD provides critical knowledge on what is selling, where, to whom and why to help our clients make more successful, fact-based business decisions. Today more than 1,300 manufacturers and retailers rely on NPD to help them better understand their customers, product categories, distribution channels and competition in order to help guide their business and positively impact sales and revenues. Information from The NPD Group is available for the following major vertical sectors: apparel, appliances, automotive, beauty, cellular, consumer electronics, food and beverage, foodservice, footwear, home improvement, housewares, imaging, information technology, music, software, travel, toys and video games.