Music labels find themselves up against the Wal

The discount giant Wal-Mart has threatened to stop selling CDs from major record labels unless the labels lower wholesale prices. Wal-Mart wants to sell CDs for $5 to $12, according to an article in the April 3 Rolling Stone magazine.

This column is no valentine to Wal-Mart, but I do applaud them for sticking it to the record labels.

This isn’t the first time Wal-Mart has fired back against the record industry. Last year it had an exclusive marketing deal with the Eagles for ``Long Road Out of Eden,'' which sold 2.6 million albums solely through Wal-Mart.

Since CDs overtook vinyl in the early 1990s, they’ve been overpriced. If a small touring band can sell a CD for $10 out of the back of its van and turn a profit, then a major label can lower its prices and still make a buck, too. But most major-label bands will be making roughly $1 a CD, with packaging and other costs accounting for another buck or so. Promotion, marketing and recording expenses all probably bring the total raw cost to $5. No doubt, the profit from successful bands helps the record company maintain a roster of not-so-successful bands, too, but in the final analysis, the markup is pretty immense.

Read the entire article here.