The $5 CD

I was surprised to find many young people enthusiastic about the prospect of paying $5 for a CD.

I'm sure the record business is not.

I can hear them right now: "We can't make money on $5 CDs" -- like they can make money on free downloading, right?

I put the question to students in my USC class "Music, Broadcasting & the Mobile Future". About 75% of them -- a surprising number -- said they would buy CDs or multiple CDs -- a significant increase over their current spending -- if the labels charged a flat $5 for the CD.

Only one condition: they also want a high fidelity digital version for purchasing the plastic.

On a negative note (and I feel I have to represent what I perceive the labels' response to be): "your students are not representative of the entire market". True enough, but -- how about 50% being willing to buy a CD. Or even 35%. You get the idea.

The record labels have a pricing problem.

For years they've profited from overpriced CDs because -- well, they could.

Now they can't.

The real interest in this issue is that, once again, the next generation is saying they want to own music and they want to be able to hold an actual product in their hands. This smacks in the face of conventional record industry wisdom that charging more for super CDs and enhanced packaging will make the next generation spend money.

When we broke it down, here's why these young people liked the prospect of a $5 Compact Disc (in no particular order);

1. Better fidelity

2. Can use it in their cars

3. The "pot luck" factor -- they may actually like some of the songs on the CD that didn't attract them to buy it and at $5 -- that's a plus.

4. $5 is close in price to buying three iTunes songs.

5. It would then be affordable to grow with music they might not ordinarily listen to.

6. They expect unrestricted use

7. Less risk of paying for bad tracks when the price is reasonable.

8. They want to order the CD on line with a credit card and get the download right away.

As you know, I am not a genius, but the $5 CD provides a lot of hope.

The record industry has a pricing problem. They have stubbornly stuck with yesterday's prices while music has become available for free today to their best customers online.

CD sales continue to decline and legal downloads can't make up the shortfall fast enough.

The $5 price point may be like the 99 cent per song standard on iTunes and the price is right for more spending on CDs not less.

We all know how little it costs to make a CD and since record labels are fast becoming lean, mean record machines they have no excuses not to cut the price to increase the volume.

I know -- I must be smoking something.

But I just can't help believe that some of the self-inflicted music industry problems would respond to a little love -- like a fair price for a CD in a world where music can be stolen so easily.

Ignore this generation at your own peril, but I'm listening.

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