From Digital Music News today:

The Polish division of the Universal Music Group has recently adopted a new method for defeating piracy. The company is drastically dropping the price of its CDs, by 30 percent in many cases. “It was the natural thing to do, because CDs aren’t selling and clients aren’t accepting the price,” said Universal Music Polska president Andrzej Puczynski in comments to the Warsaw Business Journal. “It took us a year and a half of negotiations with the head office to finally get them to accept our idea.” The Ludzka Cena (Fair Price) initiative is largely experimental, and other labels - both in Poland and elsewhere - will be eyeing the results.

Similar initiatives have been pushed in the United States, also by Universal Music. In September of 2003, the label dropped MSRP values to $12.98, a significant decrease from a previous price range of $16.98-$18.98. Corresponding wholesale prices dropped from $12.02 to $9.09, offering retailers a greater margin and incentive to lower prices. That helped to prop overall 2004 CD sales, which remained buoyant for the first half of the year. But the longer-term effects were mild. By Christmas of 2004, annual sales were barely above 2003 levels, and the industry has seen significant decreases since. Meanwhile, current price points at major retail outletslike Amazon hover in the $12.98 range, while mega-retailers like Wal-Mart often sell titles below $10. Still, overall sales have dropped 7.2 percent in the last year alone, challenging the theory that CD buyers are simply price sensitive. Whether a different result will emerge in the Polish market is entirely unclear, though other local labels could follow suit if a recovery emerges.

The article fails to mention that online sales at $1/single and $10/album affects this price point, too. The margins are still too high for labels to cut album prices to a point where the consumer AND artist AND label are happy — if that’s even possible.