WEA SLICES CATALOG PRICES

A customer letter was sent out by the distribbery today, slashing catalog prices on 1,776 titles. The plan is to expand selections in WEA’s existing $9.98 Super Value line by some 1,200 titles, with just under 600 others being lowered into the $11.98 Super Save line and $13.98 Super Sonic line. The wholesale prices on these three categories, now being referred to as the Honorary Titles program, are $6.71, $7.85 and $9.17 respectively.

The letter also stresses that this is not in lieu of any additional discount promotional opportunities that might be offered in the future on these reduced titles.

Artists at the $11.98 price point include Madonna, Chris Isaak, Missy Eliott, Green Day, Rod Stewart, Sugar Ray, Stone Temple Pilots and Gipsy Kings. The $9.98 category includes Bad Company, Jackson Browne, Doobie Brothers, Genesis, Prince, Van Morrison, James Taylor and Warren Zevon.

In the letter, EVP Sales John Madison says the changes in pricing came from "an open and honest dialogue, like the one we’ve been having." And goes on to say that "in order to drive the goal of creating the best value for consumers, inevitably some compromise is called for on both sides."

That being said, the new policy comes with a couple of caveats.

WEA will be doing away with the 20% restocking fee, that it has been applying to their Top 100 Frontline Catalog and Top 100 Supersaver CDs. The restocking fee amounted to a $2.40 penalty per unit on catalog titles that historically "just shouldn’t come back." In its place, WEA is now instituting a flat 19 cents per unit returns fee on all of their some 5,000 current and catalog titles.

WEA President John Esposito tells us that the new returns charge will not apply to WEA’s numerous Developing Artist categories. Nor will it stop WEA from selecting other titles that may need a boost in the marketplace from being exempted from the new charge.

"Everybody has a returns incentive, disincentive or a flat charge," Esposito says, "and with our new policy, we haven’t by any means made ourselves the most expensive. For the most part, our customers said that they knew something along these lines was coming."

WEA has also lowered its 2% prompt payment discount to 1.5%, noting that the current discount rate had been offered since the prime-lending rate was in double digits.

Esposito insists that in order to make these changes in pricing, WEA needs retailers to share in some of the risk. "We are the ones that still need a lift. We’re hoping our customers will give us promotions right out of the box to help drive the sales that we are going to need to be able to keep going back to our labels and find more ways to give better catalog pricing."