How the record industry realised cover-mount CDs are killing its business

Interesting snippet at The Guardian:

Universal, the major music company, has announced it will no longer allow its back catalogue to be used for CDs given away with newspapers and magazines. The U-turn follows a similar move by EMI last year, and is in response to further evidence that cover-mounted CDs seriously damage sales of record company compilations.

While new artists’ album sales have risen by 2% in the past year, compilation sales have plummeted by 10%, and now hold 19% of the total albums market, down from 24%. From the end of next month, Universal will restrict the use of cover-mounted CDs to promoting new artists only. “We had an existing supply agreement [with publications] which we decided not to renew,” said a Universal spokesperson.

Brian Berg, the company’s managing director, is more colourful. “There are so many of the bloody things and they’re doing more harm than good. We’re better off out of it,” he says.

It remains to be seen whether Sony – which has contractual agreements – will follow suit. Warner has long shied away from cover-mounts, which chairman Nick Phillips believes act as a form of “cannibalism” on record sales.

I have heard, informally, that Universal took a payment of £2 million from Mirror Group, in return giving it full access to the Universal back catalogue. (My source wasn’t clear on how much of the back catalogue, or for how long the contract ran.) Now, Universal has realised that doing that doesn’t really raise revenues, and completely kills off one of the major money-spinners record labels have – compilations of various artists’ work, where ancient tracks are dusted off for a “Best of..” or similar themed album. You can always find some suckers who’ll buy those.

1 Comment

  1. Aw, and I’ve had so much fun with The Mirror’s free CDs. You can beat some hoary old music that 43 year old editors love to drunkenly stumble to at the office party.

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