Wally World CD’s

My term of endearment for Wal*Mart is Wally World. Actually, there is no endearment. In my old job, I sold to Wal*Mart corporate and they are not fun people to do conduct business with. But I am digressing. The point of this blog is the news that Wal*Mart is selling many top-selling cd’s for between $5-$10. My guess is that this will not help out the record labels any since Wal*Mart is notorious for charging back discounts to the suppliers.

Historically, here is the price breakdown for a $15.99 cd:
- $3.84 (24%) Retail Overhead
- $2.88 (18%) Label Overhead
- $2.40 (15%) Marketing/Promotion
- $1.76 (11%) Label Profit
- $1.60 (10%) Artists’ Royalties
- $0.96 (6%) Distribution
- $0.80 (5%) Retail Profit
- $0.80 (5%) Publishing Royalties
- $0.80 (5%) Packaging/Manf
- $0.16 (1%) Musicians’ Union

It would be very interesting to know what these numbers become when a cd goes from $15.99 to $5.99. Some of these costs are fixed, such as packaging, manufacturing, and distributing. So, the profit can only be coming out of the labels and artists. I highly doubt Wal*Mart is taking a huge cut on this deal.

This is obviously expected to have a big influence on the music industry this year adding to the woes.

Stay tuned,
Erik
erikrostad.com