CD price war breaks out

A CD price war has broken out in the run up to Christmas with music stores slashing prices in a desperate bid to compete with the internet and supermarkets.

The unprecedented competition has opened up wide price differences between the main retailers, an Evening Standard survey has found. Shoppers are able to make huge savings of up to £50 on the top 10 chart CDs.

Someone going to Tower Records in Piccadilly Circus would pay almost £137 for the top 10 CDs but, with online retailer Amazon, could get the same albums for less than £87, a saving of more than 35 per cent. The only disadvantage is a wait of up to a week for delivery.

Even sticking to the high street, a music buyer could slash £20 off the bill simply by shopping around for the best deal.

For example, Busted's A Present For Everyone is being sold for £9.99 at WH Smith but costs £13.99 at HMV, Virgin and Tower - 40 per cent more.

However, the best deals of all are still in America, where anyone on a winter shopping trip to New York could pick up most of the chart for around $15 each - about £8. The strength of the euro means fewer bargains in Paris.

This year's blizzard of pre-Christmas offers has for the first time been extended to chart titles, bringing the price of the country's most popular CDs to as little as £10, a new low. Previously, special deals were usually limited to older, slower selling titles.

Paul Smiddy, retail analyst at City brokers RW Baird said: "There is a price war going on in the top 20 and the top 50 and that is taking prices down below £10." He added the industry is shifting its focus towards higher-priced DVDs.

CDs are still sold on profit margins of 25 to 30 per cent but retailers are reluctant to cut prices much further because of the impact on overall profits.

The music industry is reeling from increased piracy, internet downloading and supermarket and online competition.

The big four supermarkets accounted for 17.7 per cent of CD sales last year with the internet selling 6.8 per cent. The biggest player is HMV with 18.2 per cent of sales.

Next year could see further price cuts after record label giant Universal decided to cut its wholesale price of CDs by around £2 to £5 in America earlier this year. It has threatened to extend the cuts to Europe.