Newspaper article The Evening Standard (London, England)

EMI Strikes Wrong Chord as CDs Price War Starts; Market Report

Newspaper article The Evening Standard (London, England)

EMI Strikes Wrong Chord as CDs Price War Starts; Market Report

Article excerpt

Byline: MICHAEL CLARK

EMI hit a flat note with investors today after it emerged that a price war has broken out in the music industry.

Its shares responded with a fall of 61/2p to 165p after learning that the world's biggest recording company, Universal Music Group, had slashed the wholesale price of compact discs in the US by as much as 24%.

Universal said the move is needed to revive sales and tackle the growing problem of illegal downloading of discs on the internet and copying.

It said the average wholesale price of a CD will drop from [pounds sterling]7.65 to [pounds sterling]5.80 while retail prices will fall from [pounds sterling]12 to [pounds sterling]8.26.

The news will strike a chord with music lovers but leave the producers with a headache. Brokers say the move will put pressure on margins of other music producers such as EMI.

Share prices generally came off the boil following yesterday's strong performance that saw them climb to their highest closing level for almost a year. The Dow and Nasdaq enjoyed positive performances overnight in the US, cheered by a revival of confidence among technology issues. The FTSE 100 fell 10.1 to 4252 ahead of the monetary policy committee vote on interest rates.

British Airways continued to edge ahead following yesterday's improved passenger numbers - the first since November last year. The national carrier is now valued at [pounds sterling]2.2 billion and almost certain to regain its place as a constituent of the top 100 companies in next week's quarterly review.

Another company which may soon be back in the top flight is LogicaCMG, down 51/4p at 2513/4p on profit taking following yesterday's better-than-expected trading news. The likes of US securities house Goldman Sachs and Deutsche Bank have been singing the praises of the computer services group. …

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