Universal Music Group Slashes Prices

Top MSRP on CDs Will Be $12.98

NEW YORK, Sept. 3, 2003 — Universal Music Group today announced a plan to significantly reduce the cost consumers pay for CDs by decreasing its wholesale prices and by instituting a $12.98 Manufacturer's Suggested Retail Price (MSRP) on virtually all top line CDs in the U.S.

The program, which will begin in the fourth quarter of 2003, will eliminate $16.98, $17.98 and $18.98 MSRPs. The company believes retailers will begin offering the lower priced CDs to consumers as soon as October 1, 2003.

Verve Music Group is the jazz arm of Universal Music Group and is included in the new pricing policy.

Universal Music Group says its labels plan to significantly increase their direct-to-consumer advertising to raise music fans' awareness of the artists and their music.

"Our new pricing policy will allow us to take the initiative in making music the best entertainment value and most compelling option for consumers," said Doug Morris, Chairman and CEO, Universal Music Group. "UMG is responsible for almost 30% of all album sales in the U.S. so we are uniquely positioned to try this new strategy. We strongly believe that when the prices are dramatically reduced on so many titles, we will drive consumers back to stores and significantly bolster music sales."

"Music fans will benefit from the price reductions we are announcing today," said Jim Urie, President, Universal Music & Video Distribution. "Our new pricing model will enable U.S. retailers to offer music at a much more appealing price point in comparison to other entertainment products. We are confident this pricing approach will drive music fans back into retail stores."