"Consumers respond to price. They're looking for value and we see significant sales lifts for anything priced under $10."
——Lon Lindeman, Best Buy


Murder Inc/Def Jam's Ashanti First Release Under New Incentive Plan for Retailers
A Rerap exclusive

Retailers are watching a new sales incentive program designed by UMVD which will rebate $2 per unit on new releases.

Some eyebrows have been raised over the decision by Def Jam to utilize the plan, offering $2 rebates to retailers for the first two weeks of its debut Ashanti album, which hits shelves this Tuesday.

Both IDJ honcho Mitch Imber and UMVD Sr. VP Sales Mike Davis insist it's not just an attempt to win this week's chart battle with rival Elektra act Tweet, whose own bow, Southern Hummingbird, comes out the same day (see hitsdailydouble, 3/26).

Late last year, UMVD began exploring ways to expand on its popular "Flex" program created by Davis and used at the catalog level. The new program, dubbed "Launch Pad," was requested by Def Jam to use for the first time with Murder Inc.'s Ashanti.

The retail response has been very positive. Best Buy's UMVD buyer Lon Lindeman applauds the distributor for its efforts: "Consumers respond to price. They're looking for value and we see significant sales lifts for anything priced under $10."

Predictably, Lindeman feels that the new $19.98 list on certain titles, including the new Jay-Z/R. Kelly, is "inappropriate at this time."

Here's how it works: Ashanti lists at 17.98 and wholesales at $11.42. After a 3% deal and the $2 rebate, the cost dips to $9.07. The rebate plan is in addition to, not in lieu of, co-op programs.

Obviously, UMVD honcho Jim Urie is hoping retailers will be incentivized to give a little more during the rebate period. Label CFOs have complained in the past that the developing artist price point often costs the labels when the act is breaking and the price eventually raised, spurring retailers to buy boatloads at the cheaper price.

Davis contends that "Launch Pad" creates a "win-win" situation where retailers are rewarded on a performance model for a specified period of time. He also insists UMVD will continue to put out titles at their "Listen Up" and "Combustion" price points, wholesaling at $6.50 and $7.50, respectively.

Next up for "Launch" will be A&M's Vanessa Carlton release on April 30. With a $12.02 wholesale price and a 4% deal, there will be a $3.50 rebate during the first three weeks of release, bringing retailers' cost down to $8.04. Expect aggressive pricing on both these titles during the rebate period.