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Online CD Stores Offer Discounts

The burgeoning online music retailing industry is seeking to lure shoppers by offering discounts, music samples, special promotions, and the promise of a hassle-free, armchair-shopping experience.

The latest entry into the increasingly competitive business is Amazon.com. The Seattle-based online bookseller recently expanded its Web offerings by adding a 125,000-title music selection and taking on such established online sellers as CDnow and Music Boulevard, a unit of N2K.

Industry analysts are predicting intense competition and price wars as online retailers slug it out to attract shoppers, and that's good news for consumers. At stake is a market that's expected to rise from about $300 million this year to $2.5 billion in 2002, according to industry analysts.

To find out how online music stores retailers' prices compare, CBS.com surveyed several major retailers to find out what it would cost to buy 10 best-selling CDs.

We came up with a hypothetical shopping list of 10 best-selling CD albums and checked out prices at five online music sites: Amazon.com, CDnow, K-tel, N2K's Music Boulevard and Tower Records' Online Music Store. We also sent our shopper to a Tower Records store in Manhattan to see how prices compared at a regular retail outlet.

The results of the survey are summarized below:


RETAILER TOTAL FOR
10 CDs

(includes shipping)
AVERAGE COST PER CD
AMAZON.COM $156.61 $15.66
CDnow 151.59 15.16
K-TEL 159.11 15.91
MUSIC
BOULEVARD
158.78 15.88
TOWER RECORDS ONLINE 169.89 16.99
AVERAGE $153.44 $15.99

TOWER RECORDS
(NY Store)

$176.90 $17.69

In general, CDs online are sold at discounted rates below list price. But shipping costs can boost the price for an order. Shipping costs typically run about $3 for one CD and $5 for 10 CDs, though prices vary. Music Boulevard currently ships ordrs of 3 or more CDs for free, while Amazon.com charges a flat $2 per shipment plus $.95 for each CD.

Our survey of five online retailers found that that the average price of a CD for our list of 10, including shipping costs, was $15.99. CDnow had the lowest average price at $15.16; Tower Records Online was highest at $16.99.

If we had bought the 10 CDs at the Tower Records store in New York, the total cost would have been $176.90, an average of $17.69 apiece. That's somewhat higher than a total of $169.89, or an average CD price of $16.99, for Tower Records' online counterpart.

Clearly, it pays to shop around.

*These 10 albums were on our list:
MP Da Last Don, Master P
Adore, The Smashing Pumpkins
City of Angels(Soundtrack)
Godzilla -- The Album (Soundtrack)
Hope Floats (Soundtrack)
It's Dark and Hell Is Hot, DMX
Backstreet Boys, Backstreet Boys
If You See Him, Reba McEntire
The Limited Series, Garth Brooks
Shut 'Em Down, Onyx

Research by Laurie Kulikowski

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