Potential price hike seen for CD-R media

Prices for compact disc recordable (CD-R) may be on the rise soon, as a result of royalty demands from the recording medium's...

Prices for compact disc recordable (CD-R) may be on the rise soon, as a result of royalty demands from the recording medium's patent holders. But name-brand disc sellers like Memorex and Verbatim say price increases are unlikely to be significant.

Ritek and CMC, the two major CD-R manufacturers in Taiwan, have come under the eye of the patent holders for CD-R technology --Philips, Sony and Taiyo Yuden. An increase in royalty enforcement and a decrease in the number of smaller competitors have changed the way the disc makers sell to the disc middlemen like Maxell or Memorex.

Last year, manufacturers could sell excess inventory on the spot market -- whatever the CD-Rs could sell for at that particular moment -- often dramatically below production costs, lowering overall prices at the end of the chain, said Brad Yeager, a Memorex spokesman. Today, disc makers are more reluctant to churn out CD-Rs without a sales contract in hand, because a royalty must be paid on every disc sold, he said.

As a result, Memorex's per-disc cost has increased more than 30% over prices at the end of 2000. Memorex announced an increase in costs to retailers beginning 1 June, but would not say how much prices would rise. Consumers should expect to see a price increase, but Yeager noted that the increase was unlikely to be severe.

Other disc sellers echoed the sentiment.

"From what I've been able to determine, the higher prices are only applicable to Ritek," said Andy Marken, a Verbatim spokesman. Competitive pressure from the remaining manufacturers will keep prices down, and consumers are not likely to see any serious changes in costs, he said.

George Chidi

Visit Memorex at http://www.memorex.com/ .

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