Maxell Expects Price Tag Hikes Of Blank CD-Rs

By Jeff Malester -- TWICE, 5/21/2001

FAIR LAWN, N.J. — Due to higher manufacturing and material costs, as well as more vigorous enforcement of royalty agreements, Maxell Corporation of America said it has been receiving price increases of about 30 percent on CD-R blank media, and that it is expecting further increases in the coming months.

Maxell, which could not pinpoint just how its sourcing increases would affect its own retail pricing strategy, or when hikes for retailers would go into effect, said that once manufacturers and patent holders finalize a royalty structure, Maxell would reflect increases in its own pricing.

"Some of our manufacturers still are in negotiation with the patent holders about royalties. Until they complete the negotiations and let us know about any increases, we can't announce any new prices or when these would take effect," said Don Patrican, Maxell executive VP.

"Yet, buyers seem poised for price increases," said Patrican about his visits with the trade. "It's going to happen once we dot the i's and cross the t's. My guess would be June 1 or July 1."

Early in May, Santa Fe Springs, Calif.-based Memtek Products, the U.S. distributor of Memorex-brand recording media also brought to light 30 percent price increases instituted by its manufacturers, and said that it would be raising prices on its CD-R blank media offerings as of June 1. (TWICE, May 7, p. 3.)

However, Maxell said accelerating price increases for CD-Rs do not always represent bad news, that these will help stabilize the industry and the marketplace. "CD-R price erosion has been the steepest downhill roller-coaster rise in the history of blank media," Patrican said. "However, we believe higher prices for the format won't affect end-user consumption. Demand continues to be exceptionally robust."