When news broke last week that Universal Music Group Distribution will lower CD prices to $10 or less, the immediate expectation was an increase in sales. But lower CD prices should have other benefits as well. And even if other majors don’t immediately mimic UMG’s so-called Velocity program, all sales may still receive a slight boost.

Lower prices are better in sync with labels’ greater emphasis on alternative revenue streams. Multi-rights deals have become the norm, and lower prices will help create more fans and direct them to ticketing, merchandise and artists’ Web sites. As a result, other components of the multi-rights deal will benefit. Of course, the most important revenue stream is still recorded music. So, a drop in revenue related to a price decrease would have to be balanced by an increase in other areas.

Lower prices will also help secure shelf space. In reality, record labels and distributors have two customers: retailers and consumers. The move to lower CD prices is as much about appeasing retailers as enticing consumers. A drop in sales volume is harmful, but a total loss of an account is far worse. If a $10 price points help to keep CDs on the shelves on Wal-Mart, the price drop will have paid for itself even without an uptick in sales. Even losing a major retailer smaller than Wal-Mart would be devastating to labels and distributors.

And, of course, more people buying more music is a more desirable situation than fewer people buying less music. Lower prices create more purchases. As David Pakman, former eMusic CEO, wrote at his blog Disruption, demand for music is elastic. “Higher prices produce lower sales,” he wrote, “lower prices produce higher sales.”

However, a question mark hangs over Velocity: awareness. Not only does price affect sales, but consumer awareness of price is necessary to drive sales. Without consumer awareness, a unilateral price decrease will not have the intended effect. Billboard.biz’s report on UMGD’s pricing change mentioned an increase of over 100% in sales of $10 CDs at Trans World. What it didn’t mention was the effort Trans World put into to awareness and merchandising. For example, a vinyl banner hanging outside an f.y.e. store in Nashville alerted consumers to the low prices. Inside, $10 CDs received prominent placement on end caps. And three of the four majors took part in the test. For these reasons, a single major is not likely to duplicate Trans World’s success.

And yet there is a chance UMGD’s pricing strategy will bear significant fruit. The other three majors may not react with strategies as structured, branded and well communicated as Velocity, but they may soon begin to drop their prices – on some, if not all, price tiers. Universal’s peers did not follow its lead when it launched JumpStart in 2003 and lowered prices, but their frontline and catalog prices eventually came down, too.

In addition, the awareness surrounding Velocity could benefit all CD sales as consumers become more primed to purchase. In 2004, the year Universal launched JumpStart, album sales had a respite from their decade-long downward march. Retail was relatively healthy that year, and labels had some strong releases. But it’s notable that unit sales actually improved 2% the same year JumpStart was launched. That was the only year-over-year improvement since album sales started to fall in 2001.