At Hastings, we're convinced that the CD business can continue to be a good, slowly declining and profitable product, exposing new and established artists to the marketplace in concert with digital distribution. Our everyday interaction with customers in our multimedia stores shows they still shop our music departments with enthusiasm and an increasing appetite for CDs priced for less than $10. This is not only evident from conversations with customers but from the fact that our under-$10 business is up by double digits, while our over-$10 business is down by double digits. The difference is more than 30 percentage points.

Our recent merchandising experience had mid-lines increase fivefold when the price was lowered from $10.99 to $5.99. This makes a compelling argument: How much of the rapid decline in CD sales is a function of mispricing compared with digital cannibalization?

One of the new rules of digital commoditization is...

Click here to read the full story including Marmaduke's thoughts on addressing the mispricing of CDs, what he believes is the major culprit behind music's loss of market share, how to approach pricing and more.

John Marmaduke is the president/chairman/CEO of Hastings Entertainment.