Michael Jackson Music Sales Surge Could Last For Months

Allocating limited supplies

Sony wasn't as lucky. The supply of solo Jackson CDs in the U.S. market was relatively low at the time of his death because 13 of his albums were part of the major's previously announced move to reduce prices on 8,000 catalog titles. The price cuts, which kicked in June 29, lowered the wholesale cost of the standard version of "Thriller" and "Off the Wall" from $9 and $7.81, respectively, to $6.40 and $5.40.

With the price change imminent, retailers had been waiting to reorder product at the new price. But when Jackson died, those pricing considerations all went out the window.

"On Friday morning, I got out of bed and went straight to my computer to order Jackson product," says Dedry Jones, owner of indie retailer the Music Experience in Chicago. "I didn't care about old price/new price. People aren't asking price on Jackson. They are just buying it."

Faced with massive demand, Sony decided to ration product rather than try to fulfill entire orders placed by accounts, according to retail sources. So the entire account base received enough product to get through June 29, with new shipments arriving the next day. "Sony is rationing Jackson product but they did right by us," says Newbury Comics head of purchasing Carl Mello. "Of course, they didn't ship us what we ordered, but they got us in more than I expected. The rest of our order will come in during the week."

At Alliance Entertainment, senior VP Robert DeFreitas says he's pleased with how Sony responded to the spike in orders. "We are never going to be satisfied with the amount of our product order we got," DeFreitas says. "But in terms of getting us stuff, I can't complain about the timetable. I applaud Sony for that."

Moreover, Sony appears to have taken on the costly option of shipping product to individual stores—on an overnight basis—rather than sending bulk shipments to an account's warehouse. "Anything you ordered, they would bear cost," says an executive at a midsize U.S. chain.

Sony's ability to satisfy its account base is even more impressive considering that Sony DADC, its manufacturing arm, closed its Toronto plant June 26 as part of its plans to move the facility to a new location. That forced its U.S. plants in Terre Haute, Ind., and Pittman, N.J., to pick up the slack.

Sony DADC handles Universal's CD manufacturing, leaving some accounts to wonder if the division was favoring orders for Sony's solo Jackson recordings at the expense of Universal's Jackson 5 product. But Universal's Urie says that Sony DADC is doing right by his company. The reason why it will take a week for the Jackson 5 product to reach stores is because of the time needed to print the artwork, he says.