Sony BMG Distrib Arm Issues Terms

Sony BMG Music Entertainment Sales, the new company created from the merger of Sony Music Distribution and BMG Distribution, has issued the trading terms it will use in selling to accounts.

Sony BMG Music Entertainment Sales, the new company created from the merger of Sony Music Distribution and BMG Distribution, has issued the trading terms it will use in selling to accounts.

Among the most notable points of the policy letter to accounts is an across-the-board reduction for every retail price point. For example, the $18.98 list price carries an $11.86 boxlot cost, which is lower than the $12.04 price point both Sony and BMG had previously.

But that move appears to be offset by the elimination of the early-payment discount, which was 1.75% of wholesale for Sony and 1.7% for BMG. The new policy also eliminates all incentives for managing returns while the disincentive remains in place. Likewise, the new policy eliminates open CD allowances.

The billing month begins on the 26th, but payments are due on the 10th. Dating on new releases stays the same in that it comes due on the 10th after the end of the second month.

In other changes, the company has adopted a 10-unit minimum order, which means that orders for less on a title will not be processed, while the loose pick charge will be 30 cents per unit. The company will charge 50 cents per unit for unauthorized returns, which will be sent back to the account.

Bill Frohlich -- co-president of Sony BMG Sales Enterprise, the parent of Sony BMG Music Entertainment Sales -- says that in choosing its terms, the company had to “harmonize” between the old BMG and Sony policies. “In general, the policy is revenue-neutral for our company. How it affects the different classes of accounts, I can't answer that question.”

Jordan Katz, co-president of Sony BMG Sales Enterprise, says, “Our primary goal was to simplify and streamline ... and to eliminate old, outdated policies.”

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