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CD-R disc makers to hike prices

Wholesale prices for CD-recordable discs will spike this summer, a new report asserts, although the increase should be short-lived.

Wholesale prices for CD-recordable discs will spike this summer, a new report asserts, though the effects should be short-lived.

The wholesale price of CD-R discs is expected to as much as triple this summer because of a shortage of the media, according to market researcher IDC. However, prices should fall back to "normal levels" by the end of the year and possibly before the holiday-shopping season, IDC analyst Peter Brown said Wednesday.

The prices have been as low as 10 cents per disc and will increase this summer to an average of around 30 cents, he said.

Consumers shouldn't feel the pinch, however.

"The price increase should only affect consumers incrementally--probably less than $1 more for 50 CDs," Brown said. "Resellers and distributors are likely to feel the effects more dramatically."

CD-R discs, which can hold up to 700MB, allow a person to record once but not erase the data.

The price increase is partly in reaction to an artificially low bar set by manufacturers amid a price war last year, Brown said.

The growing popularity of burning CDs created a market for the media, and disc manufacturers jumped aboard. In 1999, up to 80 companies were manufacturing CD-R discs. To try to drive out competitors, they cut prices. In addition, companies overestimated demand. The result: Disc prices dropped to as low as 10 cents, Brown said, and companies began consolidating or going out of business.

With fewer disc makers around, Brown predicts that prices will rise as inventory drops. He expects that manufacturers will react to the new conditions and that inventory should be back up by the end of the year.

In 2000, manufacturers shipped about 3.5 billion CD-R discs. This year, IDC projects, manufacturers will ship 4.5 billion discs. That represents a nearly 30 percent increase, which is about half the growth from 1999 to 2000.