Update: Tesco denies it has pushed labels for lower wholesale costs.

Powerful retailers sure do have a knack for perfectly timing their requests to labels. UK grocery and merchandising chain Tesco, which represents about 13% of British music sales, is putting pressure on labels to drop their wholesale CD prices. From Financial Mail:

Tesco is using its considerable retail muscle to press leading music groups into cutting their takings from CD sales. One source said it was looking to keep up to a third of the retail price it charges for CDs. ...

The industry estimates that on an average-priced CD selling for £9.99, about 30.5% will be kept by the retailer - though for supermarkets this is likely to be considerably less - 44% will go to the record company, 8% to the musicians and composers and 17.5% in tax.

(Note that the 8% that is said to go to "musicians and composers" is the royalty paid to the publisher. In the U.K., the statuatory mechanical rate is 8.5% of the published price to dealer or 6.5% of retail price. Artists royalties from their record labels are separate.)

The article says Tesco can represent up to 40% of sales for a high charting album. Placement alone is reason for some sales, but there's no doubt hit albums benefit from the chain's small markup.

In the U.S., Wal-Mart, the nation's leading music retailer, is pressuring for a significant drop in wholesale prices.