"We're still trying to understand all the details and the financial terms," said Mike Spinozzi, senior vice president and chief marketing officer for Borders. "There's going to be a lot of deflation ... fewer gross margin dollars per CD, and we hope because of that we'll attract a lot more people to the store."

Universal said it would cut the wholesale price of most top-line CDs to $ 9.09 from $ 12.02. While it changed its suggested retail price to $ 12.98 from $ 18.98, it hopes retailers will charge below $ 10.

Spinozzi said, CDs at Borders sell for between $ 11.99 and $ 13.99, but it's possible that Universal CDs will be reduced to below $ 10.

"We intend on passing the reduction to the consumer," he said.

Some independent record store operators said they were not entirely clear on how far they would be discounting Universal CDs or how the new pricing policy would benefit them, if at all.

"I like the idea of CDs coming down in price. It's a fundamental thing that has to happen in the industry," said Rand Foster, owner of Fingerprint, a record store in Long Beach. "Unfortunately, we're at the stage where there are way more questions than there are answers."

Foster said he is particularly worried about losing the so-called co-op money that helps pay for advertising and in-store promotions such CD listening stations. Universal said Thursday it would stop the common industry practice of giving discounts to retailers who spend their own money to advertise or prominently display its CDs.

"There were a lot of very effective programs that worked within the sphere of co-ops. They've cut all the funding to that," Rand said. "They still expect to be represented in these programs, but without funding."

The end of the co-op discounts will mostly hurt large chain CD music retailers like Virgin Entertainment Group and the parent company of Tower Records, said Phil Leigh, an analyst at Inside Digital Media in Tampa, Fla.

"It really puts the squeeze on the retailers," Leigh said. "All of them are going to get hurt without that co-op advertising, that's basically profit for them."