Amazon Loses $3.2 million on Two Days of 99 Cent Lady Gaga Sales | Hacker News Reader

Amazon Loses $3.2 million on Two Days of 99 Cent Lady Gaga Sales

billboard.biz

31 pointslotusleaf198730 comments

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So they acquired a half millon customers for, ummm, $6.50 each.....

.... and they got a TON of press worth millions.

.... and the word of mouth has been staggering.

.... and they could do this every week for a year and still not lose as much money as was invested in the CueCate.

Move on peoples.... nothing to see here but common sense.

Why are you still bashing the CueCat? Yes, it was ugly, and yes they messed up the marketing, but it created the QR codes we see today. Sometimes, things are before their time and they get mocked unfairly for it. For example, Nikola Tesla demonstrated the first remote controlled device(a boat) in 1898. He was mocked for wasting his time with a toy. So I understand it's fun to have a go at the CueCat, but it was just an idea that was before it's time.

What does the CueCat have to do with QR codes? I've worked with phone code-scanning extensively in the past and the technology behind a dedicated 1D barcode scanner vs. a 2D code scanner (particularly working with consumer-level optics like mobile phones) are completely different.

A quick glance at Wikipedia shows that the QR spec was laid down long before CueCat even existed, and the initial technology was based on parts tracking in industry, not consumer usage.

It should also be pointed out that still nobody uses general-purpose QR codes. As a boarding pass? Sure. As a concert ticket? Sure. But when's the last time someone eagerly whipped out their phone to scan a QR code in a magazine ad?

Near nobody in America uses general purpose QR codes. In other countries they're pasted on nearly everything. Hell, I've seen them on TV before. Hold your phone up to the screen to scan.

But as you say, it likely has little to do with the CueCat.

Dave Mathews spoke about the CueCat IP on Jason's show recently and he said it's the CueCat patents that are behind modern QR code software. http://www.youtube.com/watch?v=Z8Tczfk1saQ&feature=playe...

scvngr? And there seemed to be a fair number of QR codes on several subway systems I've used.

You're arguing against a strawman, most of the comments here have been positive and the article even says: But is a loss really a loss? The important aspect of this 99-cent promotion is the value of the increased traffic and awareness. It has new products to promote, Cloud Drive and Cloud Player...

Even John Gruber has been positive on the promotion: http://daringfireball.net/linked/2011/05/28/gaga-amazon

This move was more than mere advertising, it was direct user acquisition. A certain number of people who would not have otherwise had amazon cloud drive accounts now do, and they have music they want on it.

It's a frontrun on itunes cloud as much as anything.

They didn't "lose" $3.2 million, they paid $3.2 million to advertise their music and cloud service.

Agreed. Even the linked article's headline is merely flamebait. And, as others noted, this isn't just advertisement -- it's direct user acquisition.

Awesome 'found money' for Gaga and her label. Everyone who just wanted the free storage increase, or maybe decided to take the whole album because it was cheaper than a track, sent $8 her way from Amazon. She should have put out a promotion paying people $2 to buy the album through amazon, presuming her cut is greater!

I like the symmetry with the recent livingsocial promo ($20 at amazon for $10, where LS just bought the $20 credits at full price), which effectively flowed VC money to amazon to leverage amazon's brand appeal to acquire users to livingsocial. Amazon has now taken that money and given it to Gaga. How do I get on this train?

Probably a carefully calculated loss and lot cheaper than getting this kind of exposure through advertising.

Is there any reason to believe that this promotion wasn't a partnership between Amazon and the record company? I'd expect Amazon to bare the majority of the discount, but would be surprised if they hadn't got some of the discount knocked off from the other end, as it was a great promotion for them as well.

Why would Lady Gaga of all people need to stoop to the level of a $0.99 promotion?

She's already a household name, I just don't see the incentive for her, or her record label, to want to participate in a steep-discount form of promotion. That's a lot of money on the table.

Obviously on their own that would be too high a discount for too little gain. However, if Amazon say "we want to do a huge promotion and sell this for $.99, can you give us a $1.50 discount on all sales we make at this price), Amazon is still paying for the majority of the discount, and the increase in sales might well make up for the smaller amount that the record company lost (replace $1.50 with whatever was negotiated).

In marketing like this it's incredibly common for both companies to fund the promotion - I have no experience working with the music industry, but it wouldn't surprise me if Amazon negotiated this with them the same way they would with other companies they sell products for.

For a company that deals in billions[0], this is more of an experiment to gear towards the future of media dissemination.

[0]: http://www.teleread.com/paul-biba/some-sales-figures-from-am...

"Amazon will lose about $7.40, according to Billboard's calculation."

Yeah? Where the calculation? I just read this as; "We've made up some number".

The cut that record labels get from online sales are for the most part standardized. Amazon would presumably have to pay this regardless of actual sale price.

> The similar title is selling for $11.99 at iTunes. The retailer typically keeps 30% of the sale price, meaning it owes the label and distributor the remaining 70% -- or $8.39.

That's what would happen if they did the normal thing. If there is any evidence that they did, the article does not present it. Of course, there's also no evidence that they did something different - but the fact that of the three versions of the album Amazon sells through downloads[1] two are not only cheaper than the $11.99 iTunes has it for but also cost less than what the article claims that they must pay the label suggests that this is the case (or that Amazon is taking a loss on every sale, which seems unlikely).

[1] One is just the album, one has a digital booklet, and one has the booklet as well as being a "special edition," whatever that means.

[2] One is $5.99, one is $6.99, and the third is $12.99.

It's widely rumored (with substantial reason) that Amazon MP3 got cut a much better deal from the record labels than Apple. Keep in mind when Amazon's entry first launched, iTunes was practically the only digital music sales service around. The labels were desperate to avoid Apple gaining a unassailable dominance of the market and were throwing other providers significant deals in exchange for fighting Apple. It seems entirely likely that Amazon's normal "cut" for the labels is lower than Apple's.

That is some seriously cheap user acquisition for Cloud Player and Cloud Drive - both great services IMO. Well played Amazon.

great strategy to get new customers. they will gain more than they supposedly lost... this "loss" will be nothing more than a marketing expense.

These kind of stats bug me. Because someone buys something at .99 cents does in no way mean they would have bought it for the full price.

...but Amazon certainly paid the royalty. So it did cost them the stated amount of money.

How much money did Apple lose?

We all lose when lady gaga sells music, or gives it away

I bought the album just to get the 20GB Cloud drive space free for a year. Definitely a great deal and I'm sure the product awareness from the promotion was cheaper and more effective than traditional ads.

if anyone else missed out, there are actually 69 cent albums available that will give you the extra 15gb free:

http://amzn.to/mt5Ihw

Me too. And then Google emailed me the very next day with an invite to Music beta. It's way better.

Oh well, it was just 99 cents.

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