
Amazon Loses $3.2 million on Two Days of 99 Cent Lady Gaga Sales - lotusleaf1987
http://www.billboard.biz/bbbiz/industry/retail/how-many-millions-did-amazon-lose-on-two-1005206452.story
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jasonmcalacanis
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.

~~~
daimyoyo
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.

~~~
potatolicious
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?

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mullr
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.

~~~
daimyoyo
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...](http://www.youtube.com/watch?v=Z8Tczfk1saQ&feature=player_detailpage#t=920s)

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waterlesscloud
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.

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

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

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jdh
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?

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

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corin_
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.

~~~
potatolicious
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.

~~~
corin_
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.

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wicknicks
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...](http://www.teleread.com/paul-biba/some-sales-figures-from-amazon-sales-
are-up-46/)

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pan69
"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".

~~~
jeffreyg
> 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.

~~~
sorbus
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.

~~~
potatolicious
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.

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

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

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benzittlau
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.

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

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dbz
How much money did Apple lose?

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

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lotusleaf1987
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.

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

<http://amzn.to/mt5Ihw>

