Going Gaga at Amazon

OK, so Amazon might have guessed that launching a one-day sale of Lady Gaga’s latest album for just 99 cents –$11 less than iTunes — might provoke millions of rabid fans to swamp its online music store. It has only itself to blame for its servers crashing yesterday and royally pissing off said fans, some of whom loudly told the press they won’t come back.

But that’s not the real news. Here’s the real news  – or, shall we say, the data points:     .

  1. If you price music reasonably, people won’t bother to pirate it;
  2. iTunes’ near monopoly on legal digital downloads will evaporate the moment someone comes along with a more attractive model;
  3. Streaming music from the cloud will become a huge factor in music industry sales over the next year or so;
  4. You don’t have to make money on digital music sales to drive your overall business to profit.

I  use the term “data points” because none of my points above will surprise anyone who’s been following digital music sales over the last few years, least of all the music executives who  mule-headedly continue to tie the industry’s fortunes to CD sales and $12-an-album digital downloads in the face of all countervailing evidence.

Why has the RIAA’s countless suits against pirates had virtually no impact on the “infringement” of music by non-payers? Because it’s not a moral or legal issue in the minds of most people. It’s a supply-and-demand issue. Give the public a better alternative, and they’ll fly to it in a heartbeat. That’s point 1.

Those of us who do try to do the right thing by buying music on iTunes — and try to force our children to do the same — do so with gritted teeth, completely aware that most people could care less. Give us an alternative and we, too, will fly to it in a heartbeat. That’s point 2.

Point 3 is self-evident. Streaming from the cloud has arrived.

Finally, Amazon clearly didn’t do this deal because it wanted to make money — not when Interscope presumably charged Amazon about $7 for each Lady Gaga album Amazon sold. It probably didn’t even primarily do the promotion because, as some suggested, it wanted to get a jump on Apple’s own expected launch of a music cloud service over the next month or so.

Why then? Well, isn’t it possible that if millions of people think Amazon is a cool place to download music, they’re going to buy other stuff, too –say,  iPhones, iPods, iPads, cell phones, computers and other stuff to play all that great music on? Does Apple make most of its money from iTunes or from devices that support it?

At some point, some people decided they’d better eat the costs of their mule herd and invest in tractors to haul stuff if they wanted to survive. Which side of history is the music industry on?

About Michael Stroud

Articles Here’s a brief selection of articles I’ve written recently: NexTech blog: http://www.nextechforum.com TheWrap.com columns: http://bit.ly/lFL9Sq Variety: http://bit.ly/iXulHF Hollywood Reporter: http://bit.ly/mkekMH DigiDay: http://www.digidaydaily.com/stories/movie-marketing-2-0/ http://www.digidaydaily.com/stories/should-publishers-still-fear-apple/ http://www.digidaydaily.com/stories/hearst-s-big-bet-on-apps/ ..more to come as I put finishing touches on this site!
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One Response to “Going Gaga at Amazon”

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