Lady Gaga Promotion May Cost Amazon $3 Million
Amazon is once again offering Lady Gaga's 'Born This Way' -- which is projected to move between 800,000 and a cool million copies when the SoundScan tallies are in and counted -- for the bargain bin price of 99 cents. The digital retailer did so on release date, which was Monday, causing massive service interruptions for their customers and crashed servers due the flood of activity on the site and people trying to download the album. This is Amazon's move to remain competitive with iTunes.
Billboard has estimated that this loss-leading strategy -- which means a seller can offer a CD at a dirt cheap price since customers will be purchasing bigger ticket items, offsetting the discount and profit loss -- is costing the company $2.96 million. Amazon has to pay Interscope, Gaga's label, over $8 for every album sold at .99 cents. You do the math there!
Is it risky? Yes. Is this strategy attracting media attention? Of course. Will it pay off? Time will tell if Amazon can recoup that lost with other profits in other sectors of its retail business. Some speculate that the economic boom from Father's Day alone could erase the deficit on the quick.
What we'd like to know is how Gaga feels about a retailer offering her brand new album, which she painstakingly gave birth to, at such a low price. We wonder if she gives this game plan a thumbs up or down. Regardless, the Mother Monster should bow with one of the most successful first week sales of the year.
Watch Lady Gaga Perform 'Judas' on 'Saturday Night Live'