Much is being made of Lady Gaga’s admission to the Wall Street Journal that her album Born This Way—at least, the digital version of it without the bonus tracks—isn’t worth more than the 99 cents Amazon charged for it during two deep-discount promotions last week. “It’s invisible. it’s in space. If anything, I applaud a company like Amazon for equating the value of digital versus the physical copy, and giving the opportunity to everyone to buy music,” Gaga told the Journal. Cue the cutting, pasting, and palpitations! But there’s more to the story—hell, there’s even more to the quote.
“It also wasn’t really 99 cents, because Amazon paid the difference on all of those purchases as part of their promotional campaign for one of their new services. I think it’s amazing and it was a really nice surprise and I felt honored that they chose my record to be part of it.”
So, see, it all works out because she (and her label) got the same payout from Amazon that they would have received had the album been sold at full price—about $8.39, a price that results in Amazon taking a $7.40-per-unit loss on each 99-cent album, which when you multiply that by the online retailers (approximately) 440,000 Born This Way sales comes out to a red line-item of approximately $3.18 million, according to estimates put forth by Billboard last week.
The message digital-music retailers should take away from Gaga’s statement, which effectively adds up to a claim that digital music isn’t worth money for consumers, but a full-fare item for retailers? “You’re all loss leaders now—or at least until you go out of business.”