Chart: How Amazon Can Afford To Lose Money Selling Music plus Why Facebook & Google Won’t
(UPDATE 2) Amazon offers some great deals on music downloads, often selling hit albums for $3.99 – $5.00. Sometimes the labels participate with lower wholesale pricing, but often Amazon sells downloads at a loss. Loss leaders are common, but how can Amazon afford to lose money so consistently, and why are Facebook or Google with its pending music service unlikely to follow Amazon's lead? Glenn Peoples points to a Business Insider chart based on public filings and estimates that provides the answer.
Amazon is generating $189 per unique user while Google search generates just $24 per user. Facebook is only generating $4 per user though that is expected to grow.
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loose?
wow.
Bruce, I love ya, but once again:
LOOSE = Not Tight
LOSE = Fail to maintain possession
Yeah, that’s bad.
Sorry guys. It’s corrected. Writing at 6AM is my only excuse…
Might want to fix this one too :
Facebook is only generating $4 per user according though that is expected to grow.
It’s a common mistake Bruce, as is using it’s to mean anything other than IT IS.
Been enjoying your posts here for ages now (and retweeting lots of them) – keep up the good work and happy new year!
Jer aka Afront
I’m going to go ahead and actually comment on the content of the post.
I think it makes perfect sense for any company to sell any digital product at a reduced price (relative to the competition). They already spent the money on hosting the content and the bandwidth. Why not make more money by selling more “product” for less dollars per unit? Everyone is baffled but they seem to forget that digital “products” aren’t tangible.