Some distributors, labels angry over 99-cent Lady Gaga album sale on Amazon

Andre Yoskowitz
11 Jun 2011 22:19

On May 23rd, Lady Gaga released her much-hyped album "Born This Way," and Amazon quickly dropped the price of the digital album to 99 cents, bringing a huge amount of press to the company's MP3 store.
In fact, the deal went so well that "Born This Way" sold 1.1 million units in its first week (massive by 2011 standards) with 662,000 of those copies being digital.
There was so much demand that Amazon's normally unflappable servers experienced some downtime, adding to the media coverage of the promotion.
Amazon and Lady Gaga were certainly happy, but it appears that the labels and some independent distributors were not.
Merchants have already told Gaga's label, Interscope (part of Universal Music Group) that they will need to return physical CDs, and UMG already shipped 2.1 million CDs before the street date. The label will likely see 400,000 returns, says THR, a rather large number given Lady Gaga's popularity.
Says one independent distributor:

This was a really bad move. Ninety-nine cents is almost free.

A UMG exec added:

There are going to be times when music is the toy in the Happy Meal. If Amazon tries to turn 99 cent superstar albums into a regular thing, I would be outraged.

Amazon lost $3.3 million on the promotion but has likely signed up many tens of thousands of new users to its service, which was the point.