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.