Impact of Amazon’s Gaga Sale on Physical Distribution?

June 13, 2011 · Posted in M&E Daily, Today's M&E Connections 

Interscope and Universal Music Group Distribution shipped 2.1 million copies of Lady Gaga’s “Born This Way” before its May 23 street date, according to Billboard. But with Amazon.com’s 99-cent sale of the album’s MP3 version on its release day — along with a repeat of the promotion on May 26 — CD editions moved just 449,000 units during the first week of release.

Billboard notes that Interscope likely would have reduced shipments had it been aware of Amazon’s promotional plans; under current distribution practice, record companies often ship fewer than two copies of an album for every unit expected to be sold in the first week. Now, the magazine reports, Interscope could be facing returns of several hundred thousand units from retailers, unless it offers stores a “sweetener” to keep the inventory.

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