Business Matters: If Big Radio Had Pandora's Royalty Rate, It Would Owe Billions
Business Matters: If Big Radio Had Pandora's Royalty Rate, It Would Owe Billions

Buyers of the digital version of Taylor Swift's "Red" paid the full fare at iTunes last week -- and turned out in great numbers. Great bargains await those who didn't rush out and buy the artist's latest album.

Taylor Swift's 'Red' Sells 1.21 Million -- Biggest Sales Week for an Album Since 2002

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Both Amazon MP3 and Google Play were offering "Red" for $7.99 on Tuesday evening. Amazon MP3 was selling "Red" for $13.99 earlier in the day and apparently lowered its price to match the $7.99 price Google Play had set earlier in the day.

The wholesale cost paid by digital retailers for a $14.99 album is $10.49. So at the current sale prices, and without discounts by the label, Amazon MP3 and Google Play will lose $2.50 per unit and 7digital will lose $5.49 per unit.

"Red" was ranked No. 2 and No. 5 (the version with digital booklet) at Amazon MP3 on Tuesday evening. The top digital album at Amazon MP3 was Psy's "Gangnam Style," although that title is only one track. The album had not cracked Google Play's list of top 200 albums by Tuesday evening, however, in spite of its sale price receiving promotion at the web store and the Google Play mobile app.

The biggest bargain can be found at 7digital's U.S. store where "Red" is selling for $5. 7digital regularly offers a slate of new releases for $5. Green Day's "Uno!" and No Doubt's "Push and Shove," for example, were both priced at $5 when they were released on Sept. 25. 7digital has its own web stores in the U.K. and U.S. and has partnerships to power downloads for more than 60 million devices manufactured by the likes of HTC, Research in Motion, Toshiba and Samsung.

iTunes, which had a one-week exclusive on the digital album, is selling its "Mastered for iTunes" version of "Red" for $14.99. As reported last week, the exclusive could have been a tactic to prevent any deep discounting that would have disqualified first-week digital sales from the Billboard 200 chart. Billboard's price threshold is $3.49 for albums in the first four weeks of release when computing their chart position.

Although "Red" is now available in more U.S. digital stores, the album is still not available at subscription services in the U.S. (although user-generated streaming services YouTube and Grooveshark have the entire album). To no surprise, the absence of "Red" from Rhapsody, Spotify and other services stirred a contentious debate. Rhapsody drew attention to the issue in a blog post titled "Where's Taylor" on the album's release day that explained the album's absence to subscribers and encouraged them to mobilize on Twitter. The debate could continue when the focus shifts to the album's first-week sales numbers on Wednesday.

Those first-week sales numbers were boosted by creative partnerships with traditional retailers as well as non-traditional ones such as Walgreens and Papa John's. Second-week sales numbers will see a boost -- but nothing significant relative to first-week numbers -- from the discounting going on right now at Amazon, Google Play and 7digital.

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