Is it worth it for AMZN to run a promotion which costs $3 million to grow its Amazon MP3 Store + Cloud Player?
$3MM gets people aware and buying from Amazon MP3 for sure. And gets them trial of Cloud Player. Here's a hypothethical, very rough model of what they could hope to gain economically from this:
OK, not too shabby (totally appreciate that there a lot of assumptions about revenue per user, conversion to paid cloud drive, light versus heavy downloaders, and what the lifetime value of these folks may look like).
But that seems to be a lot to pay for if we're looking at this solely as a play for its Music business.
Not sure if this thinking is going on in Seattle, but this seems to be a bigger play for digital media and device ownership.
What does that mean?
With products like Cloud Player, AMZN Streaming Movies (bundled for free with Amazon Prime by the way), AMZN App Store…if they can own all of these media customers, they can deliver a rich ecosystem for Kindle and impending Amazon Tablets, that syncs across all your devices (like Apple already does).
And it all starts with Cloud Drive, which is the hub for movies, books, music, apps, magazines, etc. so there is a seamless, synchronized experience everywhere for the consumer.
This isn’t solely about music. It's AMZN play to own media sales – and the devices on which they are consumed – as we leave the physical world behind. It's a broad play to go after Apple, using Google's Android platform in the short run, and then possibly their Kindle platform as a general purpose device in the long-run.
In that context, $3MM is really not a big price to pay.
No comments:
Post a Comment