“Can we sell more sh*t?” Plus Last Week’s Top Stories

Over the years, many of us have become familiar with the famous Jeff Bezos-isms such as “Always Day One”, “2-pizza rule” and the memo-based meetings. We also know that the main unwritten rule, or acid test, for every new idea Amazon has and that is “will this help us sell more sh*t?”

Amazon made a move this week seamlessly selling recording Artist’s merchandise (with some items as exclusive) within the app. While this recent move sounds relatively minor, and it’s unlikely that Amazon will sell billions and billions of artist merchandise, it is absolutely strategically brilliant. Amazon is playing to their unique strengths and building a competitive moat for the future.

From the early days of Napster to the multitude of streaming options today, recording artists and music labels have lost much of their power over the past 20 years – not to mention a whole lot of money. At one point, it was estimated that Napster alone cost the industry $12.5 billion. In 2019, 80% of the $11.2 billion music industry was streaming – with much of the revenue going to Apple, Pandora, Spotify and of course Amazon.

While seamlessly selling a t-shirt or old school vinyl album may not sound like a huge win for artists, it can be if you do the math. Currently streaming services pay between $0.0026 to $0.0070 per song streamed, which is then split 3 ways between the label, composer and artist. According to the BBC, an artist essentially gets ~13% at the end, which would be ~$1 for every 10,122 streams. On the flip side a popular artist can get as much as 30% of merchandise sales.

So the $16 Funko Pop! Willie Nelson, that a certain RetailWit team member is eying, scores Willie a cool ~$4.80. Willie would have to stream somewhere around 48K songs to get that same $4.80.

This move gives Amazon negotiation power with the Artists, demonstrated by Amazon already having some exclusive merchandise but the bigger win is when they get more exclusive content which can drive even more customers to the flywheel that is Amazon. And of course allows Amazon to Sell More Sh*t. Bezos also now has more time on his hands to hobnob with the music crowd so another win for him as well.

Here at RetailWit, we are big consumers of music of all kinds, it is a frequent topic of discussion and debate. This move by Amazon really got us talking this week, and made us go down a several hour rabbit hole on the history of technology’s impact in music. (PS. this one was particularly interesting <link>)

Now last week’s top stories: (click on the story to read the full article)