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Noted Economist Lady Gaga Says Digital Music Is Nearly Worthless

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The Wall Street Journal conducted a pretty awful video interview with Lady Gaga that included the question, "Let's talk creative, because when you sit down on the piano at a show, you're playing that piano" and a reference to "a lot of Auto-Tunes." OK, so the Journal is not Creem. But since it is a business paper, the reporter did get in one timely query about the 99-cent Amazon special that helped propel Gaga to her record-breaking 1.1 million opening week. Cheap albums? Lady Gaga is totally down. Is her album worth more than 99 cents? Her full reply:

"No. I absolutely do not [think so], especially for MP3s and digital music. It's invisible. It's in space. If anything, I applaud a company like Amazon for equating the value of digital versus the physical copy, and giving the opportunity to everyone to buy music. It also wasn't really 99 cents, because Amazon paid the difference on all of those purchases as part of their promotional campaign for one of their new services, so. I think it's amazing and it was a really nice surprise and I felt honored that they chose my record to be part of it. ... I don't know if other artists or other companies will want to adopt the same model. Everyone always has the opportunity to sell their music at any price that they want to. It just sort of happened this way and it's very exciting."

A few thoughts:

• The record industry still depends on album sales to make money, and Interscope might not have been so keen on selling Born This Way for 99 cents if they'd actually made less than a buck on each album -- Amazon paid the label full price for each digital disc (around $8.39) and took the massive loss of nearly $3.2 million on the Gaga fire sale.

• Is an album really worth less than a buck if it's digital rather than physical? Gaga argues yes, if you can't hold it in your hand, it's nearly worthless. Most artists would argue an LP is more than a piece of plastic, though -- it's the result of months and years of creative energy and hard work.

• This is a pretty big slap in the face for Apple, who essentially set the price of a single track at 99 cents on iTunes years ago.

• Since most albums leak and artists lose a ton of money on sales anyway, a 99-cent price may be enough to guilt even illegal downloaders into ponying up a buck for an LP.

• The amount of money Lady Gaga makes on tours and merchandise is massive because she's a superstar who plays arenas, and she also rakes in tons of cash doing random gigs like working for Polaroid and writing songs for other artists. Record labels still depend on selling music to stay in business, so while Gaga is wisely encouraging artists to get creative about how they make money, her business model doesn't apply to 99 percent of working musicians.

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