The sudden death of pop icon Michael Jackson on June 25 has set cash registers ringing with purchases of his music and memorabilia, at least temporarily boosting revenues at physical record shops and online outlets like Amazon.com ( (AMZN)
) and Apple's ( (AAPL)
Sales of Jackson's albums and songs jumped on iTunes immediately after the first news reports came in that the pop star, who was 50, had been rushed to the hospital. Three of his albums landed in iTunes' top 10 best sellers within hours. That number shot up to seven by midday on June 26, with The Essential Michael Jackson
on top. In the afternoon, the top 15 music best sellers on Amazon.com were all Jackson titles. On the eBay ( (EBAY)
) auction and merchandise site, where a search of Michael Jackson's name brought up thousands of listings, bidders were offering more than $50 for newspapers recording Jackson's death and $250 for a Michael Jackson "Thriller" doll.
Shares of Apple rose more than 2% in midday trading, while Amazon was up more than 1.3% and eBay gained 0.64%. Shares of Jackson's record label, Sony ( (SNE)
), declined 0.7%.
A Thriller for Amazon.com
It's not just online sites that stand to benefit—
reported June 26 that Sony has received an "unprecedented" amount of CD orders. A spokesman in Tokyo for the company said it is considering boosting production to meet the increased demand.
Scott Fullman, an investment strategist at WJB Capital Group in New York, recommended short-term purchases of Amazon stock after he received word of Jackson's death. "Given that his popularity is so strong, people are looking to own CDs and albums" instead of simply MP3s, Fullman said of his decision to favor the online site, which sells tangible goods as well as digital music.
The swell in CD and album sales stemming from Jackson's death will likely brighten what have been increasingly bleak revenue streams for companies selling records in recent years as consumers migrated toward digital purchases to stock their music libraries.
But the risk of a shortage of physical stock remains. The advantage of digital stores over physical stores is their ability to offer endless supply, says Glenn Peoples, senior editorial analyst at Billboard
. "This will be better for sales than most stars' passing," he said. "But there's always an increase in demand when somebody dies."
Short-Term Surge, Long-Term Gain?
Although iTunes sales may see a temporary boost as fans seek to remember the singer by snapping up hits such as Thriller
, Beat It
, and Black and White
senior tech analyst Brian Marshall is quick to put Apple's revenues in perspective. "The key to Apple is continued penetration of larger existing markets, with MacBooks and iPhones driving sales right now," he said. He forecasts iTunes revenue to top $4 billion for the 2009 calendar year—which represents just over 10% of the $37.5 billion total revenue he predicts.
Both Fullman and Peoples agreed that the rally won't last too long. "This is going to be one of these events that will have an immediate impact and then wane out in a week or two," Fullman said. But it won't hurt Amazon's long-term growth either, as first-time users visit the site at a time when they may not have otherwise.
While Amazon, eBay, and Apple can all expect to reap profits from the pop star's death, another company may see record losses.
, the concert promoter behind Jackson's 50-show run at London's O2 Arena that was slated to begin July 13, has already spent some $30 million on production, according to Billboard.biz. More than 750,000 tickets—worth over $85 million—will have to be reimbursed to fans around the world at considerable cost to the company, Billboard.biz reports. Money that merchandise sales at the shows would have brought in is also lost.
Ultimately, says Peoples, "The big winners are Amazon and iTunes. They're the most popular places to buy music online. Also, whoever does the best job with online memorials—news sites or music blogs—they'll get a lot of traffic out of all of this."