Best Practices In Online Promotion Of New Music Offerings

from the worth-a-read dept

Bas Grasmayer alerts us to a paper he's written as part of the research for his thesis on the future of music distribution. This isn't the full thesis, but is a quick analysis of 5 different musical acts (pdf) and the new music launches they did. All five are ones that we've talked about here: Radiohead's name your own price deal for In Rainbows, Trent Reznor's tiered reasons to buy for Ghosts I-IV, Groove Armada's spam your friends EP sponsored by Baccardi, Danger Mouse's blank CD-R and book given out after EMI wouldn't release his latest project and Mos Def's t-shirt album. The paper gives a pretty good summary of all of them, and concludes with some key points:

What does NOT work (well)

• Not going all the way. Fans love free music and so do people that are not familiar with an artist's work, but if you're going to give something away then really give it away. If you don't, you won't get the attention you were hoping for and might even disappoint some fans instead of connecting with them.

Creating unnecessary mediums instead of utilizing existing ones. While the Bacardi B-Live Share application looked cool (now offline), it was completely unnecessary. Instead of creating a digital dashboard with meaningless graphics, it could have been executed in a much simpler fashion by utilizing existing social networks or filesharing websites. IF you're going to set up such a thing, then at least make it interactive, social (in terms of enabling users to interact with each other) and add value (with videos or a game for instance). You could even use it to sell other products of the band or artist.

Expecting people to pay for what they can get for free. People might pay, but most will pick whatever way is most convenient. Usually, this is by remaining seated at your computer and by avoiding complicated online payment procedures. Sure, people should use legal ways to buy music, but the reality is that people go for convenience.

What does work (well)

• Giving fans a reason to buy. Instead of expecting people to pay for something which they can, perhaps more easily, get for free, create added value. This is what Nine Inch Nails, Mos Def and Danger Mouse and Sparklehorse all did very well. Instead of expecting people to pay for the music, they all created something besides the music which people would be more willing to pay for.
• Freemium. By offering something for free, one connects with fans and they will spread the word about you (as long as what you're offering has value). Once attention has been garnered, and perhaps sympathy has been won, you can offer a premium product. This is how Radiohead and Nine Inch Nails have been successful with aforementioned albums. First you give something for free, then you market your premium; freemium.
• Understanding that the package IS the product. This goes for all of the cases, except for Groove Armada. In the case of Danger Mouse and Sparklehorse as well as Mos Def, the package was actually the reason to buy the product. In the case of Radiohead and Nine Inch Nails, they marketed the package as premiums, perhaps understanding that it's hard to make money if you have to compete with free, meaning music downloads.
• Buzz. By generating buzz, you can turn people just turned on to your product into fans. These fans can then later be marketed to when trying to sell premium packages (or subscriptions for example). Even if they don't buy, having them talking about your brand or product increases the buzz. This works best if they can give others free samples (free music) to see for themselves how great the brand or product is.
• Co-branding. By co-branding, the two brands can both benefit of each others' resources and skills. In the case of Groove Armada and Bacardi, the latter benefits mostly from Groove Armada's image and the ability to promote themselves on all Groove Armada-related products, this includes live performances. Groove Armada on the other hand, benefits from the resources Bacardi has, for instance to set up the website and network for the distribution of the music, as well as their marketing capacities. Both are connected to different audiences and by working together, they can promote each other to their respective audiences, perhaps new ones.

I think this is a fantastic list -- and the results of other experiments we've seen seem to support many of the points on this list as well. The rest of the paper is also worth reading, and I look forward to the final thesis. Of course, two small quibbles: the paper cites me a couple times, including claiming that I coined the term "competing with free." I can't take credit for that, though I have no idea who coined it. I was under the impression the phrase was in widespread and common usage prior to me ever mentioning it. Second, it claims that to get In Rainbows that the "minimum donation" was a penny. Perhaps that's technically true, but the real minimum donation was nothing at all -- and you could still download the album. Bas seems to recognize this, because later in the paper it mentions that many people got the album for free. Overall though, for folks who are paying attention to this stuff, this is a nice summary.

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Radiohead Leaks Its Own Track To BitTorrent; Apparently Still Happy With 'Free'

from the oh-look-at-that dept

Last week we did some debunking on the unsupported idea that just because Radiohead was sick of recording full albums, it somehow meant that the band's business model experiment had been a failure, and that the band did not like using "free" as a part of its business model. Amazingly, the usual cast of characters in our comments continued to insist that Radiohead had clearly learned that "free" doesn't pay. Amusingly, that very same day a "brand new" Radiohead track suddenly appeared on BitTorrent, leading to all sorts of speculation (much of it wrong). But on Monday, the band not only officially released the track for free, but in order to distribute it, it pointed to the very same torrent tracker that had been uploaded last week. In other words, the band leaked its own latest song (for free) via BitTorrent, let the buzz build, and then officially announced the "release" a few days later. But, of course, we're to believe our commenting friends who insist that the band learned that "free" doesn't work?

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Radiohead's Thom Yorke Explains How Recording Industry Milked CD Business

from the quotable dept

JJ sends in a short quote from Radiohead's Thom Yorke about the music business:

"There's a process of natural selection going on right now. The music business was waiting to die in its current form about twenty years ago. But then, hallelujah, the CD turned up and kept it going for a bit. But basically, it was dead."

Bingo. The "recording industry" has basically been a "sell plastic discs" industry for way too long, and used the monopoly rents it received from the government to significantly overprice its products, and then lived fat and happy for many years. So, of course, when better, more efficient formats for distribution, recording, promotion and listening came along, it wanted absolutely nothing to do with them, because they didn't present the same sort of monopoly rents.

And, that, of course has been the point we've been trying to make here for quite some time. This has always been a business model issue. The record labels lived off the CD business for so long that it refused to recognize that a better, more efficient system was showing up, because it meant giving up some easy profits.

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Radiohead's Manager: File Sharing Should Be Legal; It's Great For Music

from the so-there-you-go dept

This probably isn't much of a surprise given Radiohead's well-publicized experiment with letting fans "pay what you want" for its last album, but the band's manager has now said that he thinks file sharing should be legal (sent in by Ruby), noting:

"We believe file-sharing by peer-to-peer should be legalised. The sharing of music where it is not for profit is a great thing for culture and music."

Compare that to, say, Paul McGuinness, the manager of U2, who has been going on and on about how pretty much everyone other than the music industry (i.e., users, ISPs, Apple, software companies) is to blame for file sharing, and they should all be kicked off the internet if they don't pay up.

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The Cure's Robert Smith Continues To Claim Free Doesn't Work

from the um.-but-it-does? dept

We recently pointed out the statements made by The Cure's Robert Smith, insisting that business models involving giving away music for free, such as the one used by Radiohead, couldn't work. This seemed rather odd, given that not only did it work fantastically well for Radiohead, we've been seeing it work for a lot of different bands for many years. So, to claim that it simply can't work was blatantly false and easily proven as wrong. Given that... you might think Robert Smith would recognize the fallacy of his logic, admit he was wrong and maybe learn a little. Or not...

An anonymous reader points us to Smith's blog post in response to the criticism of his statements where he digs in to repeat the original, easily proven as false, claim and calls those who disagree with him "cretins." Or, rather, "CRETINS" since he uses the CAPS LOCK button to full effect (though, appears to have a faulty space bar at times). Oddly, to get around the fact that the model did, in fact, work for Radiohead, he pretends he didn't say that it couldn't work for Radiohead (though, that's exactly what he did say), but claims he actually meant that it couldn't work for everyone else. Then he brushes off Radiohead's success by noting:

ANY FAMOUS ARTIST WITH A HUGE AND DEVOTED FAN BASE(OFTEN ARRIVED AT WITH A LITTLE HELP FROM A WEALTHY AND POWERFUL 'PATRON' ORTWO?) CAN AFFORD TO DO WHAT HE, SHE OR IT WANTS... INCLUDING GIVING THEIR ART AWAY AS SOME KIND OF 'LOSSLEADER' TO HELP 'BUILD THE BRAND'

Masnick's law, anyone? Even that statement is somewhat self-contradictory. If the band is "famous" with a "huge and devoted fan base" then... um... why do they need to "build the brand"?

And, then, of course, he falls into that old fallacy that we see way too often:

IF THIS 'ART FOR FREE' IDEA BECOMES THE CULTURAL NORM THEN HOW DO ARTISTS EARN THEIR LIVING?

It really does amaze me how people's brains seem to stop as soon as "free" enters the picture. But, once again, for you first timers, just because you give one thing away for free, it does not mean you give everything away for free, and thus you earn your living selling those other things. But, of course, apparently anyone who uses logic and understands actual business models doesn't count:

AND QUITE HONESTLY

AS ANYONE THAT DISAGREES WITH THIS POINT

IS UNLIKELY TO BE AN ARTIST

I DONT REALLY CARE TOO MUCH WHAT THEY THINK... !!!

Fair enough. But when plenty of actual artists are understanding this and making plenty of money in doing so, it seems rather silly to ignore the points they're making, doesn't it. Or... wait, is Radiohead not an artist? And, then, there's the final sign off:

I WONDER HOW MANY OF THE PROFESSIONAL APOLOGISTS OUTTHERE WRITE THEIR SHIT FOR FREE?

Well, I don't get paid anything specifically to write this blog. But I do get paid, in part thanks to giving away all this content for free. Just as Smith could get paid by embracing a business model where he gives his music away for free...

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Cure Singer Blasts Radiohead, Saying Name-Your-Own-Price Can't Work; Apparently Unaware That It Did Work

from the it's-not-like-the-info-isn't-out-there... dept

While we're not huge fans of the pure "give it away and pray" name-your-own-price business model, it still seems pretty ridiculous to see people like The Cure's Robert Smith blasting Radiohead for its experiment, claiming "it can't work" (thanks to Chris, for sending this in). Smith is uninformed on a number of different fronts. First, so many people get so focused on the "name your own price" part, that they forget that wasn't the only business model at all. That was just a part of the business model. At the same time they announced the pay-what-you-want downloads, they also announced an impressive boxset that cost quite a bit. Furthermore, contrary to Smith's assertion that "it can't work," it did work. In fact, it worked phenomenally well. The band sold more albums than it had in the past and it made more money. Actually, as the article points out, that Radiohead album did much, much better than the Cure's last album. Oops.

All of that info came out months ago. Apparently, Smith was too bothered "violently disagreeing" with Radiohead to notice how much money the band was pulling in. He also might want to brush up on his economics. His explanation for disagreeing with Radiohead confuses price and value drastically:

"You can't allow other people to put a price on what you do, otherwise you don't consider what you do to have any value at all and that's nonsense. If I put a value on my music and no one's prepared to pay that, then more fool me, but the idea that the value is created by the consumer is an idiot plan...."

Which, of course, has it backwards. If the music had no value, no one would want it, free or not. And, it's not that fans are "creating the value" in setting the price, it's that they're deciding how much they want to reward the artist. That's all. Perhaps instead of spending so much effort violently disagreeing, Smith should spend some time understanding the actual business models being put to good use by many different musicians, sometimes allowing them to do much better than the Cure... even if the music is "free."

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Could Radiohead's Success Spell Doom For Music Collective Bargaining?

from the well,-not-really... dept

Last week, we wrote about the details showing how Radiohead's experiments with a new business model was successful. However, a couple of readers sent in an article at The Register, which looked into Radiohead's success, and concluded that musicians shouldn't be happy about it, because Radiohead's success may destroy their "hard-fought" collective bargaining arrangements.

There is some amount of truth in this, but it shouldn't be seen as a bad thing for musicians. Part of Radiohead's success was that it, indeed, was able to get certain royalty collections groups to effectively "bend the rules" for the experiment. The Register seems to argue that this is a bad thing, as it will destroy the validity of those royalty groups. However, that's not a bad thing for musicians at all. We've already explained why we think compulsory licenses are a bad idea, creating a bureaucratic nightmare where only the lawyers really benefit. More importantly, they serve as a complex patchwork system to guarantee an old and obsolete business model -- which is why Radiohead had to work around them. Because of this, you get various collections societies making ridiculous claims about representing artists, when some artists don't agree with their stance at all. Yet, because it's "compulsory" many artists have no choice.

Cracking the legitimacy of these royalty collecting societies isn't damaging to musicians. It's just the first step in helping them to embrace much better business models.

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Details Released On The Radiohead Experiment Results: A Tremendous Success

from the good-for-them dept

While Trent Reznor has been very open in discussing the results of his various business model experiments, Radiohead has been notoriously quiet about it -- leading some to falsely assume that the experiment was a failure. CNN even called it one of the dumbest moments in business last year. That seemed ridiculous on its face, as it was quite clear that the experiment was a huge success for Radiohead, even if the band was quiet about the numbers. However, Radiohead's publisher has now come out and revealed some of the numbers and debunked the myth that the experiment was a failure (thanks to SteveD for sending this over). Instead, it turns out that Radiohead made much more money from this experiment than from their previous album. The band's music was spread much more widely than previous albums, with over 1.75 million physical albums sold (and that's not counting all of the paid downloads) -- as compared to its previous albums, which all sold in the hundreds of thousands. About the only downside to the experiment was that the band found itself talking about the experiment more than the music.

Now, of course, some will point out that this experiment isn't very representative, because Radiohead got a huge boost by being the first high profile band to do this. And that's absolutely true. But that doesn't mean the business model doesn't work at a more reasonable level. Obviously, Radiohead got a big boost from doing something unique and different, but that just gives other bands reasons to look at not just copying Radiohead, but adding more unique offerings themselves. That's how business models innovate, by trying out new stuff and trying to attract attention. Unfortunately, though, we still have big record labels who think business model innovation is having Congress protect your old business model.

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Can 'Pay What You Want' Work Outside Of The Music Industry?

from the who's-next dept

Last year, Radiohead garnered incredible attention by offering its album for free and asking fans to pay what they want. Contrary to the guffaws of many, the experiment turned out to be a smart decision which was quickly copied by other musicians. Now, we're starting to see other industries try the "pay what you want" model.

First, Good Magazine began allowing their subscribers to pay any value more than a dollar. Now, the Free Culture 2008 conference, headlined by Stanford's Larry Lessig, John Lilly of Mozilla and Pam Samuelson of Berkeley Law, is using the model. The organizers have implemented a "pay what you want" model for registration and, contrary to the myths of traditional economics, people aren't choosing to pay $0.00. In fact, with more than 200 registered attendees, the average price paid has been more than $20. As more and more examples of this style pop up, it becomes more and more obvious that new, hybrid business models will become widespread and sustainable.

Kevin Donovan is an expert at the Insight Community. To get insight and analysis from Kevin Donovan and other experts on challenges your company faces, click here.

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Musicians Realize They Need Their Own Lobbying Group

from the but-will-it-be-more-of-the-same? dept

Many people realized long ago, that contrary to what the RIAA (and the politicians it supports) states, the RIAA is not representing the interests of "the music industry," but rather the interests of a few big record labels. Those interests are often directly at odds with the actual musicians. It's almost amazing it's taken this long, but a bunch of musicians, including Radiohead, are now forming their own lobbying/bargaining group, called the Featured Artists' Coalition. One of the goals, actually, is to put pressure on the record labels to allow the musicians to retain the copyright on their music, rather than handing it over to the labels. At the very least, it ought to be interesting to see the two of them fight this out. Though, my fear is that this new group really just promotes more of the same, and doesn't focus on new business model opportunities, but again looks for ways to "protect" rather than to innovate.

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Less Well Known Musicians Embracing 'Pay What You Want'

from the small-musicians,-big-musicians-alike dept

It still amuses me how often when we talk about specific music business models, defenders of the old system rush in to explain why any particular example is an exception. For years, we showed examples of less well known musicians embracing these kinds of new business models, critics would complain that they might work for unknown musicians who have "nothing to lose" and need attention more than anything else, but it would never ever work for a big star who has too much to lose. Then, of course, we talked about big time musicians like Radiohead and Nine Inch Nails embracing these kinds of models, and the critics said "well, sure, it works for them with their well recognized name, but it would never work for unknown artists." Hell, someone said that just yesterday in response to a post here, leading another commenter to jokingly (I hope) coin the phrase "Masnick's Law", which is loosely defined as

"in any conversation about musicians doing something different to achieve fame and/or fortune someone will inevitably attempt to make the argument that 'it only worked for them because they are big/small and it will never work for someone who is the opposite,' no matter how much evidence to the contrary might be readily available."

I might expand on that definition a bit to have it go beyond just big/small. People will keep looking for excuses why each example is an exception, (big/small just being an easy such reason) to the point that they'll eventually miss the fact that all of those exceptions are the rule.

Anyway, based on all of this, it will be interesting to see how Girl Talk's new album does. Girl Talk is a one man DJ once mentioned (positively) in Congress as an example of why traditional copyright laws might not make sense anymore. With the release of his latest album, he's decided to use a Radiohead-style model, with a few improvements. That is, rather than just a pure "give it away and pray," he's giving people an additional reason to buy -- though I think he could still put together a better model. His is set up so you can pay what you want (including nothing at all) and get 320 kbps MP3 files, but if you pay over $5, he offers FLAC files as well, and at $10 you'll also get a copy of the physical CD when it comes out. If you pay $0, he does ask that you fill out a little survey explaining why. There still are some problems with this model (it's still a little too much like a give it away and pray model), but overall, it's quite similar to Radiohead's experiment.

Now, of course, all the folks who insisted that Radiohead's model would never work for a relatively obscure musician are supposed to now insist that this model won't work at all for Girl Talk, right? But what happens if Girl Talk is actually happy with the results, whether in direct payment amounts or in the fact that it gets him more publicity? Will they finally admit that the model isn't just an exception?

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Now Gene Simmons Is Blaming Radiohead For Killing The Recording Industry

from the while-making-money-for-themselves dept

Last fall, we wrote about Kiss's Gene Simmons explanation for why the RIAA should be suing even more people to stop the evils of file sharing. There were all sorts of problems with it -- and when the interviewer pointed to the success stories of Radiohead and Nine Inch Nails, Simmons brushed them off as being not worth commenting on because they were "exceptions" rather than business models that work. Of course, if it were just an exception, then it wouldn't be much of a problem, but as a few folks have sent in, it appears that Simmons is increasingly upset with Radiohead, suggesting that its "exception" is helping to destroy the industry. He seems to be skipping over the part where Radiohead made a ton of money from its "exception."

It's difficult to see how an example of a way to make a lot of money could possibly be killing an industry -- unless Simmons is defining the "industry" so narrowly to only include the selling of plastic discs with music. And, of course, after blaming Radiohead, he turns on the real problem: those darn fans: "The record industry is dead. It's six feet underground and unfortunately the fans have done this." Always a winning strategy: blame your biggest fans for your own inability to embrace a business model that makes sense to them.

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Even Lawyers Are Confused About What's Legal Or Not In The Prince/Radiohead Spat

from the wait-a-second... dept

We were just discussing how copyright has been stretched and twisted so many times that it really just isn't designed properly to handle internet communications -- and a good case in point may be the funny little spat we covered a few weeks back between Prince and Radiohead. If you don't recall, Prince performed a cover of a Radiohead song at a concert. Someone in the audience videotaped it and put the video on YouTube. Prince's representatives demanded that the content be taken down under a DMCA request -- raising all sorts of questions. After all, Prince didn't own the copyright on the song. That's owned by Radiohead, whose lead singer wanted the video back online. Prince didn't own the copyright to the video either, since he didn't take it. So how could he use the DMCA to take down the video?

But, it's not that simple, apparently. As Ethan Ackerman details, as lawyers began to think about the situation, the more confused they got, noting that maybe there was a right under anti-bootlegging laws. Only, then things got more confusing, because it turns out that anti-bootlegging laws aren't actually a part of the copyright act (though it does fall under the same "title" just to add to the confusion), and the DMCA (under which the takedown occurred) only applies to copyright law.

However, again, we're left in a situation where the "law" is hardly clear at all, and even those who follow the space were somewhat confused over whether or not Prince had any sort of legal standing here. A law is not useful if the boundaries of that law are not clear, and if someone has no clue if their actions go against the law. In the internet era, copyright certainly falls under that category of laws in which it is no longer clear what is and is not legal -- and that should be seen as a problem.

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Prince And Radiohead Fight Over YouTube Song

from the this-is-what-it's-come-to? dept

For years, Prince was the poster child for "getting" the internet and new media distribution opportunities. He experimented with a variety of different creative business models that suggested he got how the economics of music worked these days. It was working too -- with his efforts to give away his music helping him sell out concert after concert around the world. But then something changed, and Prince went ballistic, suing YouTube, The Pirate Bay and eBay and even threatening fan sites while demanding that even videos with tiny snippets of Prince music in the background get taken offline. The whole thing is quite surprising, and if he keeps this up, he's risking taking all that goodwill he built up for years, and turning himself into another Metallica. Becoming anti-fan is never a good idea.

The latest story, though, has a twist. Prince apparently did a cover of a Radiohead song at a recent concert. Someone filmed it and put the video on YouTube. Given his newfound hatred for YouTube, Prince demanded that the song be taken down. And here's where it gets interesting: Radiohead's Thom Yorke is demanding that it be put back online, noting that he owns the copyright on the song: "Really? He's blocked it?... Well, tell him to unblock it. It's our ... song." Of course, as that LA Times report notes, in true Streisand Effect fashion, the effort to take down the song has only driven much more interest in people trying to find the song. If Prince weren't suing so many people, you might even think he was canny enough to have done this on purpose as a marketing campaign.

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Don't Read Too Much Into Radiohead's Claim That It Won't Offer Music For Free Again

from the just-wait-and-see dept

Radiohead is making some noise again today, with lead singer Thom Yorke basically saying that the band won't do a promotion giving away free music again. Some are using this to suggest the model was a failure or that those of us who recognize the clear economic trends toward free music were somehow wrong. That's not the case at all. Early on Yorke had admitted that there was no large theory behind the decision to do the name your own price offering. One of the band's managers suggested it and the group went with it as a publicity stunt -- which worked. The fact that the band then pulled down the download offering prior to releasing the actual CD confirmed that the band merely viewed the free offering as a stunt, rather than part of a larger strategy. As such, it's not at all surprising that Yorke would say the band won't do it again. Since they only viewed it as a stunt, repeating the stunt doesn't make sense. They'll come up with some other stunt for the next release. That doesn't, however, mean that the idea was wrong or a failure. Just that the band wants its publicity stunts to be new and different each time. The fact that this most recent one tapped into an obvious trend seems to have been more of a lucky guess than the sign of a well-thought out strategy. The good news is that it's made plenty of others start to realize the power of free music -- even if that line of thought hasn't permeated back to Radiohead and Yorke.

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Radiohead: Pay Us For A Chance To Make Our Songs Better

from the not-that-appealing dept

It's been clear for quite some time that Radiohead more or less stumbled into its position as "embracing" new music distribution models. The band has admitted that the idea of doing a name your own price download offering was suggested by the band's manager just before they put the album online. They didn't really think it through, they just did it. And, since then, it's been clear that the band doesn't quite grasp the wider economics of what it's doing. It never made sense for the band to get rid of the download offering, but it did. And now, the band is getting some publicity for asking its fans to remix a new single from the band, apparently a song the band has struggled to complete for quite a while. However, the details are anything but fan friendly. Fans are asked to buy the five separate tracks (bass, voice, guitar, strings/effects and drums) and only once all five have been bought are they given access to a program to mix the tracks. And, as a bunch of readers have sent in, the terms are not particularly friendly -- basically saying that the fans have no rights whatsoever, Radiohead gets everything and no one should expect any prizes for participating. In other words, this is Radiohead getting fans to pay the band to do its work.

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Radiohead's Physical Album Selling Well

from the good-for-them dept

Despite what some claim, Radiohead made it abundantly clear from the very beginning that the "name your own price" download offering was part of a promotional campaign to get more people to buy the physical CD. And buy it, they are. Apparently, the physical Radiohead CD is topping the charts in the UK -- and I'd bet that an awful lot of those buyers also downloaded the music first (whether for free or not). While we still don't understand what benefit there was to closing down the download offering, it's hard to see how anyone can still claim that the promotional blitz was a dumb idea. Obviously, Radiohead would have received plenty of attention just for releasing an album. But, in doing it this way, Radiohead got even more publicity, and were able to do it for almost no promotional costs. So, even if Radiohead's lead singer actually is accusing his internet fans of being "sad loners," it appears that Radiohead's internet experiment has been quite a success.

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David Byrne Breaks Down New Business Models For Musicians; Confirms Radiohead's Success

from the changing-world dept

Wired is running a couple of stories involving well-known musician David Byrne. The first is an interview with Thom Yorke from Radiohead, where he confirms what a huge success the "name your own price" offering was, contrary to CNN's editors calling it dumb. According to Yorke: "In terms of digital income, we've made more money out of this record than out of all the other Radiohead albums put together, forever." Yorke also confirms other things that we've said about new business models, where touring can be a big part of the model (contrary to people who insist that's impossible). Yorke notes: "at the moment we make money principally from touring." Yorke admits that he's not a fan of touring (partly for ecological reasons), but that's how the band makes money (this is similar to what we've heard from other bands as well). So, again, given all the publicity around the "name your own price" deal (which Yorke admits they basically tried on a lark and only agreed to it right before announcing it), it should pay off well with more people willing to pay more money to see the band on tour. The one thing Yorke says that I disagree with is the idea that the model only works for Radiohead due to its following. As we've pointed out, most of the examples of bands successfully trying similar models involve much less well known acts. In fact, Byrne himself later points to the success of Jane Siberry, who tried a name your own price model years before Radiohead, and certainly didn't have the same huge following, but found that the model was quite successful.

The second article is by Byrne himself, where he does a nice job breaking down the business models of the recording industry. Much of what he says will sound familiar to folks around here, though he adds in some interesting numbers concerning how much a musician makes per CD and per iTunes download (it's not much). He points out that the value proposition of a record label is decreasing rapidly as areas where they used to be needed (money for recording, promotion and distribution) are approaching free in cost, meaning the labels provide little, if any, value on those points. He then lists out what he believes are the six business models a musician can adopt these days, noting that it's nice to see more than just a single option. This highlights another point we've tried to make: the new business models for the music industry mean that there isn't just one business model for every musician. In fact, just about every successful new business model we see is slightly different -- though most pick up on some important economic cues. The one problem I have with Byrne's explanation is that it still mainly focuses on one thing: how do you sell the music itself. This comes even after he talks about how the idea of selling music is only a recent phenomenon, and historically, music was always tied to the performance itself. The less bands focus on "selling music" and the more they focus on using the music to sell other stuff, the faster a path to success will become clear.

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Getting Millions Of People Listening To Your Music, With Many Giving You Money Voluntarily, Is Dumb?

from the please-explain dept

Karl writes in to point out that on Fortune/CNN's somewhat bizarre list of 101 Dumbest Moments in Business, number 59 is about Radiohead's decision to offer a name-your-own-price offering for its downloaded music. As CNN notes, "Can't wait for the follow-up album, 'In Debt." Ha ha. It then quotes the disputed Comscore numbers, suggesting that since only 38% of downloaders agreed to pay anything for the album, this is somehow a dumb move. I would argue that the only thing "dumb" here is the inclusion of this move on the list. CNN seems to think that Radiohead expected everyone to pay for the album, when even the band has clearly stated that this was a promotional move. Is CNN "dumb" for putting this article online for free? Of course not -- because they make money through other means, such as advertising. In the same way, Radiohead did quite well even if people downloaded the album for free. After all, even if the Comscore numbers are accurate, Radiohead still pulled in millions, distributed millions of tracks to fans all over the world with no promotional budget, got its name and its music talked about around the globe and found at the top of popular playlists everywhere, and got a tremendous amount of free advertising for its upcoming tour and CD box sets. Can you name a single band in the world that would turn that down? Hell, can you name a single Fortune/CNN editor who would turn that down if he were in Radiohead's shoes? Not unless he was pretty dumb. In fact, if Radiohead did anything dumb it was shutting off the download site.

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The Second Stage Of The Radiohead Experiment

from the some-good,-some-bad dept

Certainly an awful lot has been written about Radiohead's experiments with new business models, but it's starting to crank up again, as the band gets ready to release the new album on CD. While some fans felt "betrayed" by this, the band had made it quite clear from the beginning that this was the strategy. However, it's likely that we'll now see plenty of stories focused on how well the CD sells, as if that will be the key factor in determining whether or not this experiment qualifies as a "success."

That, however, is the wrong way to look at things. It's the "old business model" way of looking at things, where the key point is how many CDs were sold. That's doesn't much matter any more. The band has supposedly made quite a lot of money from selling the MP3s directly, and the attention garnered by the marketing stunt will likely allow them to sell more concert tickets at higher prices (and, yes, the band is about to start touring). Plenty of people who knew little about the band now know a lot more and are talking about and listening to the new album. At this point, no matter what happens with the CD, you'd have to say that the experiment has been quite a success.

That said, it doesn't appear as though the band fully embraces the economics impacting the music industry these days. That's because the band has decided to stop offering the downloads off its site as it gears up to try to sell the CDs. That seems like a rather pointless and shortsighted move. The music is already out there and being listened to widely. If you look on sites like Last.fm and Hype Machine, Radiohead clearly dominates. Continuing to offer fans an option in terms of how they want to consume and purchase the music only makes sense. It's not as if the music is suddenly not going to be available on various file sharing sites. So, really, all this move does is limit the ways fans can give the band money -- and that doesn't make much sense.

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