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38% of Downloaders Paid For Radiohead Album
brajesh sends us to Comscore for a followup on the earlier discussion of Radiohead making $6-$10 million on their name-your-own-cost album "In Rainbows" — with the average price paid being between $5 and $8. Comscore analyzes the numbers: "During the first 29 days of October, 1.2 million people worldwide visited the 'In Rainbows' site, with a significant percentage of visitors ultimately downloading the album. The study showed that 38 percent of global downloaders of the album willingly paid to do so, with the remaining 62 percent choosing to pay nothing... Of those who were willing to pay, the largest percentage (17 percent) paid less than $4. However, a significant percentage (12 percent) were willing to pay between $8-$12, or approximately the cost to download a typical album via iTunes, and these consumers accounted for more than half (52 percent) of all sales in dollars."
"In this scenario, they're responsible for all the marketing, recording, and distribution costs. In the scenario where they're getting $2/album they don't have to foot any of those bills."
Huh? Typical music contacts often give you a set amount of money for a record and then X$ per CD, they then charge you for marketing, recording and distribution. so often an artist will come out ahead only if they sell X number of CDs to make up for those charges.
Actually, record companies advance the band up front, which isn't quite the same as paying them. The advance is paid out of the royalties of the album sales, so in essence, the record company is just giving them a loan. The record companies try to recoup 100% of all expenses out of royalties; this includes music videos, tours, production costs, many forms of advertising, and more. Even the band's producer is paid by the band out of a 100% recouped advance. About the only things that aren't 100% recoupable are actual pressing costs and distribution. Music publishing, you see, has very little to do with most other forms of publishing.
I recommend Donald Passman's "All You Need To Know About the Music Business" for a good overview of what record companies actually do, what the average royalties per CD sold actually are, and how recoupable advances can drive popular bands into bankruptcy. You'll discover all sorts of fun tidbits, like the 20% breakage fee on royalties (a holdover from the days of vinyl that bands are stuck with now). No, I'm not shilling -- I've read it, and it's quite enlightening.
To get back to the overriding question, the answer is almost assuredly yes. Radiohead most likely made more money off the download sales than they would have off a physical CD sale, since their royalties per CD are likely less than $3.
The Freelance Wizard
Whoa; Completely wrong.
Did they 'break' when they were vinyl? No. BUT, I worked for major chains, pal, and the automatic returns system (accounting) was valid because an enormous number of records ended up as returns. You have no idea what you're talking about. Big stores usually had staff whose sole purpose was to validate returns. The main cause of the returns? Warpage. And the reason for that? Two things: Thinner LPs, with less actual vinyl, and the killer cause: The major labels never veered away from tight 'shrink-wrapping', which, in combination with the standard 60 LPs to a box in trucks with higher heat... equaled Warp City.
On big number pressings, where sales were easily predicted at hundreds of thousands of units, the returns could hit 15-20% easily in Southern California, which makes the notion, that the "10% breakage" policy was an unnecessary artifact from the past, all the way wrong.
I worked, briefly, all over Southern Cali, for WEA, doing Inventory, and part of it was dealing with returns. Did the labels mitigate some of the loss as part of overall contract strategy? Sure. But a mitigated LOSS, is still a LOSS. And trust me, when we shipped X number of units we wanted wholsale times X back. Nobody wanted to lose shit, mitigated or not. That's Business 101. Nice paranoid try, though.
Sorry if I sound harsh. But I hate the way the labels have treated artists and the fans. I always have. But we can expose these people, and their methods by stating the facts and telling the truth. It's not valid to get the facts wrong in pursuit of any 'point' one is trying to make. I hated the 'returns' thing, back in the day, because it was simply more evidence of the cheap-assed cynical methods that were being employed and 'perfected' before, during and after my stint in that part of the biz, before I went back to 'just' being a working, touring musician.