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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."
How many of those were people who downloaded it, gave it a listen and then went back and paid for it after they decided it was worth some cash.
What is google? What is the slashdot search box, even? If you expect each story summary to give you a background on every term or group it includes, slashdot would be a pile of shit.
I would imagine they only get 1-2 dollars per CD from a label so probably a lot more.
Well, it has never been successfully tested.
For example, if I divide it in to two groups: those who paid less than $4 and those that paid more than $4, you could say that the largest percentage (83 percent) paid MORE than $4.
Lies, damn lies.... and terrible journalism.
A slashdotter who didn't build his own computer is like a Jedi who didn't build his own lightsaber.
Actually you raise a good point on the advertising costs. If they did not spend much in terms of advertising, then their costs would be lower and it's possible that they ended up with similar or even more profits. Having an already established name would help, of course, along with the free publicity, but hey, that's savvy too. But yeah, no idea how that actually played out.
The enemies of Democracy are
Hmmmm.
Three cheers for Radiohead, at any rate.
"None are more hopelessly enslaved than those who falsely believe they are free." -- Goethe
Of those who did not pay anything, how many would have purchased the album if it had not been available for free download? Between that, and the minimal compensation from a standard record contract I'd call this endeavor a success. I also think that if this model took off there might be more of a social push to encourge cheapskates to support the bands they listen to.
I don't believe in karma, I just call it like I see it.
Either that, or many people wanted to use this opportunity to make a point against the recording labels, and the results would be different if this became a standard practice.
For some reason, I'm inclined towards the latter.
The AACS key is NOT 0xF606EEFD628B1CA427BEA93A9CA9773F
You can spin the numbers any way you want...
17% paid less than $4? Well, that means that of the 38% that paid, 21% paid more than $4. What does $4 have to do with anything at all? It is a completely arbitrary number.
The numbers that would be important are:
Of the 62% who paid nothing, how many of them would have bought the disc at retail at launch?
Of the 38% who paid something, how many of them would have bought the disc at retail at launch? How much more / less did they pay than if they bought it at retail?
Not to mention that they will still sell physical CDs, which they stand to make more money off of.
Or was the website strange enough that I was inherently unwilling to give them ANY of my personal info, let alone my CC number?
I like the band, and I am willing to wade through any number of website disasters that reflect a given bands 'taste'. But when it comes to giving my money to someone I'd like something nice, normal and boring.
But that's just me.
A lucky band might get a deal whereby they are paid 15% of revenues *after the record label recoups it investment*. Costs to be recouped can include nearly anything: secretaries, fat cat lunches, photography and printing costs, air conditioning, parking, coffee. You name it. Perhaps most importantly, the label has to shell out a pretty hefty percentage of revenues to the distributors and manufacturers whether they be a disc manufacturer or iTunes.
My band had a record distributed through V2 records and I believe our tiny label was *supposed* to get paid about $2 per record. Despite selling a few thousand records, we never got paid a dime because they claimed they didn't recoup the cost of their sales department selling our record to Target, Best Buy, etc.
I'll admit my band isn't as popular as radiohead, but let's do a little arithmetic. Suppose radiohead sells 1 million copies of their record at $20 a pop. That's $20 million dollars. Let's further suppose they get an extremely generous (nay unheard-of!) deal whereby they're paid 20% of gross after the label recoups their 'investments'. Let's suppose they get an amazing distribution deal that only siphons off 10% of gross revenues. Hell let's go crazy and assume that the record label doesn't expect to recoup anything and pays radiohead their percentage from the first record sold.
20% of $20 million is $4 million
take 10% of that and give it to iTunes and that leaves $3.6 million dollars
I'd bet my right arm that radiohead have made out like bandits on this.
For some interesting reading on the crooked record business, I would suggest Donald Passman's book All You Need to Know About the Music Business
Site Usability The website where you buy/download the albums is REALLY hard to navigate and understand. They don't even make clear that you set your own price. Had I not known beforehand that you could set the price, I would've abandoned the site because it looked broken.
Can't Purchase After Download If you download the album for free (like I did), but then decide you like it and want to pay for it, YOU CAN'T! Basically they let you have one download per email address. So unless you have another address handy to use the second time, you can't retroactively pay for your first download. That's just silly. Of course some of us want to decide whether we like it or not before handing over some cash, so this is a significant feature flaw.
So given these two significant things were hampering sales of the album, I'm actually pretty optimistic about the model. The next artist that does this and gets the site experience right and supports a "delayed" purchase, will make even more.
It's easy to sell things when you're already famous. That's what the record labels do: they make you famous. They put you in record stores and on the radio.
So I don't really care who downloads the albums of famous people. There are plenty of brilliant bands out there who you've never heard of and won't download their albums even when they give them away (and they often do).
Yeah, a bunch of famous people got in the newspaper and made a bunch of money off of it. Big deal.
I mean, it might be the best way for RADIOHEAD to distribute their album, since they're already rich and can front the capital to self-distribute. They also got a ton of free publicity due to the novel business model. They also had a ton of existing fans who were waiting for this.
But if you're the next great band, and no one knows who you are, you might want the label to push your product for you, while you focus on just making the music and touring.
If it were really that simple, everyone would be doing it.
Reason, free market capitalism, and individualism
10% is a freaking lot. If everybody I know paid for Total Commander, the guy that made it would probably be a space tourist by now. Twice.
The reality of music in the Internet age will be that hardly any bands "make it big", but lots of bands make a living.
Note to ACs: I usually delete AC replies without reading them. If you want to talk to me, log in.
The problem is that most small bands don't have the exposure that Radiohead does. "During the first 29 days of October, 1.2 million people worldwide visited the 'In Rainbows' site."
Small bands sign with a label not just to get a loan, but also to get promotion services. Aside from giving you a loan and pressing your CD's, the company might:
- contact all the radio stations where your music would fit and try to hype you up to get airplay
- arrange for you to open for bigger touring bands also on the label
- send out your CD to get reviewed by various magazines etc
- use their network and connections to spread your name around
You could do this all by yourself, but it's actually a lot of work, and many bands prefer to "focus on the music" (meaning they're not interested in the business aspects, just the music aspects of being a band... sadly it's the business aspects that make money - playing beautiful music on the street won't make money without the business aspect of putting down a hat for donations).
Radiohead did this all themselves - the did the record company's job. They hired their own publicists directly, contracted with distributors (the website storefront developers, and whoever is manufacturing their box sets). They still had to promote their music using their own network of contacts, though their own name is already very popular. They're big enough that industry eyes were already on them, so they don't really need a record label to lend a hand by begging for magazines to review their new album.
So what worked for Radiohead doesn't necessarily translate to smaller bands trying to break out onto the scene.
Personally, I still think what new bands sacrifice for their record deals is by far not worth it, compared to just doing all that stuff themselves, especially early on in a band's career.
In the end it's really all about the music. If the songs you write are really good, then even recording them by yourself will still produce desirable music. Then once you're making some money touring and selling your semi-pro quality CD after shows, you'll have more clout when arranging terms for your second album's national distribution with a major label. That's because now they need you more than you need them, and because you bring your own fan base you pose much less risk to the company than the average band.
The mistake that many bands make is if you write really good music but let a label handle all the business starting early on - it's like selling your company's stock the day you open your doors, then watching the other investors get rich as your company gets popular and successful.
But if the songs you write suck so much that no one goes to your concerts and no one buys your CDs after the show, then, when you sign a record deal, don't be surprised that the record company thinks it deserves a huge share, because after all you were bombing before they got involved, and you're more like a studio musician to them than a gotta-sign breakthrough band.
$8.95/mo web hosting
There's a big difference psychologically between:
Putting up a free download link, and having a donate button
OR
Having an order form that explicitly lets you type in $0 for the purchase price.
Your method will not work because the audience at large feels no obligation to to "donate". Radioheads makes you feel like you ought to pay something, even if it's minimal. Those 62% must feel really bad about now, unless they didn't like the music, in which case they probably appreciate Radiohead for not charging them.
Traditionally, a record label's value-add was as a gatekeeper with access to the cartel-like retail channels. Those channels are rapidly diminishing in importance as the world moves towards downloaded music. Artists won't have nearly as much reason to sign away all of their control just to be able to access the market.
I think marketing/distribution was quite cheap for this one...
No sig today...
If you want to look at the numbers without spin, it's simple: Radiohead pulled in 6-10 million bucks.
That's the bottom line, that's the number that matters, and without any spin it's clear that this is a good, positive number.
The enemies of Democracy are
Its not just retail channels. Its MONEY. Producing an Album Costs MONEY. Lots of it. Record companies give the band access to studios and time with industry professionals who add polish and shine to the music.
Record companies often PAY the band up front, so they can enjoy a comfortable standard of living while making an album. The record company amortizes income for the band instead of having them starve until they're uber-famous.
Record companies have huge marketing efforts. They can make posters, promote with other cross channel media in order to educate the public about the product. This is the kind of stuff that's too expensive for a small band. You might argue that the internet is a great promo tool, but I'd argue that the internet is a self-reinforcing marketing tool... people who already know about the band use it more than people who don't... educating people who AREN'T fans is where traditional marketing excels. they tie the music and band to existing brands, events or items (like the super bowl halftime show, etc), so that people learn about the band.
Record Companies provide big tour buses and relationships with web site designers and access to top-of-the-line instruments and equipment and get the band onto tours with bigger acts. This is all bigger than a promoter.
Reason, free market capitalism, and individualism
When you go out to dinner how much do you tip? 15%? 20%? Why pay that when you can get it for nothing? Is it out of guilt? For future service? Either of those motives work well enough in this case. And unlike the waiter they don't need everybody to do it. Just a reasonable portion.
Comparing it to current sales and profits is not very meaningful. The industry is changing, and so is the profit model.
Back in the days of monster sound boards, specialized recording equipment, a special sound-tight room and all that crap, sure.
Nowadays a somewhat-pro sound guy with a used Macintosh, the right software, and a small sound board, could do the whole shebang in a room lined with the appropriate sound-deadening material. Like a spare bedroom rigged for just that purpose.
It's not too hard to rig up, and the biggest expenses would be the Mac and the software that runs on it. An enterprising guy could set aside some dough and time to set up his own in-home shop, producing a very decent product in the meanwhile.
Or you could just check into a local studio, where the prices would be hella reasonable compared to some Sony/EMI/Whoever-owned studio.
Marketing isn't this big cloudy mystery that most people peg it as. Get playtime and interviews on the local radio station (in many larger cities, yes they do exist and thrive, and are not owned by ClearChannel). Do charity gigs. Pass word around online through donated royalty-free play on streaming Internet radio*. Pass around (or hire some kids to pass around) some CD's at the local high school. Do free podcasts. Hire a local web marketer and a local promoter to get your name out. Open for semi-bigger acts when they come to town. Play at the local "Big Ass" music festival (Salt Lake City, Utah had one yearly with that name).
I just described what many of the 50's, 60's and 70's bands did to get their names out, before the RIAA put a stranglehold on it all.
If you're good and not too un-lucky, word gets out and you get better recognition. Sure, it takes a bit longer than the synthetic "stars" that an RIAA house will shovel out, but you have more fun in the long-run and you won't end up being sucked dry in the process.
* Streaming radio? Hell yes! I've discovered more good, solid bands that way in the past four years, than through any other means.
Quo usque tandem abutere, Nimbus, patientia nostra?
If Radiohead did not have record labels such as "XL, ATO, Parlophone and Capitol" marketing them or in essence providing seed funding/capital, would Radiohead have had the ability to make a name for themselves in today's internet era? My band gives away their music for free and do you think KROC in LA would tell the world that my band gives away our music for free? Nope. Radiohead was taking advantage of the marketing that had already been done (and yes they paid for it with the labels taking their cut of Radiohead's work).
So how could you market your music? Mail CDs to the radio stations, doubt it. Battle of the Bands, local gigs, works fine but takes a while to build up a non-regional following, and even that might not lead to radio play. So you're still left with word of mouth.
and this is where Radiohead cheated. Their word of mouth was spread via the mass media. I heard about it on not less than 3 radiostations. Radioheads "Can we get people to download something for free?" is not much different from a local ice cream shop offering a free scoop on their anniversary. Since the ice cream is free, I'll give it a try even if I normally don't eat ice cream in February. Sure I might return one day and purchase some on my own, or maybe i'll never go back there.
While I envy Radiohead's experiment on downloading free music (or name your price), I think it would be far more interesting for a study to be done on the viability of the thousands of bands which do not already have an international following of giving away their music.
Steal? How can it be stealing, given that the author allowed them to download the album for 0.
Stating this, also is a broad generalisation : this proportion could be split up in many categories (thieves, curious about the music which did not like it afterall, curious about the process itself, etc...)
It would indeed, be interesting to see the account per country.
May I use your sig please?
No, you absolutely must look at the total, because that's what ultimately matters: the bottom line.
You can't go by the percentage because you don't know what they would mean in other contexts. All this says is that 12% of the total downloads came with a payment competitive with download services given the option of not paying at all. This says nothing about the number of downloads that would have been made at typical download service prices if there was no choice but to pay that price.
How many fewer downloads would there have been if it was a mandatory payment? How many of these downloads were from people who would have never downloaded the album at typical prices? How many of these downloads were from people who were not willing to pay for an album they had never heard, but after downloading it for free decided it was worth their money and paid for it? How many were people who had already paid but were now downloading a second or third copy for work? How many were from people who would have paid typical prices for the album, but instead happily downloaded it for free?
We don't know, and we can't know, because we have no way of converting the figures about downloads into figures about individuals. So how do you figure out how all these various factors turn out? If we can't put a number on each individual factor, can we at least find out how the add up together to give an overall picture? Yes. Yes we can. With total income.
The most definite fact we have about this is that Radiohead pulled in a high-seven-figure gross in a short period of time.
So however all these factors we're discussing about human behavior shook out, it resulted in a hefty pile of cash for Radiohead.
Hard to say that doesn't look good. It would be nice to compare this to Radiohead's (not the record company's, but the band's) income from previous albums.
The enemies of Democracy are
Don't forget about people who downloaded it for free to check it out then later payed for it. I'm curious how many of the free downloaders did that.
We hope your rules and wisdom choke you / Now we are one in everlasting peace
But they saved on lawyers fees because they didn't try to chase down housewives and drag them through lengthy legal battles.
Not to mention probably the best PR money can buy.
Let's hope this raises the bar.
These payments are anonymous. Tipping is not. I bet a lot of people wouldn't tip if they could do it without showing their face...and then, of course, restaurants would finally move away from our stupid tipping system itself.
In anonymous situations, many people are jerks. How often does someone cut you off when driving? How often does someone barge in front of you in a line at a store or restaurant. What is the difference? Anonimity.
Why would you? It's in a zip file. Let's stop trying to justify this. Over 60% were given the opportunity to pay for the music, at any price, and didn't. That puts the lie to the "oh, it's overcharged" argument. There's always lots of talk about "greedy corporations" here, but let's face it. Slashdotters are willing to take without compensating their favorite artists without blinking an eye. That's greed.
I'm not sure that would be a good idea. There is a critical difference between staple items like rice and flour, and goods like digital media. A person has no reason to take more than one copy of the digital media, but plenty of reasons to stockpile an exorbitant amount of the staple items (save for later, take more than they would ever use and sell it, etc). It's the same idea behind newspaper and soda vending machines--you can feasibly take as many newspapers out of the machine as you want once its open, but theres no reason to take more than one (unlike the soda, where if the machine just opened up instead of dispensing one it would be empty *real* soon).
I decided to stop stealing cynical quotes to use as a signature line.
I haven't downloaded it yet, but I'm going to, and I don't plan on paying.
Why?
Because I'm gonna buy it on CD next year! I want a lossless copy and their constant-bitrate MP3s just don't cut it. Why should I pay for the album twice?
I own hundreds of CDs, and I'm not going to pay. Do you think i'm especially unique? I think the REAL message will be delivered come 2008, when this free, 6 month old album goes PLATINUM.
Jeremy