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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.
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.
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.
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.
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.
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.