Posted on 11/06/2007 1:06:52 PM PST by mojito
Radiohead let its fans decide how much to pay for a digital copy of the band's latest release, "In Rainbows," and more than half of those who downloaded the album chose to pay nothing, according to a study by a consumer research firm. Some 62 percent of the people who downloaded "In Rainbows" in a four- week period last month opted not to pay the British alt-rockers a cent. But the remaining 38 percent voluntarily paid an average of $6, according to the study by comScore Inc.
Radiohead broke with its past practice of releasing its music in CD format and through a major record label when it released its seventh studio album online itself. The biggest wrinkle was the band's decision to let fans pay as much or as little as they wanted to download a copy.
The results of the study were drawn from data gathered from a few hundred people who are part of comScore's database of 2 million computer users worldwide. The firm, which has permission to monitor the computer users' online behavior, did not provide a margin of error for the study's results.
Between Oct. 1 and Oct. 29, about 1.2 million people visited the Web site the band set up for fans to download the album, comScore said Monday. The research firm did not say how many people in its study actually bought the album.
Among U.S. residents, about 40 percent who downloaded the album paid to do so. Their average payment was $8.05, the firm said.
Some 36 percent of the fans outside the U.S. who downloaded the album opted to pay; on average, those fans paid $4.64, according to the study.
Radiohead's U.S.-based publicist said Tuesday the band had no comment on the study.
The online release sent shock waves through the recording industry, with some hailing it as a shrewd move at a time of declining CD sales industrywide and others writing it off as a publicity stunt that amounted to the band giving away its music.
The band, which also offered fans the option of buying a lavish box set for about $82, plans to release the album in CD format some time next year.
You have to admire them for risking their own revenues to conduct the interesting social experiment.
So, this is your first foray into capitalism, then?
What I’d like to see is if they still profited more this way than through traditional record labels and the cut they’d get out of that.
That's an average of $2.28 for all downloaders. It's probably more than they would have gotten through a record label.
Complained those who paid nothing, “I can’t believe I got what I paid for.”
I wouldn’t be surprised if this proves viable, given that a lot of people willingly pay $10-20 for a CD even though downloads are available. As others have pointed out on this thread, the band will probably get no less than they would have received through a traditional record deal.
Radiohead is an awesome group.
Yes, Radiohead is an excellent band, but their latest albums isn’t one of their greatest. I still say “The Bends” is better than “Ok Computer” also.
I paid for the album when I downloaded it as I think musicians should be paid for their craft.
....gee, I’m stunned....
If they really want to be cutting edge, they should let fans pay whatever they want too for concert tickets...
I agree. Radiohead is awesome.
Oh! THAT free market.
Squawk 8888 wrote: “I wouldn’t be surprised if this proves viable, given that a lot of people willingly pay $10-20 for a CD even though downloads are available. As others have pointed out on this thread, the band will probably get no less than they would have received through a traditional record deal.”
From what I’ve read, the artists don’t make much off album sales, so you may be right. An alternative approach would be to charge a modest fee for downloading the album. A band, especially a popular one, could easily undercut the recording companies and appeal directly to their fans.
Brilliant business decision, IMO.
This "experiment" didn't tell us anything about what people would be willing to pay for music because in this case they didn't have to pay. How many of the people who paid $0 would have paid $1, $5, or $10 if they did not have the option of $0? How many people who paid $4 would have bought it at $6 if that were the price, and how many would not have? Those are the questions I think are interesting from an economics perspective.
I would be much more interested in an experiment devised as follows: Announce that you will release a certain number of copies of your album, and no more. This number could be revealed in advance, but even better would be not to reveal the number (or even not to choose the number) in advance of the experiment. Set up the web site as an auction, where people who want the album must bid a certain amount and give a credit card that will be charged if their bid succeeds. After the fans have had a couple weeks to put in their bids, take your number of release copies (say, 1 million for this example) and give the copies to the 1 million highest bidders. People could bid $0; if you had fewer than 1 million people who bid above $0, the first people to bid $0 would get a copy for free until all 1 million were gone.
This method would tell you exactly how many purchasers you would have at any given price point and give you the optimal price for your album (assuming your next album was exactly as popular as this one, and you wanted to sell it in a conventional manner). The artist could maximize his income by not selecting the number of copies to be sold until after the auction, and simply releasing as many copies as he had bidders (of course, this would probably only work once, after which most people would bid $0.01).
Bands make most of their money touring... this $6 average per download is WAY WAY WAY more than the band would have made releasing it traditionally with a retail price of $15 or whatever CD’s go for now.
isn’t that was they did for ozfest this year?
1.2million x .38 paying=458 thousand customers
458 thousand x $6 average payment =$2,748,000
Yeah I’d say they made a huge up-front profit that by-passed the record companies completely.
Since home editing boards via computers and studio mixers are cheap what other upfront costs could they have incurred?
If they were smart they consulted with a professional sound edit0r to polish their sound but other than those costs, I’ll bet they made a huge bundle of loot that doesn’t get paid to the RIAA!
Even if only half that visited the site downloaded it (paid or free) at $6.00 average would be $1.3 million.
Do I have my math right? As I understand it, they don't have to pay the royalties and stuff to the record label since they did everything on their own. So although I don't know what type of profit a normal release gets, they still seemed to come out ahead while proving their point. And probably ensuring a future fan base.
1.2 million downloading with an average of 2.28 in donations? 2.7 million gross split 5 ways? I’d say they did very well. Of course there are production costs to be paid, but still ... even for a year’s work that’s good stuff.
In 2000 dial up still ruled....I don’t think King had the exposure on line then that he would have had now...he should try it again!
>>Announce that you will release a certain number of copies of your album, and no more.<<
No, you can calculate everything in advance. How about have the price be set at a certain level, and it go down slowly based on how many people buy it within a certain amount of time? A counter could be set up that showed how many more people needed to buy it before the price dropped to $X. I think there was a website that did this a while back.
I think that could be interpreted as fraud -- if bidding $10 doesn't actually give you any greater chance of "winning" the bid than bidding $0.01, then the artist is simply taking $9.99 and giving nothing in return.
I can see a huge difference. The broadcaster paid for that movie; the only reason the viewers didn't have to pay to see it is because broadcasters are in the business of selling audiences, not movies.
According to King, he had other books to deal with and did not finish with his experiment. If memory serves, I believe the number of paid downloads outnumbered those that did not pay.
The story was “The Plant.” It was originally a story in installments given away as Christmas gifts to friends over several years. Mr. King noticed the similarity to “Little Shop of Horrors” and stopped writing it, but issued it as a PDF download with the profits going to charity.
Found this link before posting:
http://books.guardian.co.uk/news/articles/0,,435496,00.html
A little old, and not exactly what you were asking about, but it’s a good reference. Check near the bottom of the page for the cash flow chart
http://www.negativland.com/albini.html
Did you download it?
But it is more of a theoretical experiment than a practical marketing method, because as I mentioned it could only work once (and would probably leave a bad taste in the mouths of the fans). The experiment would still work well if the number were decided in advance, although I'm not sure whether it would make a difference to the experiment if the number were made public before the auction.
You know, I was trying to remember how much we were paying per chapter, and if it was his normal 38 chapters in length, it was going to be more expensive than any other book I had ever read of his.
I’d love to see a corrolation with their political leanings.
My favourite artist is Neil Finn. I would never download his music for free, because I actually want him to be able to keep making music.
I'm suprised it was this much. THis may actually play out as a successful thing. No record companies to pay.
I don’t see the difference from an economics perspective. In both cases, you have the opportunity to receive a good (entertainment) for free. Whether or not some other entity paid the performer for his work is irrelevant to the transaction between you and the performer.
If I offer my widgets to anyone who wants one for free, the number of people who take one doesn’t tell me anything about the number of people who would have paid $5 for one. If someone offers me $5 as a contribution for my widget, that doesn’t tell me anything about whether the person would have paid $10 for one, if I were charging $10 for them. This is true whether I paid to make the widgets myself or (as in the example of the TV broadcast) someone else paid me to give the widgets away.
Wasn’t it a buck per section or something?
Aside from the fact that the survey is a little shaky, I wonder how it handles repeat visits. I didn’t get around to downloading the album, but if I had, I wouldn’t have paid up front — I would have listened to it, then returned to the site to decide how much I want to pay.
Fish did that awhile ago with either Raingods with Zippos or the next one that I didn't buy. I wonder if the band still talks to him. New Marillion is ok, but Fish in concert is just stunning.
I’d need to know more about that specific example, but as far as I can tell that system just offers an incentive to hold off on buying and let other people pay the higher costs. I think the advantage of my “silent auction” idea is that every buyer’s transaction with the seller is completely independent of every other buyer, and the only incentive is for the buyer to bid exactly as much as he thinks the music is worth to him (and no more). Then the people to whom the music is worth most will get it, and everyone (at least everyone rational) is happy because everyone paid an amount they agreed the music was worth, and those who didn’t get the music didn’t feel it was worth the “minimum” price to them.
Big surprise. Watch what happens when Hillary and her ilk make health care free to everyone.
I am however a bit skeptical of the numbers.
The results of the study were drawn from data gathered from a few hundred people who are part of comScore's database of 2 million computer users worldwide. The firm, which has permission to monitor the computer users' online behavior, did not provide a margin of error for the study's results.
I have a suspicion that the people who give comScore permission to monitor their online activity are far more likely to pay for the album than the average downloader.
The only way to know for sure is for Radiohead to release the real numbers.
Whereas the Baen Free Library and Webscriptions.net continue to power Baen’s backlist, as well as pre-selling new books, ensuring that there’s money in the bank for publicity.
Somewhere between $830,000 and $2,150,000 in gross revenues. Definitely more than they would have gotten from a label.
So, no, I didn't download it, but now that I see there's a new album out, I'll take a looksee.
It will be hard for them to top OK Computer, tho.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.