How Much is Radiohead Worth to You?
It’s been confirmed that the popular rock band, Radiohead, will release their latest album, In Rainbows, on October 10th. Both loyal Radiohead fans and casual music fans alike are stoked for the release new album, but it’s not the band’s popularity that is creating all the buzz about their new music. In a ground breaking event in the music industry, Radiohead will be offering their new album without a record label or retail price. In Rainbows will be available only as a digital download from the band’s website, Radiohead.com. If you place the album in your checkout bag, the screen will prompt you to enter a price you’re willing to pay for it. The price is ultimately up to the customer; it is totally acceptable to pay $0 or any higher amount you desire. This is the first major record to ever give the customer complete control over pricing options.
The whole concept and idea behind this is really fascinating. I have no idea what the outcome of this business strategy will be. On one hand, they will be able to distribute their music and gain exposure from all the people looking for free music. This could indirectly help them with concerts and ticket sales. But on the other hand, I wonder how much revenue they will lose from people who were expecting to pay the market value of $15 for the album. Regardless, I still believe there is a large demographic who are loyal to the artist and will support them with compensation for the CD. And since there is no record label involved in this business model, the band will actually be making all the profits.
That leads me to another interesting question. If this trend catches on and becomes popular, will there be any need for record labels? Generally a band under a major record label only receives about 30% of all sales, so I’m interested to see how much gross profit Radiohead actually receives without a label, compared to what they could have made with them. Anyways, it will be interesting to see how this new “business model” affects the music industry. It surely can’t be good for the large record labels, but I’m wondering what kind of affect they will have on such distributors as iTunes, and Amazon’s new music project.
October 4th, 2007 at 11:49 am
Nice post, Brent.
I think record labels will continue to be a “necessary evil” if only because of the amount of money they’re able to throw toward groups for recording and promotional purposes.
There’s no doubt that music production is becoming increasingly accessible…tool capabilities are increasing while decreasing in price, making them within reach of the average Joe. Similarly, new media allow for incredibly cheap promotional opportunities, but the costs associated with production and traditional exposure continue to be very large.
Bands still need to pay significantly for the professionals with expertise that can’t be mastered (ick, I know…) without a great deal of dedication: e.g., mixers & producers. This is in addition to the studio costs with good acoustics, equipment, etc.
Flashy music videos cost a fortune & getting a spot on MTV…something with a guaranteed, demographically relevant audience… requires significant access that just isn’t there for the average band with the Do It Yourself approach. For the moment and probably the near future, bands need those big names backing them, if only to be seen as “legitimate” in the eyes of traditional media. Not every group requires that corporate legitimacy, but it certainly helps one’s chances of gaining a wider audience.
I’d imagine that Radiohead is able to do this as a “full time band” because they were previously established as a legitimate act and probably have the funds/backing to not take a complete hit if the experiment isn’t as successful as one would hope. This approach is also generating a lot of free publicity, which probably would’nt have happened had the band been an unknown act.
I applaud Radiohead for this approach and am also curious to see how it works for them. I suspect that very few people would disagree with the notion that musicians are, more often than not, at the mercy of the label and are usually taken advantage. No doubt, it’s an exciting time. The power distribution is gradually changing for the better, imo.
edit: removed a dupe paragraph
October 4th, 2007 at 2:33 pm
Ya, I agree. There will still be a need for the major labels, especially with new artists trying to get airplay and to get their name out. I do feel that it will take a well established band such as Radiohead, to succeed with this new approach, but I also think that if this is a success, then more people will be inclined to self promote/distribute their music over the internet. I’m really interested to see how it will affect iTunes and Amazon though.