Pay what you want for the new Radiohead album

by on October 2, 2007 at 7:40 am in Music | Permalink

Here is the story, but no this model won’t much change the music industry.  Yes you really can download this album and "tip" Radiohead as you feel inclined to.  But note that:

1. Radiohead is an indie cult band with extreme loyalties from its partisans and the possibility of attracting more such partisans by seeming "cool."

2. Radiohead peaks high on the charts (#3 for their last release, if I recall…) but I believe they sell the product pretty quickly and don’t have a long run at the top.  Again, they’d like to widen their fan base.

3. Radiohead’s gambit has reaped enormous publicity, but this won’t be the case next time.

4. Many donors will give to a highly visible "cause of the month" (remember the outpouring of support for the tsunami victims?) but they won’t necessarily give on a regular basis.

5. Radiohead probably has an especially high ratio of touring to CD and iTunes income; see #1.  This scheme is a natural for them but not for Kelly Clarkson. 

What we will see is lots of lesser bands (and authors) giving their work away for free, but that trend has been underway for some time.  And by the way, Radiohead’s best album is Kid A.

1 GoodneesOfFit October 2, 2007 at 8:15 am

Your #1 and #2 are inconsistent. No “indie” band peaks at #3 by any definition of indie I am aware of.

2 Steve R October 2, 2007 at 8:28 am

“Amnesiac”, “Hail to the Thief”, and Yorke’s solo album “The Eraser” are more complex and interesting than Kid A. Give them another spin.

3 Ampersand October 2, 2007 at 8:42 am

#4 is also questionable – Radiohead tours relatively infrequently, especially in North America.

4 Seamus McCauley October 2, 2007 at 8:47 am

Radiohead’s iTunes income is nil – the band refuses to have albums chunked into tracks, which is the only model iTunes has been willing to offer.

5 Richard Pointer October 2, 2007 at 8:53 am

I bought their record online. 7.55 pounds is what I offered. They benefited from the fact that I knew they were getting all the proceeds, that I had full discretion, and that I am a huge fan. And the fact that I feel ripped off every time I buy a record from the record labels did push my bid higher as I would like to see this more often.

6 Shefaly October 2, 2007 at 9:07 am

Market forces to determine the price! What is wrong with that?

Nothing except conditioning in individual markets may pre-dispose consumers to ‘value’ an offering in a certain way.

Richard Pointer offered £7.55. Considering new albums in the UK used to sell for £12.99 or £15.99 in stores, this seems like a good price. Considering record company owned stores started selling them for £5.99 a month after release, especially when people started buying CDs from Amazon or tunes from iTunes, this is not a good price. If as a frequent traveller, you have been buying your CDs in a country where the same labels have been selling them for even cheaper prices than in the US, this is a total rip-off.. But the consumer has the benefit of choosing what to pay.

Price of CD? £7.55
Customer satisfaction? Priceless!

The point about them getting all the proceeds is interesting but I doubt the awareness of the broader music industry model which rips the artist off is that universal.

It will be interesting to see the outcome of this experimental model, so various theories can be junked, re-defined or validated.

7 Tyler Cowen October 2, 2007 at 9:18 am

I know all about you people for whom nothing is “indie enough,” perhaps short of Sebadoah. The point remains that Radiohead, relative to what else sells, is way to the indie side of the spectrum. The absence of iTunes income of course makes this project more financially feasible, not less so. Radiohead has spent a great deal of time touring, just read the Wikipedia entry on Thom Yorke.

8 mk October 2, 2007 at 9:41 am

The first time I listened to an advance leak of “Kid A” in my friend’s dorm room I was so confused.

I would say OKC, then Kid A, then maybe the Bends.

9 Marco October 2, 2007 at 10:03 am

I like Pablo Honey.

10 londenio October 2, 2007 at 10:17 am

The question that lingers after reading this post is why this business model is good for Radiohead and not for K. Clarkson. What is it about working with a label that musicians cannot do on their own? What is it about the physical distribution of CDs that benefits some musicians more than others?

Unsatisfying explanations:

i. Advertising? It can be done with any distribution model (digital or physical CD). Ok, except advertising in store windows. But that cannot be the whole story.

ii. Store availability raising awareness? This is a key concept in grocery channels of distribution. Because the cookies are in the shelf, customers pick them. But music? Are people this impulsive? How many people get to know either Radiohead or Clarkson by browsing cd covers in music stores?

iii. People actually enjoying the ownership of a physical CD? But then … why is ITunes so successful?

Tyler or someone else: i want to know more! 🙂

11 Tyler Cowen October 2, 2007 at 10:25 am

Lodenio is getting at the key point. Brian’s complaining aside, one key fact here is that Radiohead, relative to its popularity, doesn’t have a very wide reach outside of its core demographic. (And reaching broad demographics, and moving across demograhpics, is in general what makes for a long run on the charts, just ask Levitt and Dubner!) To put it bluntly, they are a group that smart people listen to. That’s fine, but presumably they sense that traditional record company tactics have not enabled them to broaden their audience base to other groups as much as they would like. So now they are trying something new.

12 Shaun M. October 2, 2007 at 10:43 am

Kid A is their second best, OK Computer is their best album, sorry John.

13 NE1 October 2, 2007 at 11:13 am

I like Radiohead, but would like them more if they sent only bad links to those in the bottom 50th percentile of offers. Can you think of a more upsetting PR move? Oh, I would scream.

The argument that this is an experiment to see how much pirating will still go on… I didn’t think of at first. I was not impressed by Eraser, and am a little wary about the loss of quality-insurance linked to 2-year release spreads, promotion costs etc. With a band as famous as Radiohead, it seems the main incentive for higher quality music is wanting to keep the reputation. Junking the label, going electronic, allowing sideprojects (Bodysong = strike 2), already being wealthy…

14 Michael Foody October 2, 2007 at 11:31 am

The reason why this works for radiohead and not for kelly clarkson is that radiohead is a deeply special band and kelly clarkson is a far more interchangable part. Promotion has made kelly clarkson marketable, she is not without talent but her talent is not what makes her marketable. Radiohead is marketable primarily because of their unique talent. So Kelly Clarkson without her label to shoehorn her ubiquity would be nothing. The music business is generally a lottocracy, Radiohead is an exception to that rule.

15 Brad L October 2, 2007 at 12:09 pm

What is it about working with a label that musicians cannot do on their own?

The thing that a musician cannot do on their own (or at least, nearly as well as a label can) is raise their own profile. No band can turn into Radiohead (Capitol) or Kelly Clarkson (RCA) without a major label promotions effort behind them. I am not implying that promotional efforts are all equal, or effective, but I am suggesting that there is a threshold that really cannot be reached by an artist on their own.

There are some indie labels that dent the culture, but even their best successes (e.g. Belle and Sebastian, Arcade Fire) don’t become juggernauts [side note: Canadian acts like Arcade Fire may also benefit from national arts support].

Contra Tyler’s comments, Radiohead is no more “indie” in a business sense than Kelly Clarkson, even if their music doesn’t seem as mainstream. Without the label support to launch them, they are just some geeks selling 10k records a year in England.

However, having achieved success through normal channels, they are in a position that their fanbase has a different character than many, which may help them pull this off. It is, as noted, deep but not wide (whereas Clarkson’s is probably wide but not deep).

After 15 years (and tons of press and general exposure) they aren’t likely to greatly expand their fanbase through this or any other promotions. Their profile is not likely to move higher. Taken together, this means there is very little that a label can really do for them.

[More likely, they have more value to a label than vice-versa at this point, as they confer credibility and give the label a product that they can use as leverage to gain other types of concessions, to the extent that the classic record store model (HMV, etc) even still works.]

Given all that, it probably makes more sense financially to sell records directly to their fans for $6 (or whatever the average turns out to be) and keep all of it than through stores for $12 and get a couple bucks a disc (in a traditional model contract). It also helps to be buffered by wealth when trying to create a new business model like this 🙂

16 Brad L October 2, 2007 at 12:26 pm

I agree with Tyler. For the most part Radiohead is an indie act that happened to have some commercial success with “creep” and then with their release of OK COMPUTER. However, other than that most of their notoriety comes from being incredibly popular with the indie crowd.

Huh? That’s like saying that most of Brooks and Dunn’s popularity comes from the country music crowd, or that most of Jay-Z’s popularity comes from the rap crowd.

I mean, it’s true, but what does it prove? That they aren’t big or mainstream? It’s just kind of how music works — most of it is very well genre-defined. Genuine crossover success is rare, and probably getting more uncommon, not less.

In the end, it’s the size of that genre’s crowd that matters, and the size of the indie crowd is pretty darn big.

17 andy cage October 2, 2007 at 12:53 pm

One thing a label provides is influence getting radio play.

Someone asked what bands make off album sales. I thought almost all their money is made through live performances.

maybe bands could charge just what they would get from the royalties for record sales plus some expences. This is a model that might work.

Some could argue copyright laws are uninforcable and so the record companies will be obsolete anyway, so artists better come up with somthing.

18 Atabrat October 2, 2007 at 1:01 pm

Most major label bands (“indie” = “independent”) make about 13 to 16% royalties on sales, but that’s AFTER all costs are recouped. Costs include the album advance (used for recording, mandatory videos), marketing, A&R guys flying around and buying people drinks, and any other things the record companies can think of. So there generally must be hundreds of thousands of records sold BEFORE they even start collecting royalites. And out of their royalties, they have to pay managers, lawyers, and so on. The slice of pie gets pretty small, so the earnings from royalties can be very small. There have been well-known cases of artists with albums and songs at the top of the charts who end up with very little (extreme examples are TLC and Toni Braxton who–in spite of selling millions of records–had to declare bankruptcy.) The members of Radiohead seems to be MUCH smarter than the average charting artists, so maybe they might be doing better than typical. However, it is pretty well understood that bands make most of their money by touring: hence the reason we continue to see the Eagles and the Rolling Stones, and the Who going on tour–and these are bands with dozens of albums and hits over thirty-plus year careers.

This move will probably work out in their favor, but a good deal of the reason is that the industry machinery was behind then for so long that they can now coast along and try some innovative things. However, it will be difficult to apply their model to new bands without that kind of name recognition. That may be expected to change in the next few years.

19 Edmon Ogle October 2, 2007 at 1:07 pm

in virtue of the music they are making, Radiohead have effectively transcended the simple “mainstream vs. indie” dichotomy–while they are one of the biggest bands in the world with a huge, loyal fanbase, their product overlaps with the sonic/aesthetic/conceptual elements of indie bands.

Because there is such a high demand for their music (their last few records all were leaked before the official release dates), and because leaks are inevitable in today’s file-sharing world, Radiohead is quite cleverly beating the leakers to the punch. Whether Radiohead is the first to do so has already been debated, but its def. interesting when a band of their size and influence chooses such a route.

20 GoodneesOfFit October 2, 2007 at 1:17 pm

If you want an idea of how making money in the major label system works read Steve Albini’s famous essay:

“Some of your friends are probably already this fucked”
http://www.negativland.com/albini.html

21 dj superflat October 2, 2007 at 1:26 pm

your missing the point — the huge advance has to pay for the record being made, and has to be paid back from the band’s take from record sales. so it’s not in any sense free money, because unlike most bands, radiohead records will actually sell (for many bands, a huge advance makes sense because they’re not going to sell any records, so they might as well take what they can get). the question is what should radiohead give up to a major label where (i) it has the money to record it’s own records (doesn’t need an advance); (ii) will get radio and press coverage (doesn’t need much promotion, and can pay for it off the rack); and (iii) makes most of its money elsewhere — not from record sales — even in the traditional model (so foregoing an advance doesn’t in any way offset all the other benefits from the new approach). radiohead’s radical move is in many ways a nobrainer (it’s somewhat surprising other bands don’t try this, though there are admittedly few that could pull this off).

22 Jason Briggeman October 2, 2007 at 1:56 pm

Radiohead fans are one of the more self-congratulatory groups of people you’ll ever run across. They aren’t the first major band to give away a new album (e.g., The Smashing Pumpkins did it in 2000), but their fanbase is certainly soiling itself in its rush to tell us all how incredible and supposedly unprecedented it is that they’ve done so.

Funny that Tyler mentions Kid A, because the release of that album was the previous high-water mark for Radiohead-fan self-congratulation. The indie kids gushed incessantly over the “innovation” of that album, even though it consisted purely of (1) meaning-free verbal mumblings and (2) watered-down electronics of the sort that Aphex Twin, Autechre, Squarepusher, etc., had been putting out for years.

At this point Radiohead fans are pretty much the equivalent of Starbucks patrons, but with a double shot of snobbery.

23 Different Jeff October 2, 2007 at 2:27 pm

I cannot imagine this move is intended to increase sales, if they wanted to do that they could write a more palatable single or two, and still have enough of the oddball stuff so as not to alienate their fans. I think tweaking the recipe would work better than some free publicity (or the two might be done jointly. I’d give our host’s theory more credence if/when the album is released and has some mainstream singles).

I really suspect they are curious, financially set, and willing to roll the dice. They may even envision more money–by cutting out the middle man rather than increasing volume.

But I find it pretty telling that when some rather basic errors were pointed in in the original post, our host comes back with: “well that only proves my point more.”

24 Don Marti October 2, 2007 at 3:52 pm

The next band that wants to get the publicity boost might want to try a dominant assurance contract. Turn the master copy over to a lawyer and put $1 million in a fund. If the fund reaches $10 million by the release date, the lawyer releases the album on Bittorrent under a Creative Commons license. If not, the lawyer returns the money to the fans (including the band’s $1 million) and destroys the album.

25 cmn October 2, 2007 at 4:09 pm

It seems that the rest of the context of their offer is worth taking into consideration as well. They aren’t just testing the value of digital music, they’re comparing it to all the value added by non-easily reproducible tangible collector goods. So you can get the album in one of two ways: download at whatever you want to pay, or 40 pounds for deluxe box set including CDs and vinyl (!), artwork, etc. Notably, the box set includes bonus tracks not available on the price-it-yourself download.

So here’s one of the questions I’m interested in. Will the hardcore fans who buy the box set put the exclusive bonus tracks up for digital sharing as usual, or will they now feel like this would be stealing (since no mean evil record company is involved), and because they want to jealously guard their status as paying members of the elite fan crowd who have access to special goodies?

26 Matt October 2, 2007 at 5:27 pm

The Bends is one of the greatest rock albums of the last decade, and one of the very few without a single even remotely bad track.

Also – am I the only one that paid 1 pence for the pre-order? I’m a certainly a Radiohead fan, but I’m not stupid.

27 John Pertz October 2, 2007 at 5:49 pm

Brad L wrote:
“Huh? That’s like saying that most of Brooks and Dunn’s popularity comes from the country music crowd, or that most of Jay-Z’s popularity comes from the rap crowd.”

You do not actually believe that the country or rap crowd are relatively the same size as the indie crowd do you? Radiohead is much more of a niche act than any major country or rap act. Radiohead last time I checked does not play in nearly the same sized venues as Brooks or Done or Jay Z. Again, I will reiterate my point, Radiohead is probably the most popular indie act going that happens to enjoy a much larger spoon full of mainstream appeal. They do not have nearly the mass appeal of a Jay Z or Brooks and Dunn.

28 bachwards October 2, 2007 at 9:31 pm

I think the partisan nature of Radiohead fanatics makes it more prudent for the band than others (spend more than 3 minutes on atease to see some truly ridiculous devotion). This means that even if they do not make much with the digital release as they would following a conventional model, they will probably do extremely well with $80 box set. I am also somewhat inclined to agree with those who note that perhaps part of the reason for this move was to beat a leak of the record to the punch. I cannot believe how many people I’ve talked to who have paid a decent amount for the album, yet have no problems at all downloading numerous albums for free well before their release date (and never purchasing them).

As for the band itself, I think Amnesiac is their only great album.

29 Different Jeff October 2, 2007 at 10:40 pm

Keeeerist.
“I don’t have my facts straight about Radiohead, but the true facts prove my point better than my bungled facts and the Band have one great album, but I don’t like it that much because I can see they are a one trick pony for smart people, but geniuses such as myself prefer even more avante garde bands that only perform on side streets and thus have to exhibit even greater quality to draw people to their websites and take their music for free.”
ugh

30 John Pertz October 3, 2007 at 12:09 am

We all know that Radiohead released most of their work under Capital Records, which is not an indie record company by any stretch of the imagination. However, the word “indie” to many people has come to represent a cultural identity more than it indicates a method of record distribution. The thing that makes Radiohead unique is that other than “Creep”, the bulk of their music is very much complex and basically appeals to an intelligent sensibility that “indie” fans can relate to.

31 D. Greene October 3, 2007 at 1:07 am

It should also be mentioned if it hasn’t been already, that concerts are the venue where bands traditionally make most of their money, because there they are the retailer for their own merchandise and less of the fees are in place. It is instructive to read the classic essay on the economics of the recording industry.

32 Jeff October 3, 2007 at 4:17 am

Not to get political, but I found the title Hail to the “Thief” to be quite presumptuous (not to mention inaccurate) and therefore a turnoff. Something I would expect Al Sharpton to say, not a British rock band. What’s next, the Killers insulting Gordan Brown?

33 John October 3, 2007 at 9:55 am

The question remains, can Radiohead break the record industry model? I believe the answer is that, by themselves, they won’t have much impact. But what happens if every major recording artist starts eliminating the record company middle man? Let’s make the following assumptions:
1. Only blockbuster/established artists can distribute their music directly to fans without the marketing power of a record company.
2. Record companies make the largest chunk of their profits from the blockbuster artists.
3. Record companies take a loss on any artists that sell less than 100,000 records.

If all of the above are true, couldn’t it be possible that record companies might begin to lose the capital to bankroll lower-selling bands (which are either more fringe or young, unestablished groups)? Will this mean the further homogenization of the music we hear on MTV, the radio and other outlets because indies and startups will receive even less support?

34 Fiona October 4, 2007 at 1:04 am

D. Greene –

No DRM

Many of the songs have been played extensively – so you can at least get a live version. Radiohead are tape friendly so these are easily available.

I shelled out the 40 quid for the diskbox. I’ve bought all their albums on CD, special editions, vinyl etc so that price is actually a good deal for me.

(and oh – I’m still divided on whether OKC or Kid A is the best)

35 Jason Briggeman October 4, 2007 at 1:35 pm

Responding to me, “mtc” writes “The Pumpkins gave away their, ahem, ‘last’ album in 2000 because no one was buying their records anymore…”

Here are U.S. Billboard 200 chart peak position and to-date RIAA U.S. sales certification of Smashing Pumpkins and Radiohead’s three albums immediately prior to giving one away.

Smashing Pumpkins –
Mellon Collie (1995): #1, 9x platinum
Adore (1998): #2, platinum
Machina (2000): #3, gold
Machina II (2000): given away

Radiohead –
Kid A (2000): #1, platinum
Amnesiac (2001): #2, gold
Hail to the Thief (2003): #3, gold
In Rainbows (2007): given away

source: Wikipedia

36 Don Merrill October 6, 2007 at 5:02 pm

I’ve just heard Mr. Cowan’s conversation with Bob Garfield on “On The Media.” Although the former may be drawing from data and experience that predicts he will be correct about “pay as you go” good as services eventually losing interest with consumers, our experience as well as the experience of other similar non-profits and entrepreneurs begs to differ. Our donors have made the pay as you go model work for more than four years and we were thrilled to see a band like Radiohead take the concept in another direction. Visit the SAME Cafe website in Denver and the Terra Bites website in Seattle for more examples of an idea that may take consumerism in another direction.

Don Merrill
One World Everybody Eats

37 arbitraryaardvark October 7, 2007 at 3:09 pm

Although I’m a regular MR reader and link here from my blog, I came to this post via google. I’m trying to find out how much money Radiohead has raised so far from the online pay what you want model. Any clues where to find that out? Maybe it’s a closely held trade secret?
What they are doing makes good sense in the post-scarcity economy. Two of the basic treatises for that model are Eric S Raymond’s “The Cathedal and the Bazaar” http://www.catb.org and Cory Doctorow’s “Down and Out at the Magic Kingdom” http://www.craphound.com/down. Both of these were recommended to me by Wil Wheaton, who is an OK Computer fan.

38 cai December 1, 2007 at 2:50 am

who know指甲彩繪?teach me some about it
Thank.

39 anthony still January 20, 2008 at 6:59 am

my cd is not radiohead, the cottage industery that radiohead are hoping to crack should not be available for established artistes who quite frankly already have more money than they no what to do with. the whole ethos behind the internet is to enable indivduals to share their thoughts and ideas freely without intervention from the establishment but as Andy Warhole predicted every one wants to be famous, dont they.If anyone wants to download my cd for whatever reason they are free to do so. When writing his book, tao of Jeet Kun Do, Bruce Lee suggested reader to take what they need and disregarde the rest. Do this with the Cd.

40 Financial Management April 22, 2008 at 2:51 am

“Amnesiac”, “Hail to the Thief”, and Yorke’s solo album “The Eraser” are more complex and interesting than Kid A. Give them another spin.

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