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Pay what you want for the new Radiohead album
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.
Posted by Tyler Cowen on October 2, 2007 at 07:40 AM in Music | Permalink
Comments
-- Of course you were going to get a lot of responses. Remember your post asking why everybody felt like an expert on music?
-- As mentioned above, Radiohead is hardly an indie cult band. 98% market penetration in a specific demographic is beyond "cult," even if penetration beyond that demographic is low. It's sort of like Yahweh's market penetration among Israelis.
-- Utility maximization for one of the most famous/wealthy bands on the planet may not involve profit maximization, or even fan base maximization, but instead influence on popular music in general. If, as Tyler seems to believe (by calling them an "indie cult band"), their musical influence is limited to a specific genre, then this is a way to expand their influence by affecting the musical industry structure.
-- Radiohead is going to find out what people think the (morally) "right" price for music is before listening to it. ONLY radiohead, whose albums are basically guaranteed to be good, could pull this off. This model cannot apply to the music industry in general. However, it will provide the ONLY real data point in what many music consumers feel is a moral issue--album pricing.
Posted by: db at Oct 2, 2007 11:22:13 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.
Posted by: Michael Foody at Oct 2, 2007 11:31:47 AM
I had my turn as a Radiohead fanatic about two years ago. It is all that I could listen to for about a year or so. 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. They are the one indie band that almost every self described "indie" kid loves. Their shows are usually filled with alternative types and maybe a few mainstream folks who happened to love "Creep." BTW, props to Radiohead for pulling this stunt. Releasing their new album through the usual channels would of never broadened their audience seeing as MTV, which used to be Radiohead obsessed back in the 90's, now caters to an audience that is so far removed from what Radiohead is about. Could anyone imagine Thom Yorke on TRL or a Radiohead music video being played in the credits for "Pimp My Ride?"
Posted by: John Pertz at Oct 2, 2007 11:45:50 AM
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 :-)
Posted by: Brad L at Oct 2, 2007 12:09:31 PM
In case anyone doubts the non-indie-ness and the un-coolness of Radiohead today, just check Dani Rodrik's blog and see who is his favorite band!
http://rodrik.typepad.com/dani_rodriks_weblog/2007/10/has-radiohead-g.html
Posted by: angus at Oct 2, 2007 12:15:34 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.
Posted by: Brad L at Oct 2, 2007 12:26:37 PM
in response to question above, here's how the major label deal works: the label advances money for production of the album. when the album is sold, the artist gets $1-2 per sale, BUT the label first gets paid back the advance out of the band's $1-2 (not out of the other $10-15). most big bands make little to any money off their records -- which are expensive to produce -- and make most money touring, which the label does not share in. the label also does not necessarily share in the publishing royalties (though some labels have publishing arms), bands often split those with a publishing company in exchange for advances, radiohead likely has fairly substantial publishing royalties from, e.g., radio play. so radiohead doesn't need the revenue from the album -- that's not really how they're making money -- and they're getting somewhat more this way then they would if they were dealing with a major that would take most of that money (though radiohead could drive a hard bargain), because it's all gravy.
Posted by: dj superflat at Oct 2, 2007 12:39:51 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.
Posted by: andy cage at Oct 2, 2007 12:53:46 PM
When the album is sold, the artist gets $1-2 per sale, BUT the label first gets paid back the advance out of the band's $1-2 (not out of the other $10-15)...
This is all true, just more detail than I meant to get in to. Radiohead could probably have commanded a substantial advance, and left all the risk in the label's court. But there is still a very real upside to direct sales, if it works.
so radiohead doesn't need the revenue from the album -- that's not really how they're making money
Not needing the money is an odd concept to bring in -- I suspect most people take the money when they can, whether they need it or not. (And again to note that Radiohead is not a band with a high touring frequency, so it makes sense to not want to lean on that too hard).
Posted by: Brad L at Oct 2, 2007 12:58:54 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.
Posted by: Atabrat at Oct 2, 2007 1:01:09 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.
Posted by: Edmon Ogle at Oct 2, 2007 1:05:21 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.
Posted by: Edmon Ogle at Oct 2, 2007 1:07:48 PM
"I know all about you people for whom nothing is "indie enough," perhaps short of Sebadoah."
LMAO... well if you know all about us you know we wear it like a badge of honor ;)
There is simply know way that Radiohead is indie. Whether you mean indie as a style of indie as a status. They are not either.
That does not mean lots of so called "indie kids" don't love em', hell none other than Pitchfork called OK computer the best album of the 90's (it's not BTW).
Besides the so called "biggest band in the world" can't be indie, almost by definition.
Posted by: GoodneesOfFit at Oct 2, 2007 1:07:49 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
Posted by: GoodneesOfFit at Oct 2, 2007 1:17:37 PM
The Rodik comment made me think of this. My development economics professor loved Radiohead and turned me back onto them in 2003. What is it about econ professors and Radiohead? Is it as Tyler says? Smart people like Radiohead?
My professor is Adel Varghese now at A&M, by the way.
Posted by: Richard Pointer at Oct 2, 2007 1:22:19 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).
Posted by: dj superflat at Oct 2, 2007 1:26:40 PM
haha Goodness. ya Shellac I guess they're indie.
Posted by: bob at Oct 2, 2007 1:33:15 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.
Posted by: Jason Briggeman at Oct 2, 2007 1:56:23 PM
I don't actually like Radiohead that much. They're OK, but I feel I can hear through most of their tricks pretty easily. I'd much rather listen to Venetian Snares, for instance.
Posted by: Tyler Cowen at Oct 2, 2007 2:18:15 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."
Posted by: Different Jeff at Oct 2, 2007 2:27:04 PM
You and your readers are suprisingly under-educated when it comes to Radiohead. So far only one commenter has mentioend The Bends, and even then he put it in third place. In reality, The Bends so far outpaces the band's other efforts, it's barely a contest. I'm really surprised--I thought at least Tyler would know this. Of course, OK Computer is second.
Posted by: geoff manne at Oct 2, 2007 3:43:08 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.
Posted by: Don Marti at Oct 2, 2007 3:52:24 PM
Kid A as best album? You fool! Clearly, the Bends is the best album. I mean, have you listened to Street Spirit (fade out).
I really like all of their albums for different reasons. They are like your different children. Except Pablo Honey is probably more of a step-child.
Posted by: D. Greene at Oct 2, 2007 4:00:23 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?
Posted by: cmn at Oct 2, 2007 4:09:01 PM
I know you're just trying to piss people off by saying their best album is Kid A. The Bends and OK are top two by far. Nice try though.
Posted by: Chuck at Oct 2, 2007 4:38:16 PM
