Radiohead, who are one of the biggest bands in the world, are releasing their next album in a unique way. They have decided to not sign with a record label and will release the album as a download on their website. The catch? You choose what you want to pay for it. You can pay $10, $7, or even $0 - as the website says: "It's up to you." What do you think of this as a business model? Knowing the general sad shape that the music industry is in, do you like this cutting out of the middleman? Will the people who do pay for it make up for the people who don't?
Keep in mind that there are no production costs for distributing mp3s as opposed to CDs. Also, they are selling an $80 package of the album that includes a bonus CD of b-sides, the vinyl copy of the album, and artwork/lyrics.
8 comments:
The pedi-cabs in downtown work in a similar way. They don't have a flat rate, they just ask the customer to pay a fare that's fair (haha).
It seems to work and I can see why. No self-respecting local would be caught dead in a pedi-cab yet tourists, who come here strictly to spend money, will happily pay $20 for a four block ride.
This principle can be applied to the Radiohead album. Fans of the band will pay more for it to give their support. They can expect a lot of freeloaders, however, because the only thing better than cheap is free.
I personally will be paying $0 and saving the disk space. That's just me.
While I'm not a Radiohead fan, I do think this is a great example of the economic progress we've enjoyed over just the last decade or so.
Radiohead is able to offer this album virtually for free because, as you mentioned, MP3's cost next to nothing to make, and this little example goes a long way in illustrating how a free enterprise economy functions and grows and how living standards continue to rise ad infinitum through the process of creative destruction.
Artists and music companies, realizing increased profit margins from online sales, are increasingly "outsourcing" production by shifting the sale of their music from CDs to websites.
To recognize the benefits of this, let's pretend that, starting tomorrow, everyone got all of their music online for free (or at least a nominal price). The entire CD industry would cease to exist because it would no longer be profitable. All of its employees would be laid off, ranging from corporate fat cats at big-name record labels to secretaries and factory workers who package the CD's. "Lost jobs!!" would be the rallying cry of protectionists everywhere. "Outsourcing!!" "The evil machines are taking away good-paying American jobs!!"
However, there is a much brighter side to this equation that is oft-overlooked by the anti-trade lobby: every consumer now has an additional $12.99 in his pocket that he didn't have before, and that money will now either be invested or spent on something else.
By freeing up that $12.99 for every music buyer (which likely amounts to billions of dollars in the aggregate), society benefits as living standards rise. This is true not only with Radiohead, but with also with Wal-Mart, trade with China, the self-scan at Kroger, and countless other little improvements that are constantly being made every day but go largely unnoticed.
I'm glad you guys appreciate what Radiohead are doing. With a label release, they would only make about 8 cents per CD or something like that. They make all their money from their ridiculous $60 concert tickets. But now they'll be making a lot more with this direct-to-artist payment approach.
Maybe they can buy some talent with the extra money.
Ryan - exactly the point. It's not like they're doing this to be all gay and altruistic. They're doing this because it makes them more money. Profits are the mother's milk of capitalism.
I don't think ya'll are seeing the big picture here. Ryan's grammar, although probably correct (he was an English major), is really queer. "Radiohead are..." You wouldn't say "Georgia are going to beat Tennessee." Would you, Ryan? WOULD YOU!?!
How can you say "zero production costs?" You th8ink studio time is free? Recording engineers work for free? Even if they record in a garage, there's equipment to buy, maintain and depreciate.
This methodology is dumb and they'll be taken advantage of due to the free (down)loaders.
There's entirely too much "entitlement" thinking in this world as it is.
Snuffy, you make a fine point about the grammar issue. It's always weird, because you have band names that are plural, like The Beatles, and then singular names like Radiohead. So, when you get used to saying "The Beatles are..." it feels strange to say "Radiohead is." I'm always glad to see someone fighting the grammar fight.
Nick, obviously Radiohead IS rich enough to pay for their studio time, producer, engineers, etc. on their own, as they used the same producer for this album as they have since OK Computer. Don't worry - those people got paid.
I very much disagree with you about their being taken advantage of. We already covered how they're most likely going to make much more money from this than with the record company taking its usual cut. People will be much more willing to pay for the album, if not for the content, but just to support the idea. The website crashed because of so many pre-orders.
I don't know what you mean about too much entitlement. If a band doesn't need to have a record label distribute its album and take loads of money from them, then the band is absolutely entitled to making a profit from their own work. As fans, we are entitled to pay less if the band believes it is fair. As consumers, we are entitled to reap the benefits of competitive pricing and the elimination of the middleman.
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