The Second Stage Of The Radiohead Experiment

from the some-good,-some-bad dept

Tue, Dec 11th 2007 2:54pm — Mike Masnick

Certainly an awful lot has been written about Radiohead's experiments with new business models, but it's starting to crank up again, as the band gets ready to release the new album on CD. While some fans felt "betrayed" by this, the band had made it quite clear from the beginning that this was the strategy. However, it's likely that we'll now see plenty of stories focused on how well the CD sells, as if that will be the key factor in determining whether or not this experiment qualifies as a "success."

That, however, is the wrong way to look at things. It's the "old business model" way of looking at things, where the key point is how many CDs were sold. That's doesn't much matter any more. The band has supposedly made quite a lot of money from selling the MP3s directly, and the attention garnered by the marketing stunt will likely allow them to sell more concert tickets at higher prices (and, yes, the band is about to start touring). Plenty of people who knew little about the band now know a lot more and are talking about and listening to the new album. At this point, no matter what happens with the CD, you'd have to say that the experiment has been quite a success.

That said, it doesn't appear as though the band fully embraces the economics impacting the music industry these days. That's because the band has decided to stop offering the downloads off its site as it gears up to try to sell the CDs. That seems like a rather pointless and shortsighted move. The music is already out there and being listened to widely. If you look on sites like Last.fm and Hype Machine, Radiohead clearly dominates. Continuing to offer fans an option in terms of how they want to consume and purchase the music only makes sense. It's not as if the music is suddenly not going to be available on various file sharing sites. So, really, all this move does is limit the ways fans can give the band money -- and that doesn't make much sense.

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Filed Under: business models, radiohead, recording industry

24 Comments

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JDigital, 11 Dec 2007 @ 4:23pm

They got paid.
nuff said.
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Anonymous Coward, 11 Dec 2007 @ 4:31pm

For real. 10 million between the 5 of them I think it was?
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Michael G, 11 Dec 2007 @ 4:37pm

Like alway...
...its only the money that matters. 'ring out the new and bring in the old'...and i really thought they were going to do something different that mattered.

Yep, nuff said.
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Michael G, 11 Dec 2007 @ 4:37pm

Like alway...
...its only the money that matters. 'ring out the new and bring in the old'...and i really thought they were going to do something different that mattered.

Yep, nuff said.
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Evostick, 11 Dec 2007 @ 5:01pm

Experiment
Maybe they've taken away the downloads so the traditional part of the 'experiment' isn't contaminated.
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atomatom, 11 Dec 2007 @ 5:07pm

They offered it for free - if you didn't get it, it's your own fault. This might not make sense, but when did Radiohead ever make sense.
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Mark, 11 Dec 2007 @ 5:13pm

Re:
They make sense when you enjoy the music. Else not.
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shag, 11 Dec 2007 @ 6:43pm

Re: Experiment
I think yyou are right.

It might go to show the same thing that the Elvis co did.

Way back, when Disney released Alladin, the Elvis tunes were licensed for next to no money. This is still an on-going theme. Every time there is Elvis music in a Disney music not much money is made.

What happens is that there a little kids out there singing Elvis songs, and then they get interested in the man the music and everything else. Obviously, for every dollar 'lost' they gained a lot more.

So Radio Head pretty have pretty much done the same thing. Every time someone listens to their song for free/ or cheap, either they sell more albums(or not, wait to see), or they recoup that in ticket sales for their tour.

And really what is the difference between 7 or 8 million from album sales?
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Colin Suttie, 11 Dec 2007 @ 7:28pm

Unless I'm mistaken, Radiohead recently signed to a record label, their new label is releasing the CD, I doubt the new label wants a parallel honour-based payment system cutting into whatever profits they think they can make off the CD.
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TriZz, 11 Dec 2007 @ 8:24pm

Radiohead
I felt betrayed after I paid them $10 for the mp3s that they were releasing it on CD through traditional (read: old) means. This was supposed to be revolutionary. All they did was postpone the CD release a month and let the hype machine churn them profits.

...I will give them this, they got their name out there. I haven't heard from Radiohead since "Creep", and I'm delighted that their new album is soooooo good. I then went out and got other Radiohead stuff (Radiohead, Unkle and Thom Yorke's solo work) because I enjoyed the new album so much.

If they would have just stuck with the original plan, I would have been a much a much happier consumer. ORRRR, if they would have offered their older works in the same fashion...

Ah well, they got me with it. I'm sure others were suckerered, but I guess that was the point. Get the consumers listening. Once it's in their iPods, they'll buy other shit.
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atomatom, 11 Dec 2007 @ 8:47pm

Re: Radiohead
"If they would have just stuck with the original plan, I would have been a much a much happier consumer."

I'm just wondering how their change of business plan affects your enjoyment of In Rainbows. Does it make the album worse? Does it actually change how the music sounds? They can't take the album away from you - how does this affect your enjoyment as a consumer in any way other than some fuzzy future projections which Radiohead has no control over?
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James, 11 Dec 2007 @ 9:00pm

Might be more at work here...
Think about it - they may have only been able to afford X amount of bandwidth per user and due to the popularity they've well exceeded that at this point. Just saying, don't be hating.
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Mike (profile), 11 Dec 2007 @ 10:10pm

Re: Radiohead
I felt betrayed after I paid them $10 for the mp3s that they were releasing it on CD through traditional (read: old) means.

I don't understand this comment. They made it quite clear from the moment they announced the download offering that a CD release would follow.
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moe, 11 Dec 2007 @ 11:12pm

Re: Re: Radiohead
I don't understand the comment, either. After all, if it's about having the music on a CD then just burn one. If it's about getting the CD booklet & extras (whatever they may or may not be), then perhaps for you $10 was too much to pay for the downloads.
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Boris Jacobsen, 12 Dec 2007 @ 2:27am

Radiohead - the backlash
Hey all you who are knocking Radiohead for, basically, giving it away for free in the first place are completely right. How dare they mess with our minds in this way? Come back RIAA, all is forgiven.
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Anonymous Coward, 12 Dec 2007 @ 6:55am

At this point, no matter what happens with the CD, you'd have to say that the experiment has been quite a success.

What a joke. Have they toured yet? Have they drawn more people than they would have the traditional way? Can you compare the CD sales to the traditional way?

So without any data or information, you declare success. Who do you think you are, GWB? Mission accomplished?
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Chuck Norris' Enemy (deceased), 12 Dec 2007 @ 7:50am

From the beginning
The only people that were suckered were the ones who didn't even read the site before buying. If you bothered to spend thirty seconds to read you would have known that a physical CD was coming. I know I am going to buy the physical disc so when I downloaded the songs I did so for about 17 cents a song (~allofmp3 pricing). So I was out two bucks for the "cause" and Radiohead will get another $2 from me when I buy their album.
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Mike (profile), 12 Dec 2007 @ 10:39am

Re:
What a joke. Have they toured yet? Have they drawn more people than they would have the traditional way? Can you compare the CD sales to the traditional way?

The point was that they made millions already *just* on the downloads. CD sales and tour revenue become gravy. So, yes, you absolutely can call it a success.
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Anonymous Coward, 12 Dec 2007 @ 11:00am

So, yes, you absolutely can call it a success.

Considering Radiohead has not released ANY information on the sales of the downloads, you must really think you are GWB.
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Jase, 12 Dec 2007 @ 1:44pm

Ah....

Your all talking about it and I'll bet most of you are planning on giving them more money for CD's or concert tickets or merchandise because of the album.

Isn't that successful?
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Anonymous Coward, 12 Dec 2007 @ 5:51pm

The Radiohead experiment is pretty meaningless.

Sure, a band that has already had millions of marketing dollars spent on building their brand is going to do OK. Hell, the NYT article alone was tens of thousands of dollars of free PR.

Does the model work with a no name brand and no free PR? Not once or twice, but regularly.
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Simon, 12 Dec 2007 @ 6:59pm

Plenty of people?
"Plenty of people who knew little about the band now know a lot more and are talking about and listening to the new album"

Are there really people out there who (a) don't know much about Radiohead, and (b) heard about this project and were motivated to check it out?

I'm sure there were a few, like #10 - but "plenty"? What are you basing this on?
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bryan, 13 Dec 2007 @ 11:07am

RE: Signed to a label...
"Unless I'm mistaken, Radiohead recently signed to a record label, their new label is releasing the CD, I doubt the new label wants a parallel honour-based payment system cutting into whatever profits they think they can make off the CD."

Colin- The record label (XL Recordings) does not need to worry about the parallel system as the initial Radiohead downloads were offered in a low quality bitrate (160 kpb), which pale in comparison to CD. Not only that, the label saves millions in marketing dollars for buzz that the Pay What You Want campaign generated.

Ultimately, though, Radiohead came out as a giant winner. They made money off the digital downloads (an estimated $10 million in the first week alone!), they made money from their record deal, and they're basking in the glory of devising a revolutionary new business model (even if it was a marketing stunt). Regardless of how you feel bout the band or their music, you must admit the marketing campaign was absolutely brilliant.

Read more about Radiohead's "In Rainbows" on my blog: http://www.stagetwoconsulting.com/blog
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Steve K, 18 Dec 2007 @ 2:21pm

Re: Might be more at work here...
"Think about it - they may have only been able to afford X amount of bandwidth per user and due to the popularity they've well exceeded that at this point. Just saying, don't be hating."

This is the only smart comment in this thread. First thing that popped into my head as well when I saw this. A way for less smart techy people to understand it would be to equate the money spent on hosting / bandwidth costs to money they might have spent on a CD 'giveaway' / any other promotion costs. This approach allows more people the chance to hear the entire album instead of maybe one song that MIGHT get played on terrestrial radio spending that "website" money on traditional promotion.

The economics of this are a new take on an idea that I think everyone can understand, and I think the record will show different bands taking this approach to new exciting levels. I'm sure a smarter person than I could come up with a couple of formulas to follow, simply by looking at things logically.

(Production budget - cost to build website + $ from people choosing to pay for download)
/
cost per month for hosting for desired amount of traffic //-- a 'monthly special'? free downloads stop when ratio dips below a precalculated amount.
=
# of months free downloads will be available
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