Don't Read Too Much Into Radiohead's Claim That It Won't Offer Music For Free Again

from the just-wait-and-see dept

Radiohead is making some noise again today, with lead singer Thom Yorke basically saying that the band won't do a promotion giving away free music again. Some are using this to suggest the model was a failure or that those of us who recognize the clear economic trends toward free music were somehow wrong. That's not the case at all. Early on Yorke had admitted that there was no large theory behind the decision to do the name your own price offering. One of the band's managers suggested it and the group went with it as a publicity stunt -- which worked. The fact that the band then pulled down the download offering prior to releasing the actual CD confirmed that the band merely viewed the free offering as a stunt, rather than part of a larger strategy. As such, it's not at all surprising that Yorke would say the band won't do it again. Since they only viewed it as a stunt, repeating the stunt doesn't make sense. They'll come up with some other stunt for the next release. That doesn't, however, mean that the idea was wrong or a failure. Just that the band wants its publicity stunts to be new and different each time. The fact that this most recent one tapped into an obvious trend seems to have been more of a lucky guess than the sign of a well-thought out strategy. The good news is that it's made plenty of others start to realize the power of free music -- even if that line of thought hasn't permeated back to Radiohead and Yorke.

Filed Under: business models, free music, music, publicity stunts, radiohead

EMI Brings Newspaper Free Music Giveaway To The US

from the but-what-will-retailers-think... dept

You may recall last summer that Prince made some news by giving away his latest CD to every subscriber to a UK newspaper. The newspaper paid Prince for the promotion, suggesting interesting new business models that could help two industries at once: both the newspaper industry and the recording industry should benefit from such deals. The newspaper pays some money to the musician, but does so in order to get the promotional benefit -- making both sides better off. Of course, music retailers were upset, threatening to boycott Prince, but that seems like a fairly minor concern. The success of the promotion appears to have gotten the attention of at least one of the major record labels. EMI, who is under new management and seems to recognize how it needs to change, is doing a deal with the NY Daily News to give subscribers access to three free downloads. There will be an access code in the paper, and if you punch it in to the Daily News' website, you'll get to pick from a large list of songs (including at least one unreleased track). Again, this seems like a perfectly reasonable strategy, helping two separate industries in one shot -- though, again, it's likely that music retailers aren't going to be thrilled.

Filed Under: free music, music, newspaper
Companies: daily news, emi

Yet Another Report Of Free Label Music That Isn't

from the details,-details dept

Last week, we noted that the press couldn't stop talking about Last.fm's supposed effort to offer "free" music, when the details showed it was a lot less than the press made it out to be. You'd think that maybe they would be more careful the next time around. However, when you combine the words "free" and "music" it appears that some folks in the press just can't help themselves. Thus, when a company named Qtrax announced "free" file sharing, with the backing of all four major labels, plus iPod compatibility, the press ran with it. The Associated Press and Reuters both ran with it... though, at least the Associated Press has quickly started backtracking after the various record labels all started denying any kind of deal with Qtrax. They admit they're talking, but no deals have been signed -- meaning that Qtrax jumped the gun, as did the reporters who ran with the announcement. Even if the labels do come around on this one, it's a plan that will go nowhere fast. It involves crippling DRM and annoying advertising that won't even be close to effective. This is a non-story turned into a story by the use of two words: "free" and "music."

Filed Under: drm, free, free music, ipods, record labels
Companies: qtrax

Free Music Does Not Conflict With The Free Market

from the economic-principles dept

An associate editor at PC Mag emailed in a link to an opinion piece by PC Mag Editor-in-Chief Lance Ulanoff complaining that the ongoing demise of DRM is actually bad for the music industry -- and even claiming that it goes against basic economic principles. In this, he's flat out wrong. He starts out by trying to explain "basic principles of content, commerce, and our economy," but fails to recognize that the description he gives for economics fits for allocation of scarce goods, but things are different when you're dealing with infinite goods, where efficient allocation no longer is a question. He follows up this incorrect economics lesson by stating:

"Giving up control of content and giving it away free are not rational ideas in a market economy, yet everyone's cheering. Has the world gone mad?"

No, Lance, the world hasn't gone mad. The world (or, at least, much of it) has simply started to understand that basic economics still applies to infinite goods -- and if the marginal cost is zero, then a competitive marketplace will drive the cost to zero. It's not irrational. It's very, very rational. It's exactly as the core principles of economics predict. What's not rational is trying to set up artificial scarcity in a manner designed to shrink the pool of resources out there and to shrink the market itself.

Ulanoff also makes some bizarre statements suggesting that very few bands tour or make any money from touring -- when the facts suggest otherwise. 2007 was the best year ever in terms of concert revenue, up 8% over 2006, and continuing nine straight years of rising revenue. Not only that, but the numbers suggest more bands than ever before are performing live and making more money than ever before performing live. It's not just the top bands that are making money from concerts -- in fact, the percentage made by the top 20 acts and the top 100 acts were smaller in 2007, despite the total amount of concert revenue increasing. As we've seen, every single aspect of the music business has been improving, other than selling plastic discs.

Finally, Ulanoff concludes with this whopper of a prediction:

"giving away content free of charge... [flies] in the face of everything we know about a functioning economy. People will become dissatisfied. Artists will stop making content because they're not getting paid. When there is no content, people will stop buying gadgets to consume that content. In short order, one part of our digital economy will collapse, and it could be followed by countless others."

As we've already pointed out, giving away stuff for free doesn't even remotely fly in the fact of a functioning economy. In fact, historically, a functioning economy has often been improved by giving away things for free. It's usually called "promotions" or "advertising" however. In fact, Ulanoff's salary is most likely paid for because Ziff Davis "gives away his content for free" and sells ads on top of it. That system works quite well and has for years. As for his claim that "artists will stop making content because they're not getting paid," that myth has been put to rest way too many times before. The artists are getting paid. In fact, more people are making money from music today than at any time in history -- it's just that they're not all doing it through selling plastic discs, but by touring and embracing new business models that help the artist make money through different business models. Rather than collapsing, the digital economy is thriving, in large part due to the implicit (and increasingly explicit) recognition of how free isn't just a useful part of the economy, but it actually helps to grow the economy, by increasing the resource base, providing more efficient solutions and opening up new business models.

Filed Under: economics, free markets, free music

Amazon/Pepsi DRM-Free Music Give Away Shows Yet Another Business Model For Free Music

from the for-everyone-but-Doug-Morris-of-course dept

Pepsi did a big promotion with Apple a few years back to give away iTunes songs, and the latest news is that Pepsi has crossed over to the other side and will be doing a similar promotion with Amazon.com offering free DRM-free downloads from all the big labels... except Universal Music. This story actually demonstrates two important points. First, the fact that the labels themselves apparently are pushing this as an alternative to doing the iTunes promotion, shows how some of the bizarre industry logic has twisted things around. The major labels were originally the ones who were totally adamant that iTunes needed to carry DRM, which actually is part of what made Apple so powerful in the first place -- creating tons of lock-in among customers who wouldn't switch to another provider. However, that is coming back to haunt Apple, as the labels are more reluctant to allow it to also offer DRM-free tracks. No doubt, Steve Jobs recognized this fact a year ago when he called for the labels to drop DRM.

A second, perhaps more important point, is that this once again shows that there clearly are business models surrounding "free" music. One of the points that we've tried to make when people claim that there's simply no incentive for anyone to create music if the customer is getting it free is that there's always going to be incentive for someone to pay for the music in some form or another. In this case, it's Amazon and Pepsi who are paying for the music itself ($0.40/track) recognizing that giving away that music for free helps both of them promote their own businesses. In other words, the music is acting as a resource to make their own business models more valuable. I think I've heard that idea mentioned before somewhere. Of course, that doesn't mean the record labels have figured this out. And, it's especially not surprising that Doug Morris has refused to let Universal Music go along with this, as he's already made clear that he doesn't believe in the concept of promotional goods, no matter how much damage it might actually be doing to musicians under the Universal Music umbrella.

Filed Under: free music
Companies: amazon, pepsi