Radiohead “In Rainbows” Follow Up

Answering some common criticisms of Radiohead’s “In Rainbows” release.

“A less popular band would not make as much money”

This is trivially true. It is also true of recording-industry-based album releases. So it is not a specific criticism of this business model. Rather it is a fact of life regarding music: you need an audience to sell to in order to make money by selling music to your audience.

What is important is that more of the money from this business model goes to the band. So a less popular band would make more money this way than from receiving royalties for CDs, all other things being equal.

“Radiohead can only do this because they have been promoted heavily by their record label for over a decade”

Again this is trivially true. Radiohead worked very hard to build their success through the channels available. In the first half of the 1990s that was through record labels. Nowadays, it is through online networking.

What is important is that promotion is needed to build an audience. And there is no substitute for hard work and raw talent whether that promotion is through record labels or though MySpace.

“Most Downloaders Paid Nothing”

Most being 60%. So in fact just over half didn’t pay. Or, alternatively, just under half did pay, an average of six dollars each. This is much better than the O% who usually pay for unauthorized downloads.

A 40% success rate for advertising would be extraordinarily good. That is what this amounts to. Many people were buying the album unheard. Do 100% of the people who hear a Radiohead album on the radio go out and buy it? Do 40%?

I have spoken to people who downloaded the album for free then paid what they thought it was worth for a second download. If studies took account of these try-before-you-buy downloads the figures would change. Perhaps not majorly, but enough to notice.

If Radiohead had posted out CDs with invoices, played the album on the radio or on MTV or simply promoted it in the media we would be seeing headlines more like “Only 1% Of Fans Pay For Radiohead Album”.

Doing the maths shows that Radiohead still made more money for the number of albums downloaded than they would if they were receiving royalties from CDs.

So “Most Fans Paid $0 for Radiohead Album” is trivially true for some values of “most” and for some values of “fans” and if we ignore multiple downloads. But it obscures the facts that Radiohead made more money than they would have from CDs, did better than they would have from advertising, and competed successfully against no-cost P2P networks.

Posted in Free Culture
4 comments on “Radiohead “In Rainbows” Follow Up
  1. Don’t forget, some members of their audience may have been intending to pay Radiohead for the music rather than a supplier for the manufacture of a copy of a recording of the music.
    I might pay you 1p for a copy of their CD, but I’d pay Radiohead a quid to produce the music on it.
    It is anachronistic to persist in seeing this as Radiohead competing with P2P in the market for copies.
    Radiohead might not quite have grokked things, but they’ve helped demonstrate the difference between natural promotion through diffusion of free copies and disintermediated sale of music.
    Radiohead still retain the monopoly in terms of being the only artist identical to Radiohead, but they’ve lost, and evidently can do fine without, the monopoly on copies.
    Radiohead’s audience will gladly pay Radiohead for Radiohead’s music, they aren’t so glad to pay a label £9.99 for a circular piece of acetate simply for the label to convey 1p to Radiohead.
    Well, perhaps many of the audience haven’t quite figured their own psychology out either. For many it may be that intuition leads them to pay the pied piper.

  2. Have to take issue with this, especially point 3.
    First of all, the figures. 40% is not “just under half”, although when you have a point to prove, maybe you can get away with that kind of shrugging off of quite small numbers.
    Additionally, 40% only applies to the US. Non-US downloads were paid for by 36%. Which is quite considerably less than half.
    40% response rate for advertising would indeed be astounding. So would 40% of all people who knew the album was avilable to download. Certainly in the UK, that would include everyone who listened to any kind of “popular music” radio (Radio 1, 2, 6Music and pretty well every commercial station at the very least) or watched any kind of news programme. I’d put that down to “most of the population”, and I have no reason to believe this kind of awareness level wasn’t replicated across the rest of Europe and the US. Now, if 40% of those people had paid for the album then your comparison would be valid. It would also mean 142 million sales across Europe alone (assuming the population of Europe to be 710,000,000 (Wikipedia) and half those to be of record buying age).
    While the experiment wasn’t an unqualified failure, neither was it the massive success you’re trying to paint it by misinterpreting figures. When it comes down to it, they averaged $1.68 per download. Less than a pound. Probably not more than they’d’ve got from a record company CD release.
    Cheers,
    Rich.

  3. Rob Myers says:

    Since I posted this it has turned out that the figures we are referring to were pulled out of thin air. So we don’t know how many paid.
    I stand by my comparison of unpaid downloads to promotional costs. Even a conversion rate of just over a third rather than just under half is better than any conventional marketing campaign.
    I also agree with Suw Charman of ORG that any sales that Radiohead made in this way were an increase above zero for illegal filesharing. This is an improvement. You don’t make CD-equivalent profits from illegal downloads, you make none.

  4. Matt Lee says:

    Rich,
    The thing you’ve forgotten to mention – Radiohead might have only made 1.68 per download, but that’s with no manufacturer costs, and they still own their copyrights on the recordings.
    They’re now free to shop around for a record label to release those recordings. I believe they’ve picked XL for one market.