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Is Radiohead's "In Rainbows" a flop or a blockbuster?

Politically-fueled Indie/Alternative Rock band Radiohead stood up to DRM and record label's campaign of terror against music listeners when they offered listeners the ability to name their own price and receive their new album via an Internet download.

The band broke headlines in early October when it announced that fans can get the new album two ways.  First, they can go online and download it at whatever price they want -- from free to 99.99 GBP.  Downloads began October 10th.  Serious fans could also elect to purchase a box set, with a CD version of the album, vinyl copies, art books and bonus tracks for a mere $81.75 USD.  These box sets will ship on December 3rd.

So nearly a month later the record industry, tech-observers, politicians and music lovers are scratching their heads collectively and trying to figure out whether Radiohead's album was a success or a failure.  The basic problem is that the band itself hasn't released any information on sales figures yet, so it is hard to tell what is real and what isn't since all sales are done exclusively by the band's website.

In the U.S. and the U.K., a 12 percent royalty to the CD artist about the best an artist can expect, and typically the artist is hit with many additional fees of various sorts by the label.  This means that on the average CD, which costs around $12 to $14 USD at major retailers, the band will make around $1.00-$1.50 USD.  On the other hand, little bands find it hard to "make it big" without a label, as labels are willing to front bands large amounts of recoupable expenses if they think the band has significant ability to make it big. 

A very good read on this topic, is "The Problem With Music" by Steve Albini, independent and corporate rock producer, who is most famous for producing Nirvana's "In Utero".   The article, which can be found here, reveals that on a typical "hit" rock CD, the label might make around $710,000 USD, while a member of the four-member band would only make about $4,000 USD in net income.  Of course, some artists obviously wildly surpass these figures, but these are typical numbers given by someone very entrenched in the music industry.

To top it off, record companies have adopted draconian tactics in using upstream takedowns on torrent sites, spies and massive lawsuits against individuals and groups which share music.  Several bands, including Nine Inch Nails, headed by Trent Reznor, and Radiohead have thrown in the towel and said the record labels have simply gone too far and are no longer necessary.

The real quandary is, as idealistic as these statements sound; do they make economic sense for the artist?  This has left many holding their breath, waiting to see what happens.

Well, the first news has been from internet research firm comScore.  comScore reported that only about 38 percent of people downloading the album paid for it.  Among paying fans, Americans on average paid the highest amount, at $8.05 USD per download.  Fans from other countries average $6.00 USD and 17 percent of paying foreign fans paid only a penny to $4.00 USD.  Finally, comScore found that on average (including non-payers) the album sold for $2.26 USD.  A source close to the band was referenced in a Wall Street Journal article as saying that 1.2 million copies of the album were downloaded on the first day of release.

If accurate, it would mean that Radiohead made nearly $2.7 million USD before expenses, during its first day of sales, an incredible figure.

Some observers were pessimistic about these results though and state that the band could have done much better with a traditional business model. Average profits of $2.26 USD, they say, is nothing to cheer about.

Radiohead released a statement countering these comments and also disputing comScore's figures.  Radiohead said:

"In response to purely speculative figures announced in the press regarding the number of downloads and the price paid for the album, the group's representatives would like to remind people that, as the album could only be downloaded from the band's website, it is impossible for outside organizations to have accurate figures on sales."

This is true --  comScore did not get information directly from Radiohead's site; rather it used voluntarily installed information gathering software that allowed music listeners who bought the album to respond about how much they paid.  While comScore has a solid user base over 2 million voluntary users, many feel that certain kinds of internet users may be drawn to comScore, skewing demographics. 

So if comScore is wrong, did "In Rainbows" fall below its estimates or did it beat them?  Some see Radiohead coming out to deny the statements as an indication that "In Rainbows" exceeded the estimates.  It’s all speculation until the real data comes out from Radiohead.

However, despite the uncertainty, many music figures are already weighing in on the band's success or lack thereof.   Nine Inch Nails' Trent Reznor congratulated Radiohead for bravely fighting the system, but he feels their business strategy was flawed. 

Reznor is following a different business strategy on his release of Saul William's album, "The Inevitable Rise and Liberation of NiggyTardust."  He is offering fans only two options:  either download the album for free or buy it for $5 USD.  Furthermore, all options are not created equal; the $5 USD version will be in 320 kbps MP3 or FLAC lossless audio tracks, while the freeloaders will only get lowly 192 kbps MP3.  Reznor hopes that the improved track quality will lure many audiophiles to pony up five dollars for the paid option.

Ultimately the success or failure of this movement rests largely on two factors -- how well optimal distribution mechanics can be developed and, most importantly, on the average music listener's attitude and level of altruism.  Obviously, acts such as Radiohead and Nine Inch Nails are unlikely to totally flop in their efforts, due to a large, loyal fan base.  Whether their efforts will lead to surprising success and catch on with smaller acts nationwide, though, relies heavily on these factors.

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This will set a precedent for arguments in the future
By Staples on 11/12/2007 10:23:47 AM , Rating: 2
I have always argued that the vast majority of people who complain about DRM are just making excuses to justify their piracy. I mean, how many of these guys buy the CDs? 5%? People have always told me that I have no proof but finally a trial has actually occured. I know there will be ones who respond with all types of arguments in their favor (the typical I want music for free crowd) who will say things like 90% of the people who downloaded the album would not have bought it anyways. 90%? I don't think so. At the root of it all, most people have a sense of entitlement but they will never admit it. Argue other factors like DRM which was never really the problem. The fact that music cost money is the problem for most people. I am still the only one I know who buys music (let alone all of it) off iTunes.

By Brainonska511 on 11/12/2007 10:37:12 AM , Rating: 3
That's BS.

People complain about DRM because they don't want to be treated like a criminal for purchasing a product.

Music cost is a problem - the price of CDs in comparison with other forms of entertainment results in people spending less money on music and more of their "entertainment dollars" on other, more valuable [to those people] things which then results in record companies screaming bloody murder since their profit margins are taking a hit from their entrenched attitudes and business models.

And for the record - I do buy CDs when I can, provided they are really good and aren't loaded with DRM that treats me like a criminal for paying for a product.

RE: This will set a precedent for arguments in the future
By MPE on 11/12/2007 10:59:08 AM , Rating: 2
Cost of music????

A CD is less than $20. That is 1/3 the cost of a new game. And it has a longer shelf life. You can easily share with others WITH NO LIMIT - unlike GAMES. I don't see pitch forks at the game of the video game industry.

And a music CD works out of the gate - unlike many games.

How about movies? HAlf the cost of CD but it is just for one time preview. DVD Movies? Compressed and with built in copyright protection.

So what 'entertainment dollars' are you reffering to?

Please, the cost of music argument NEVER held water. And Radiohead's example just proved it. Even for a merely 1 dollar a lot of people refused to pay for it.

I hate DRM as much as the next geek, but don't be a liar. We all know a lot of people casually downloading illegal music is more about apathy about the law and a sense of entitlement. Saying it is about cost or trying to stop the big bad record labels is pure dog crap.

No one above 14 is that naive.

By Drexial on 11/12/2007 11:35:58 AM , Rating: 2
nobody said the cost of other entertainments was fair. But to be honest, a big time movie usually has a production budget of over $50-100 million far less than the cost of the production of an album. Game development also requires several times the man power that an album release does. Programmers, Testers, Texture designers, Animators, so you can see where costs build up.

so to say an album is worth that ratio when you consider its 4 people playing instruments one producer and a guy on a sound board. the number of people and costs involved isn't nearly as high as other forms of entertainment. but the cost of the CD isn't so much unfair cause how much we pay. but the low percentage of that that the artist that is actually responsible for the CD actually gets.

By MPE on 11/12/2007 12:11:45 PM , Rating: 2
You have changed the discussion.

No matter what the cost of the production is - what does that have to do what YOU want to pay for something?

A movie might cost 200 million to produce but it does not mean it is worthy of a $10 ticket. Same for CDs. NEvertheless, the worth has no justification if one can download it for free. In fact, the point it has no worth to individual yet they download it only underlines the entitlement and apathy argument. If it is not worth anything why the download it for free?

Second, the whole what the artist get is another BS argument (sorry for being blunt). This WAS NEVER an issue with the so called p2p shares. Radiohead is not the first artist to offer their music with little or no involvement from the slimey record labels. Yet, the results are the same - many music downloaders dont care either by not supporting it (when a lot of indie labels still get very little support) or download it for free.

And that argument is contradictory. If you care about how LITTLE the musicians get, why would you DENY them the small amount they get by downloading for it free? You made little become nothing. In fact not only that, since your refusal to buy the CD and pay for the download, the label now thinks the artist are failures - or not as profitable. Thus you have directly reduced their chances to be signed to a bigger contract.

So explain to me again why people saying CD is too expensive and not paying for it and downloading the music for free is helping the artist????

By fleshconsumed on 11/12/2007 12:04:08 PM , Rating: 3
Even for a merely 1 dollar a lot of people refused to pay for it.

Really? I guess $2.7 million estimated sales in the first day were paid in imaginary currency?

The rest of your comments are equally pathetic.

RE: This will set a precedent for arguments in the future
By MPE on 11/12/2007 12:18:32 PM , Rating: 2
Uhm yeah you must have ignore the rest of the article where they state a large portion did not pay for it. Even with the average paying customer in the US spent $8, the ENTIRE average was $2. Even if you go conservative on the estimate, I doubt Radiohead can state statistics that would counter the idea that a lot of people we want to admit, downloaded the album for free. Not $2, not $1 and not even a $.01 - but for free.

Your argument is myopic and selective.

And regarding the 'equally pathetic' sorry about that. I did not notice yours was equally powerful. Oh wait... you dont have one except quoting one specific statistic.

By Veraiste on 11/12/2007 12:47:07 PM , Rating: 2
Well, considering most people get it for free as it is (p2p), and that a $2 average is more than an artist normally gets per cd, isn't this good for them? Sure, some people didn't pay, maybe lots, but a better statistic would be how many paid that wouldn't have normally.

By fleshconsumed on 11/12/2007 1:07:58 PM , Rating: 3
Uhm yeah you must have ignore the rest of the article where they state a large portion did not pay for it.

You miss the point. Who cares how many people chose not to pay for the album? As long as their bottom line is better than dealing with labels it is a success. And so far, by all indications it does appear to be a success.

RE: This will set a precedent for arguments in the future
By MPE on 11/12/2007 1:26:51 PM , Rating: 2
I was talking about the part about 'BEFORE expenses'.

Until Radiohead actually opens the book, how great or a bomb it is would be hard to judge. But the amount of people getting it free... that is a whole different story.

And second, how much they earn does not justify anyone downloading it for free. So instead of the labels ripping them off, the general public should? Wow, people do care about musicians.

By fleshconsumed on 11/12/2007 2:05:09 PM , Rating: 2
Until Radiohead actually opens the book, how great or a bomb it is would be hard to judge.

Agree, it is still uncertain, but from what I've read it is a success. At the very least they won't go starving for another couple of years before they release next album.

And second, how much they earn does not justify anyone downloading it for free. So instead of the labels ripping them off, the general public should? Wow, people do care about musicians.

And who appointed you to protect their interests? The fact is you don't get a say in how Radiohead chooses to distribute their albums, if they want to let people have a choice to pay whatever they want, including nothing, let them. It's their band, it's their music, they don't need you defending them. That's why I said bottom line is all that matters. If I were radiohead, as long as the new method of distribution got me more than what I would have gotten by making contract with labels, I couldn't care less about how much general public is ripping me. And I suspect that is what Radiohead is thinking. Face it, piracy is part of life, no matter how much labels try to control it, they never will short of implanting chips in our brains. So why not capitalize on people's hatred for RIAA instead? That is what Radiohead is doing, and like I said, it appears it is working for them. Sure, most of the people are downloading their album for free, but their bottom line appears to be better than dealing with labels, and that's the only thing that matters. Radiohead managed to maximize their profits without alienating old fans, they also managed to get free publicity and get new people to try their music for free. It's a win-win situation for them, they are making good money, possible more than ever and who cares that people are downloading their album for free?

By FastLaneTX on 11/12/2007 4:17:30 PM , Rating: 1
Sure, lots of people downloaded it for free. I wonder how many would have gone back and paid after sampling it, which their site wouldn't allow? How many would never have bought the album if they'd heard the tracks before they had to decide what to pay? There's a reason stores these days have "listening stations" -- so you can decide whether an album is worth the money before you have to shell out your money.

I think Radiohead's music sucks (just a matter of personal taste), so I didn't bother downloading the album in question. There's lots of other bands I'd happily give money to even if their music was available for free. If Radiohead managed to pull in millions of dollars in a single day just by letting people name their price, how is that worse than going on a grueling tour for several months to make a tenth as much?

I think Reznor's got the right idea: let people sample the music for free and then decide if they feel like paying for the high-quality version. If they don't like the music enough to pay, what's the harm in letting them have the low-quality version (which they wouldn't have paid for anyways) for free. Best case, their friends hear the free version and decide to pay themselves, so the band actually makes money on the "free" downloads.

Also, the point about how much bands get can't be overemphasized. Even if their revenue is something like $2 per download, that's a shitload more than any label would give them even when customers are paying $10-15 per CD.

By Keeir on 11/12/2007 1:42:36 PM , Rating: 2
Cost of music????

I think you are missing his point

Back when I was buying CDs (a few years ago), CDs were typically priced 15-20 dollars and contained about 45 minutes of music. Its true, you can listen to music many many times, but the "new" experience is only 45 minutes long and only involves 1 out of 5 senses.

Movie entertainment on the other hand is typically around 120 minutes long and involves 2 out of 5 senses.

Books/Comics/Etc involve 2 senses. Typically entertainment times in the 4-6 hour range.

Video Games involve 2 senses, and are interactive. They can last anywhere from 10 hours to 60+ hours to even more for good multiple player titles.

ALL of these things can be shared (although Video Games typically only like 1 online user at a time). Is it any wonder that so many people are turning they're backs on music to consume other entertainment?

Please, the cost of music argument NEVER held water. And Radiohead's example just proved it. Even for a merely 1 dollar a lot of people refused to pay for it.

Ummmm... no. Radiohead's example is pretty much the other way... somebody offered people FREE music and a significant number choose to pay for it. Its actually pretty remarkable.

By MPE on 11/12/2007 1:59:29 PM , Rating: 2

SO each medium has its limitation. Your argument is incomplete.

What does it matter what senses it stimulates. We are talking about VALUE. One that is variable depending on the individual. The point is, no matter the value, even if it is nothing, one does not have the inherent right to receive it free from its creators and owners. Period.

It is a basic concept of human existence. Even if I think your life has no value, I have no right to take. Even if I think people's intelligence is is subpar, I have no right to remove their right to vote. Even if I think music sux from Britney Spears, I have no right to take co ownership by downloading it for free and sharing it at as my own.

[quote] somebody offered people FREE music and a significant number choose to pay for it.[/quote]

Again you twist the fact. They did not made it free. They made payment voluntary. That is like saying freeware is free.

And you looked at the glass half full. You fail to confirm the amount of people who freely downloaded it, and likely distributed it.

Yes, Radiohead music can be downloaded it for free. But the point was, even given with choice to download it at any affordable price (even a penny remember)- many people did not. So the argument that people downloading music for free is because of price is BS.

By Brainonska511 on 11/12/2007 9:57:48 PM , Rating: 2
Obviously, you just don't get it.

Sure, a $10-$15 CD costs less than a game, but the game has a higher perceived value to the consumer. If a consumer budgets $50/month for entertainment purposes, then they might buy the game just because of that instead of 4 or 5 CDs.

As for whether it works out of the gate, that has nothing to do with the cost argument I put forth. Heck, you want to argue about things working, look at those lovely DRM wrapped CDs that don't work out of the gate....

Now onto Radiohead - they haven't released any information as to how much they made and what people paid on average. The opt-in system that the market researcher is using is a flawed methodology. Now, even if the market research company was correct, Radiohead received a lot of attention for this from many people who never would listen to their music - how many of those people downloaded the album just to see if they would like it? How many tossed only one or two dollars their way just because they believe in the idea but don't actually care for their music?

I don't see how I'm a liar by hating DRM or anything I said. You might want to try a dictionary or thesaurus to find words that would fit what you want to really say. As for apathy and sense of entitlement, get a clue. There are many reasons to download music - between hearing new things (that you wouldn't hear anywhere else), trying before buying, etc...

By Moishe on 11/12/2007 11:13:10 AM , Rating: 2
I buy CDs.

I think DRM sucks because it hurts the consumer and does not stem the tide of piracy. I don't mind if they protect their investment. I actually think that they SHOULD have some protection... however that protection should never come at a cost for the consumers who are legally buying their product. That's just biting the hand that feeds you.

I don't think anyone can blame consumers for bailing out on the music industry. The music industry has made the choices and alienated a lot of consumers. That's purely on their side. They made their bed and they should sleep in it.

Piracy is not right, but the music industry has practiced their own form of piracy against the consumer for years and the consumer seems to have finally wised up and is rejecting the old school notion that rape by the RIAA is fun. Basically it's the free market deciding that DRM is costly, it's harmful, and it's a hassle.

By fic2 on 11/12/2007 12:01:00 PM , Rating: 2
Let's see
Option 1: I can buy a CD that probably has DRM that won't let me play it from my PC, or worse, installs a rootkit on my PC.
Option 2: I can download the album DRM free and be able to listen to it anywhere I want. Bonus because I didn't pay for the DRM.

I have chosen option 3: Don't buy CDs or download music.

I probably would have paid Radiohead for the download if I had even bothered to download it. I like some of their older stuff.

I like Trent's model although I agree with several people here that he is offering the free version at too high of a rate.

I have a really good friend that is in a band. They have been together 9 months. They sell their CDs at their shows for $5 and have sold up to 200 CDs at a couple of shows. Seems like they make more from their CD sells than some "big time" musicians.

By fleshconsumed on 11/12/2007 12:16:25 PM , Rating: 2
DRM which was never really the problem

DRM is never a problem? Spare the fairy tales. I bought Terminator 2 High Definition DVD a year or so ago. On the second disc it had 1080p encoded version of the movie that you could watch. The catch was that you had to either use proprietary (and crappy one at that) player, or jump through a bunch of hoops just to watch it. Since I didn't want another piece of poorly coded software screwing up my system I opted for the second option. In order to do that I had to use WMP (not the finest software to say the least, although better than proprietary player I mentioned earlier), I had to manually download license from the internet, then navigate to some obscure folder on DVD and drag and drop a file into WMP. Not the most intuitive method and I would have never been able to do it without help from google. Now the best thing is that one, the license is only valid for US, nobody in the rest of the world can watch the movie (unless they use US proxy to obtain license), the license is only valid for 5 days, so if I wanted to watch it a week after, I would have to repeat entire process again, and lastly, my viewing of the movie depends on the availability of the servers, should they experience technical difficulties, or say go down forever I will never be able to watch the movie again. How's that not a frigging problem? Take your trolling somewhere else.

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