“The experiment by the band Radiohead to allow their fans to determine the cost of their latest album may have backfired, according to a new report,” Nicole Martin reports for The Telegraph.
“It found that three in five people who downloaded In Rainbows from the internet paid absolutely nothing for it,” Martin reports.
“The group shocked the music industry last month when it announced that their fans could pay as much or as little as they wanted for their seventh album,” Martin reports.
“A report by the internet monitoring company comScore found that 62 per cent of the estimated 1.2 million people who downloaded the album paid nothing for it. The average price paid was $6 (£2.90),” Martin reports.
Full article here.
Josh Grossberg reports or E! News, “Americans were more generous, shelling out an estimated $8.05 per download. Those abroad, mostly consumers in Europe, averaged $4.64 per download.”
“According to comScore senior analyst Andrew Lipsman, Radiohead might be onto something. ‘If [Radiohead] is getting $6 on average, and it’s basically going straight into their pockets and their costs are minimal, it could be economically viable,'” Grossberg reports.
MacDailyNews Take: Remember, there’s no label to take their hefty cut. Radiohead has eliminated the middleman. Imagine if they also offered the album (and – blasphemy! – individual tracks) via Apple’s iTunes Store.
Grossberg continues, “Radiohead essentially needs to make $1.50 per download to break even, Lipsman estimates, so at $6 per buyer, the group still looks to make out pretty well.”
“‘The question is: How will new artists be able to use this [pay what you like] model in the future if they haven’t built a fan base in the millions in the years leading up to the release of their album under [this] model?’ said Michael Laskow, CEO of TAXI, a leading independent Artist and Repertoire firm,” Grossberg reports.
“Lipsman also pointed out that for every dollar consumers spent on download sales, they also spent $2 on Radiohead’s $80 deluxe box set, which includes a free In Rainbows download, as well as a physical CD of the album, a bonus disc of eight additional tracks, vinyl records, a lyric book. The package is due to ship Dec. 3,” Grossberg reports.
“A rep for Radiohead has previously said the band would release sales figures at the end of the year,” Grossberg reports.
Full article here.
[Thanks to MacDailyNews Reader “Jon” for the heads up.]
I purchased “In Rainbows” for 6 pounds ($11.something at the exchange rate at the time) even though I had never heard of the band or even one of their songs. The reason why I chose to pay for something that I never heard of (both literally and figuratively) was because I wanted to support their experiment of letting the consumers decide what to pay. I had never seen this approach done before and hoped if the experiment was successful, other bands might follow suit. Besides paying the band directly and not the record companies seems like the right thing to do.
My verdict is that I like “In Rainbows” and feel that I got my money’s worth. I still hope other bands take notice and try innovative approaches to minimize the record companies.
Peace.
Grossberg messes it up. Scott got it right though. It wasn’t an average of $6 per download. It was an average of $6 per paid download. Basically, 1.2 million downloads where 38% paid = 456,000 paid downloads @ $6 = $2.74 million. Average price for total downloads = $2.28. Profit = $2.28 – $1.50 (breakeven) = $.78 per download where the band earned $936,000 in profit.
The great results from this prove Apple’s stance that prices need to remain static and not increase or the paying customers will stop buying and opt for free sources. If Radio head sold on iTunes they would have made more profit. User base would be larger with more free advertising as a top seller. If Apple took less than 20%, RH would have made $8 per album. However, currently their album is out there with more people due to free downloads. Grass roots type of movement will get more adopters. And Bands don’t really make money on Album sales anyway. Most of a band’s revenue comes from touring. So get your album out to as many people as possible. Those people drive up popularity on radio and music charts. That in turn drives more downloaders and purchasers. The result are sold out stadiums.
My question: Would Steve Jobs accept variable pricing on albums if mainstream popular artists wanted to sell their album for $7 instead of $9.99? I’d love to see a star band try that one on iTunes. It could make the case for Apple against the labels.
I paid 5 pounds, I loved everything else they ever did and since i got the last record from a newsgroup i thought i owed them somethihng. I was happy to pay it although 160 bit rate is dissapointing and i wish i had an image to go with it so i could see an album cover on my iphone but thats a small thing, i love the record. I can’t wait for the live show to hit NYC
MDN is contradicting itself by suggesting Radiohead to use iTMS, because then there IS the middleman who svcks up their money… it’s called Apple.
The only reason AMericans were more generous is becuase they’re so used to paying in American dollars, they don’t know the exchange rate… so when they put in 2.99 it ended up costing them double that in American Dollars.
Trent Reznor (NIN) and Saul Williams… also just did the same thing.
http://niggytardust.com/
http://niggytardust.com/saulwilliams/download
£5 ($10.21 at current exchange) paid here. Still less than an album on the iTMS UK.
If cheapskates aren’t going to pay anything, why would they bother to sign up on the inrainbows site and go to all the trouble? Just use your favorite P to P software like you always do. ???
0 is about the right price, maybe a bit too much, now if they could pay me a bit.
@Dolita
Apple has to pay for bandwidth. How much is that? I don’t know but if the artist get a cut that is over 50% I think they would be very happy compared with the deals they get from the record companies.
On the free downloads. Never underestimate human nature, you would be amazed at the type of people that show up to get a free “something” at a store. Not just the ones that need it, but others dressed a little too well or driving a car that shows they got money, and don’t need the free item, they just want it cause it’s free.
Got the Discbox for myself and for my kid. Got our ‘free’ DLs, too. I personally rip CDs at 160 kbps MP3 (Normal Stereo, Not Joint Stereo) anyway — a compromise that allows for longer iPod battery life and the ability to make MP3CDs for the car — so, I’m ‘used to’ that ‘level of quality’.
Anyway, I agree with Dave (above). Why bother to sign up if you won’t pay? BitTorrent instead.
Unless you’re some wanker that wants to punish RH, by wasting their bandwidth. They have your personal info, idiot.
FWIW, while ‘The Bends’ is a very solid album — ‘OK Computer’; ‘Kid A’; and ‘Amnesiac’ are the three BEST albums. And ‘HttT’ — the only album with 4 ‘bonus’ songs
” width=”19″ height=”19″ alt=”wink” style=”border:0;” /> — and ‘InR’ move the band, ever forward.
Not many other ‘good’ bands have a 14 year recording career.
MW: Just made a ‘million’.
People who like Radiohead, are fans, and have previous albums, more than likely paid the $6 or more for it. Those of you who are not fans, paid nothing for it, and probably deleted it, why would anyone care about you or what you thought of it?
It’s not like they are trying to gain a fanbase, they already have it. If it had been in a store only, and you were not a fan, then would you have bought it? At least this way you would have been able to get it for $0 and confirm that you really don’t like them, or maybe you decide you do after all, and go out and buy the others.
So this a “backfire” because..?
Theres been hundreds of articles of analysts guestimating In Rainbows average price and sales volume. Why show this one?
Why show any?
“New and developing artists without the fan base and money could never survive this way..”
unless the new artist is any good, and is featured on iTunes, and gets a little notice on the front page….
how would Fiest have made out this way i wonder?
Bought the 40 quid 180 gm vinyls and cd box set, probably hold it’s value too if I don’t sctratch the LP’s.
It looks like The Telegraph is working hard to spin this the record companies’ way.
A big problem here is that you have to download the album TWICE in order to hear it first, and then decide what it is worth. Only existing Radiohead fans would pay for it the first time. All the publicity would have gotten lots of new people to listen to Radiohead, but their download system would show them as paying only half what they actually did decide to pay.
Also, the “break even price” of $1.50 is completely wrong because it assumes that the number of downloads is equal to the number of sales that would have happened through a normal channel at full price – an absurd assumption. What really matters is how much money did the band get, compared to how much they spent on production and maintaining the site.
Do you bozos even read your own writing?
MDN wrote: Radiohead has eliminated the middleman… Imagine if they also offered the album via Apple’s iTunes Store.
So imagine if they added the MIDDLEMAN back in? The article was about how they’re successfully eliminating the middleman and turning a profit on their own.
Some of the stupidest musings can be found in your writing.
@ MPC Guy
Some of us just have imagination, I guess. Adding the iTunes layer for promotion and face-time would go a long way to promote the album with *minimal* overhead, far less than the music companies demand. It might be good and it might not.
Why be such an asshole?
I just paid $6 cos that is what I think albums should cost. It’s cool that Radiohead will get most of the cash. Kid A was that last album I really liked of theirs so I’m hoping this one will not disappoint.
PCIdiot:
So, 1 in 3 people don’t steal?
No, it’s not stealing if you’re given permission. What do you think it means when they say, “Pay as much, or as little as you think it’s worth”?
Thanks to those who paid
The rest that didn’t your email addy has been sold to the spammers.
“H A H A ” – W.a.s.t.e
R A D I O H E A D
ChrissyOne: Why be such an asshole?
Why are you always a sheep in the flock? Aren’t you an Apple user after all? You don’t always have to agree with MDN.
I wonder, do you call out the Apple fanatics who mindlessly get out of hand? Your use of the word “asshole” is a prime example of the sorts of conversations that goes on here.
Come on, woman! Put a little thought into your position before you go bashing people.
—–
The mean stuff aside….
On a side note, the renovated University Apple store looks nice. Have you stopped by yet? Looks like they added a bunch of stuff and increased staff for training sessions.
Anyway… have a nice day. Today was nice and sunny (for a little bit)…