In Rainbows

(13 October 2007)

This probably won't be an "enjoyable" blog per se. My apologies. I just think this topic is cool.

With each passing month I grow less tolerant of the general music business. Most of the music I most enjoy right now is stuff that isn't too catchy upon the first listen. Over the years, I've concluded that about 90% of the time I like a first song the very first time I hear it, I'll probably be sick of it within a few weeks.

What got me on this tangent? Radiohead released their new album "In Rainbows" on October 10th. Online. And you set the price for which you'll purchase it. What I adore in this is how they willingly spat in the face of every major music label. Rather than signing a contract, they released the dang album on their website. Just up and posted it. No record company, no marketing, no lead single/video, no TV performance tours. The more I think about it, the cooler it is. They are known worldwide, have a loyal following, and have made their music more accessible for the curious fan.

Why do I love this? Bands get fiscally raped so easily. A long time ago I used to think the $17 I would pay for an album resulted in about $12 going straight to the band, when in truth they can expect a $1 profit off any album sold through standard channels. What's worse is this is only after their "compensation" fully reimburses the record company. "For example, if a major label spends $250,000 to record an album, the band must make over $250,000 in royalties until they receive their first royalty check. Once a band sells enough records to pay back the amount to the record label, the band has recouped and will receive royalties on future record sales. Approximately 80% of albums never reach this point which means that most bands NEVER receive any royalty checks. Do the math yourself, if you owe the record company $250,000 and you make $1.00 per CD, that is a quarter of a million CD's you must sell before you collect royalties."

All of that comes from the music producer who penned this article. I recommend it.

Back to my thesis of Radiohead's brilliance in this move. Despite liking many bands, it takes me a while actually purchase a new cd because of the price. Yeah, I'm cheap, and I like it that way. I'll wait until somebody sells it to the used CD store - or one of those amazing Russian music sites, which it turns out are legal if you do the research. If the band I endorse with every $17 CD I buy only receives an average of $1 net profit, am I not supporting their music more by going to the direct source and skipping the middle man?

Which brings me to brilliant idea 2: the customer sets their price. If you want it for free, pay nothing. If you want to support the band, pay $15. Through setting my own price, I contributed what would otherwise have required a $153 purchase of normal discs through typical vendors for Radiohead to receive the same profits. Today I (1) spent $8 less than I would have by purchasing a hard copy of the album, and (2) gave Radiohead a 900% increase on their return.

Could you imagine if this occurred more frequently? What an amazing way for a band to grow their audience. New fans could receive an album for free. Lower price = more demand for the album = higher overall gross income for Radiohead. Both main parties are better off!

I guess this way of distributing music is working. By the end of October 12 - 3 days later - 1.2 million copies were sold with the average price a customer pays being $10. That $10.2 million profit that Radiohead directly received would have only been accrued if they sold over 90 million cds. I hear Madonna is thinking about releasing her next album the same way.

So…yeah. I really shouldn't think so much. If you sat through all of this, my appreciation.