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Radiohead's
Online Release Challenges Music Industry |
Posted:
10.31.07
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The unconventional release of Radiohead's "In Rainbows"
-- sold online and without a set price -- could redefine how musicians
distribute and get paid for their music.
Printer-friendly version: PDF
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As the record industry continues to sell fewer and fewer albums
and online music sales heat up, Radiohead's break with their record
label could inspire other groups to adopt the same business model
- cut out the record companies and release music directly to the
fans.
 Instead
of selling the album in stores, Radiohead cast off their longtime
record label, EMI, and is selling their music exclusively on the
band's Web site. Radiohead also went a step further: they are
letting their fans name their own price. On average, fans have
paid $8 for the album. More than half have chosen to pay nothing
at all.
It is too early to say whether the experiment will pay off in
the long run, but Radiohead's decision to sell directly to fans
at a price of their choosing has shocked the $33 billion-a -year
music industry.
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Growing Trend |
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Radiohead isn't the only artist to part ways with their record
label recently.
Madonna cast off her label, Warner Music, to sign a $100 million
contract with Live Nation, the concert promoter.
 And
industrial-rock group Nine Inch Nails announced October 8 that
they have left their label as well. Band leader Trent Reznor wrote
on the Nine Inch Nails Web site that the record business has "radically
mutated."
"It gives me great pleasure to be able to finally have a
direct relationship with the audience as I see fit and appropriate,"
Reznor wrote in the statement.
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Cutting out
the middleman |
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Traditionally, the record company's role has been crucial to
a musician's success. The labels provide the initial funding for
manufacturing the records, and help promote the artist.
By releasing their album online, Radiohead is suggesting that
record companies have become a cumbersome middleman in the Digital
Age.
"I like the people at our record company but the time is
at hand when you have to ask why anyone needs one," Radiohead
lead singer Thom Yorke told Time magazine in 2006.
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Direct Marketing |
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It typically takes several months for a record company to produce
an album, replicate it and distribute it to stores. The company
tries to build hype for the new release through a marketing strategy.
 As
it has become easier to download music online, legally or otherwise,
traditional CD sales are declining. Instead, more revenue is coming
from the sale of related merchandise such as T-shirts and concert
tickets. Musicians say they need to get their music to their fans
faster, in order to generate word-of-mouth publicity for concerts.
"The game used to be really simple. You get your record
played on radio, you get your face on Rolling Stone (magazine),
and you get on 'Saturday Night Live,'" all of which would
be managed by the record companies, Bruce Flohr, an executive
at Red Light Management, which represents the Dave Matthews Band,
told the Associated Press.
"Now…you put your video on YouTube, you get your MySpace
page happening, you do your deal with Facebook, you tour ... all
these things add up, hopefully, to a successful record."
Radiohead hopes that success from the downloadable album, which
reached 1.2 million downloads in the first two days, will encourage
some fans to download or buy a boxed set of "In Rainbows"
for $80 at the beginning of next year.
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Broken Record
Labels? |
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Nervous industry analysts say the record labels still have an
important role in marketing emerging artists and superstars alike.
 Smaller
artists rely on labels to assume overhead costs of manufacturing
and promotion. The record companies are also better able to produce
to exacting digital standards.
Superstars like Radiohead and Madonna have a dedicated fan base
that will respond to their music, no matter how it is sold. They
have years of investment behind them, thanks to their labels.
A growing number of record companies are responding to the changing
environment by offering "360-degree" deals that extend
to cover merchandise and concert ticket sales.
"The idea is, let's become a talent developer rather than
a CD seller," Sony BMG CEO Rolf Schmidt-Holtz told the Financial
Times.
--Compiled
by Christina Satkowski for NewsHour Extra
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