Freeloading In Rainbows
comScore has released the results of their analysis of the In Rainbows sales for the month of October. Turns out that ~60% of the people who downloaded In Rainbows in October chose to pay nothing for it. For the other 40%, the average price paid was $6 US.
There are two kinds of music customers these days; the ones who will pay for music and the ones who won’t. I am in the former, having been indoctrinated into the process of acquiring music 35 years ago. But I know plenty of people who are in the latter category. They can’t bring themselves to pay for something that is available for free. They are the freeloaders and they are apparently 60% of Radiohead’s fan base.
I’ve argued loud and hard on this blog for the past four years that the music industry cannot ignore the freeloaders. It needs to come up with a model to service this group. It’s getting bigger not smaller.
People have been saying that the Album is a promotional piece for concerts for years now. The big question is who gets the cut of the concert box office?
Radiohead concerts cost about $50 per ticket. And if they come around me, I go to not one, but multiple shows if they play multiple ones. You can’t beat it — they’re live show is off the hook.The money for musicians (IMO) is in the concerts — give the music away for free (60% of people think it should be free anyhow) and charge the extra $6 in the ticket price; and give us a great live show — we’ll tell our friends and keep coming back.If I were to invest in a band ever — they’d have to have a great live show; and be willing to incessantly tour. i.e. some smaller bands like this are Will Hoge, Margot & The Nuclear So and So’s, and The Silent Years. … Will Hoge is like a younger Bruce — and he tours like 200 days a year; great live show too.
I’m a big fan of paid subscription services like Yahoo Music. It seems that there should be a way to subsidize this pay-for-access model with advertising.I’ve slowly moved from CD collector to freeloader to MP3 (iTunes) junky to Yahoo Music fan. For me, it’s less about owning the music and more about accessing what I want to hear when I want to hear it.That’s the big challenge. How does the music industry give me this commodity of the recorded song while getting me to pay or look at advertising or buy other ancillary products like ringtones, “bootlegs”, etc.Thanks, Fred. I’m a huge fan of your blog.David
By the way, I love the streampad widget.
I too believe that a subscription and/or ad supported streaming service is the answerFred
I think you nailed it on the head here. Who cares about owning music when we have unbridled, unlimited, and on-demand access to it? And we are close…as soon as this country (and the whole world) is wired so portability is no longer an issue, we will be able to do away with music ownership (and the incredible data redundancies that accompanies it) yet retain total on-demand access.Furthermore, whether media companies like it or not, consumers have been acclimated to the notion of “free,” on-demand media. Rather than alienating consumers by attempting to stuff the rabbit back into the hat and reverting back to old solutions, big-media must respond with new business models that harness the massive increase in media consumption that will come with free, on-demand access.The big challenge, as I see it, is coming up with an unobtrusive way to monetize this increased usage. Google has mastered unobtrusive text ads in search – not only do we not mind the ads, but we often times even like them (and thus click on them) – but unobtrusive ad frameworks are much more difficult to implement for audio/video media (as opposed to simple text).A short-term solution may be to pair free, ad-supported, on-demand models with a paid-subscription model which removes the ads for those willing to pony-up the subscription fee.
I have wracked my brain for years and can’t come up with an asnwer to this issue — Fred, do you have a suggestion?But I continue to mourn the degradation and disrespect of intellectual property and copyright and the like — the thoroughly modern and democratic and exceedingly liberal mechanisms by which artists and entrepreneurs and scientists and engineers survive and prosper. (Previously, only a landed gentry had property rights, and that thru the divine right of kings.)Today, copyrights. Tomorrow, patents. The next day…? Regardless, the losers are the creative class. The winners, the few huge multinational corporations who control and own the means of distribution — yes, even the “free” internet — paid your ISP and cel bill lately? — and who always, always, bemoan having to share revenues with those pesky inventors and artists, and who are now being handed the ultimate revenue share suppression tactic — a youth movement and geek/creative class deluding themselves that by proclaiming “information must be free” they are not also saying “which means that whoever owns the platform and the pipes now owns literally everything”…—btw, saying the music business model should be touring and merchandise revenues only is strange and painful — pieces like The Beatles “Abbey Road” and Pink Floyd’s “Wish You Were Here” and Brian Eno’s “Another Green World” and Enigma’s “MCMXC A.D.” simply are not the same as concert pieces as they are recordings. Similarly, for obvious reasions, the music in The Greatful Dead’s live concert(s) album, “Europe 1972”, can’t ever be recreated in concert (even if Jerry Garcia was alive). Recorded or physical manifestations of art and engineering aren’t going togo away just because a lot of dumb people think stealing is OK as long as you don’t get caught…
Fred, where do you stand on the Writers Guild of America strike?
SteveI am not familiar enough with the issues but I think the writers should get their fair share of online and digital revenues if in fact they are not currently thatFred
The same thing [strike, etc] is going to happen next year with SAG:http://en.wikipedia.org/wik…I called it ;-)http://avc.disqus.com/close…
Surely you don’t think that the entire group of freeloaders are really Radiohead fans? There was tons of buzz about the online release, which drew lots of curious people who otherwise wouldn’t have listened to Radiohead regardles of cost..The only COST of those freeloaders is in bandwidth, since they weren’t ever going to pay anything for the release. Even those total freeloaders can generate eventual revenues downstream when some of them decide they like the band, go to a show, pass it on to someone else who eventually pays some coin, etc.
More importantly, how would a move toward “free” music affect the suckers who have been paying for recorded music their entire lives? If it’s acceptable to steal intellectual property which is plainly labeled as such, is it acceptable for me to sue the freeloaders as a group to recoup the total nut I’ve shelled out over the last 30 years?The toothpaste is out of the tube. It is what it is. The low hanging fruit has been picked. Well, not really. It’s about right and wrong. And believe me, I hate the labels as much as anyone – historically and consistently screwing the artists, they made no friends by steadily increasing the average price of CDs while the cost to print and market them dropped. However, anybody who steals music and tells you they think it’s the right thing to do deserves one question: why? Their “answers” will always make you fall on the floor laughing. Nothing renders a petty thief more infantile than forcing him to explain his actions.Guy walks into Gristede’s. Steals candy bar, because he’s always stolen candy bars and never been caught. Tells all of his friends, and they start stealing candy bars. Ignoring the fact that Hershey would simply stop supplying this store with candy bars, do you change the law against shoplifting, or do you put a banner ad on the wrapper?
The music business is going from a pay up front model (coercive) to a pay if you like the product model (cooperative). I don’t see a fundamental problem with that. As fans, we need to make sure we support local artists and our favorite ones as well.PS. One of my friends was a ‘freeloader’ who never listened to Radiohead before. Downloaded the album for free and is now becoming a Radiohead fanatic (and paying for their other albums.) PSS. Does anyone know if sales of other Radiohead albums have gone up significantly since In Rainbows came out?
Even though it’ll never happen, I’d love to see some figures relating to AllofMP3’s services. I’ve known lots and lots of folks who spent a lot of money there — money that the “legit” RIAA-saddled world will never see. When a track is ten cents, it is no pain in gambling on a new album or unfamiliar artist. There is no hesitation to buy.In other words, there is a price-point at which a lot more people will buy (nobody really LIKES using P2P), and it’s simply a lot lower than anything out there right now.It isn’t complicated. Make it cheaper. Hold the DRM.
Questions I would like answered:1. How many of the 60% are *new* to Radiohead, i.e. in the act of discovering the band?2. What %age of those who purchased are Radiohead fans who already own other CDs?3. What is the possibility that some of the new converts will purchase (i.e. pay for) a new Radiohead CD and/or attend a concert? – this is key for the industry to understand since there is no such thing as 100% conversion, despite whatever noise the RIAA makes about “lost sales” beause of freeloaders. Freeloaders who don’t convert are not worth bothering about, much less suing!PS I think the subscription model is a horrible idea – reasons explained in a blog I have been trying to complete for the last 6 months.
You’re right, Fred. As a television writer/producer currently on strike, it’s obvious that for a lot of content (songs, shows, movies) if there isn’t a model that works for “free,” then there isn’t a model that works. The WGA and the studios are both living in a fantasy world — that we’re all exempt from the forces that have cut right through the music business.
Not sure I like the phrase “serve the freeloaders” — do you mean “convert those with the freeloader mindset into customers” instead?Obviously, ignoring them isn’t working, because given the chance, many are stealing the music (i.e., except in cases like RadioHead where it is being given away).
I recently discussed how to handle it here: Give away lower quality (the kind everyone is currently using and stealing) and charge for the higher quality + extras. Throw in subscription and ad-supported options as well.http://www.evolvor.com/2007…
Hey, Fred.I just came across this social internet radio site: http://www.jango.com. Have you seen this? I learned about it reading this post from Cool Hunting: http://www.coolhunting.com/…
A band like radiohead probably makes around $1 an album on a major label. Here, 40% of their users paid $6 – including overhead that’s probably around $5 an album or so. On average, this means that radiohead is making around $2 an album for this including all the ones given away for free.So even if you give away 60% for free, you still make more than you would from the labels.
Actually 40% is incredibly *high*. I think most people following this path are going to see something more along the lines of single-digit conversion either as donation or purchase.
but are those 60% who didn’t pay are Radiohead fans ? I doubt it.I don’t think those are the people who will listen to the album 24 hours a day as I did.if it’s free you grab it, if you don’t like it you delete it. you couldn’t do that with CDs.it’s similar to going to the record shop, listening and deciding whether you like it or not.in the old business model, those who didn’t end up buying weren’t accounted for.it doesn’t necessarily mean a loss for Radiohead.and they’re probably making more money that they ever made with their former record landlords.any figures on how much Radiohead made in their previous albums ?
the labels are currently at $.01 per track. too high to enable the model and remove infringers from the equation. at this rate, only the crazy ones are willing to risk their luck like imeem and lala. if the labels want to really make some money, they need to drop the rate and enable all the infringers. in the aggregate they will make alot more money. how long will it be before the rates make sense? until then, there’s an incentive for sites to operate under dmca protection or other means.
Damn straight davidFred
A pet peeve (from an old guy)There’s no question that an increasing percentage of a band’s revenue will be generated by their live show. So, why do bands (or perhaps the venues) market their shows to a small subset of their potential customers?Apparently, musicians and concert promoters are completely unaware of the fact that almost all people over the age of 21 have a job and that those jobs require you to be working before noon.I go to a lot of weeknight shows where typically the doors open at 8:00, the first band goes on at 9:00, the headliner takes the stage around 10:30, and I’m in bed about 1:00 am. But, I am anomaly. I’m willing to the pay the price the next day.So, bands and singer songwriters here’s a suggestion that could increase demand for your tickets. Start your shows EARLIER! Headliner goes on at 8:00 and working stiffs can be in bed by 11:00.And an ancillary benefit of having working people attend your concerts — they may actually have enough money to buy your merchandise.Sorry for the rant, but I’m going to see The Hold Steady Thursday night and I’m dreading my 8:00 am Friday meeting already.
i am with you. i walk out of shows about half way through way too much. standing there waiting for the main act to come on at 10:45 is painful.
The live show is NOT the way bands make money. You tour to promote the product, not the other way around. Touring costs way more than recording. Sure, huge acts like the Stones or U2 make a killing on the road, but your typical band on tour hopes to break even on the tour. The money is in publishing.I’ll never bite on the subscription model. I want product, and I certainly don’t want my music tied into some web supported system.Buy music. It’s the right thing to do.The answer is that everything was fine and y’all fucked it up.
jackson’s right. As a former fulltime recording artist who didn’t break big, I can say that record sales were really the only way to make any money. And some acts just aren’t very good live, but they make great studio artists.At the same time, Jackson, the cost of acquisition of a fan drops to near zero. The question is how do we get paid? Does the world want broke, part-time artists? Can’t you people see past the inconvenience to pay a lousy 10 bucks for a record I spent 3 months recording and 6 months writing?Radiohead can pull it off. They likely made a huge amount of money on the deal, because they don’t have to pay down through the chain. And the 60% that didn’t pay now, well some will pay later in some way. But the smaller bands, well a lot of them are getting a pretty raw deal.And yes, I support the writers’ strike. You should be compensated for your inventions when others are making money from them, whether in software, music, film, or whatever.
Was it Fred who made the comment that it’s probably never been harder for musicians to support themselves? I agree with that. However, I think a band that can build an audience/community centered on its music will have multiple avenues to make money. I also think that with a smart customer based approach, a compelling stage show can be of those avenues.
jackson nails this one.1. Most tours never even get off the ground; it takes money to make money [or to reach “break even”].In fact, the phrase “break even” is instructive here, because it implies some kind of sunk cost that the artist tries to recoup through ticket sales, etc. Most artists [even moderately successful ones with a real fan base] don’t have the funds to finance *any* type of “sunk cost.”2. Publishing is huge.
As an outsider it appears to me that the music industry is headed down a dead end by continuing to put forth most of its efforts into selling recorded music. Musicians would be much better served aggressively seeking new revenue streams and doing a better job of squeezing revenue from streams currently in place.It looks to me that musicians are in great need of management with expertise in internet marketing. Building a robust audience/community on the internet will be (if it isn’t already) an essential ingredient for generating income. I have yet to find a band/musician making effective use of their web site or using ancillary tools (a blog, Flickr, Photo Bucket, YouTube, Twitter/Pownce/Jaiku etc.) to build an audience.I have no idea how, but I’m positive talented musicians will continue to be able to make money.
In short, I believe that “personal data” is the quiet variable in this whole equation.I value my personal information. I don’t want to give it away online. Sounds like early web paranoia, but I am still careful and I’ll bet a lot of people are like me. When I do register my information, I try to do so on a limited amount of sites. Radiohead doesn’t have my information yet, so the real cost of the album = $X (whatever I want to pay) + the value my personal information. I don’t know what the real value of my personal data is, but I think it’s worth more than people think. And if Radiohead (or anyone thinking about trying this experiment) isn’t going to use it for anything valuable, why do they need it? I don’t really think it’s to place download limits on consumers.I suspect that the “In Rainbows” numbers would have been noticeably different if Radiohead had accepted Paypal or Google Checkout, services that already hold your personal data. If you could have downloaded the album by typing in your username from one of these sites, I bet the average price would have increased and a greater percentage of people would have paid. Why? Because they reduced the marginal effort to do so.I also think they should have an option to pay for the album AFTER you download it. Say you download the album, pay nothing, and then feel bad about it. Or say you like it more than you expected and want to show your appreciation. You subsequently go back to the site and try to download it again so you can pay. You can’t do that. You’d have to enter in different personal information (i.e. fake) just to make this happen. What’s the sense in that?In summary, I don’t think I should have to register my personal information with every band/product/service/etc.
Both points are good. I don’t like giving out personal information either, and how in the world are you supposed to know how good an album is until you have heard it? (some people DID sign up twice, to pay after listening to the free download – how does that show up?)There’s another huge question. 40% of how many? Wikipedia says Kid A sold 1.3M copies in the US in the first 3 years. comScore says there were “a significant fraction” of 1.2M downloads (worldwide) of “In Rainbows” in the FIRST MONTH. Sounds like a lot more paying fans to me, however many freeloaders you want to count (at about 0.1c bandwidth cost for a 15MB download, at wholesale bandwidth prices, if a New York-LA OC3 line costs anywhere near $4000/mo)
How many more albums did they sell at the $6 avg than normal? It seems to be a good model if ya can make it up in the volume. It is quite efficient. My dad used to say; something is worth what people are willing to pay for it. It is a one to one sales model. How good does that get? I get for free today, I like and pay for the next one. I paid for this one, didn’t like I don’t pay next time. It would be even more interesting to see them do this again and compare the results. Beyond the quantifiable ecomonics, there is tremendous goodwill and brand development being created. You can’t shake a stick at that.Of course my whole premise assumes the volume is there. If not, ignore everything I just said.
I paid $10. I wish all bands would distribute their music themselves so I could pay them directly. I get that it’s hard to build a name/presence without distribution but for established groups direct selling is where it’s at.In 12 months I’d like to see how the earnings stacked up with this album release compared to other Radiohead album releases. Did this experiment net the band more of less money? Was there more of less effort involved etc? I think you have to understand the answers to those questions to see if you have something potentially sustainable.