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Radiohead - So did the Boot Work?

by November 08, 2007
Radiohead In Rainbows

Radiohead In Rainbows

Results of Radiohead’s little experiment of life without leeches, I mean record labels, have started to come in. Early on, reports showed that in excess of ONE MILLION people downloaded the album ‘In Rainbows’ from Radiohead’s site.

Radiohead remains quiet about actual sales numbers and price paid. All the numbers being quoted at this point are estimates based on polls, market analysis, and inside sources.

Reports are showing that only about one third of the downloaders paid for the album, the remainder did not. When all the accounting and averaging were done, about 2.50 GBP, $5.00USD, was the average across the total of all downloads.

According to UK site The Register, Americans were apparently more generous when deciding the value of the music. You know the people that the RIAA is suing with every possible legal angle they can think of, screaming for the need of revised (sic stricter) copyright laws, and more DRM. Downloads for In Rainbows from the US averaged slightly over $8.00 USD while outside the US, the average was just above $4.60 USD. At 1.2 million downloads, the average number tallies up to around $6 million.

There were also an estimated 500,000 so called illegal downloads from various P2P sites. Here, the term "illegal download" is somewhat meaningless because Radiohead did not require any payment for the recording in the first place. A number of analysts have pointed out the people who used the P2P sites for downloading the album likely allowed convenience and familiarity trump even legitimately free downloads from Radiohead directly where one had to submit personal information for a download account. Other factors at work include that because the album was already effectively free, there would be nothing wrong with downloading it from other free sources and an overloaded, inaccessible Radiohead site on release day may have driven some to these alternate avenues.

The reality is that those who routinely get music through unauthorized downloading are also unlikely to pay for an album if somehow prevented from getting it for free. The RIAA likes to use each and every one of these people when they count up lost revenue before they cry to lawmakers to stiffen up copyright laws. This is a fallacious logic used bloat their purported losses to get more sympathy

Simple economics, marginal utility, says that people will only pay what they believe something is worth; those who hover near zero are unlikely to pay more. If the cost of an item exceeds what they value it at, they will not buy it. Yea the down loaders don’t mind having it if it is free, but they are obviously unwilling to pay much more than zero.

Various music industry geniuses with a vested interest in preserving the present, faltering system have piped up on what they see as questionable success of the venture.

The subtitle on that last one from VH-1 reads:

Music-biz professionals suspect band made out well financially - but caution situation was a 'novelty' unlikely to be repeated.

Various music industry types are trying all sorts of spins to suggest failure: the price paid by downloaders was nowhere near the average CD retail price so Radiohead came up short, that there was any so-called illegal downloading shows failure, they try to suggest that the level of success is a fluke, or that this could only work for a band that had benefited for years by using the recording industry’s generous marketing to build an audience that would allow for such a move.

The answers are that Radiohead had nowhere near the costs of a traditional album release, that the unauthorized downloads were less than legitimate downloads when typically the opposite is true, a fluke situation or novelty is unlikely as the market trend is to download music anyways, hence sagging CD sales, and as to the benefits provided to Radiohead by years of association with the recording industry, well, that needs some further examination.

The people piping up about how this can’t work are the middlemen who are interested in stopping future defections, who would like to hide how little they actually pay recording artists, how they actually take all the costs for producing the record and marketing out of artist royalties, and who want to hide just how much of the difference in retail CD markup verses what people paid for the Radiohead download actually would have gone to the labels instead.

Radiohead has been bankrolled by their former label for the last 15 years. They’ve built a fan base in the millions with their label, and now they’re able to cash in on that fan base with none of the income or profit going to the label this time around.

Mike Laskow, Taxi/Independent Artist & Repertoire
comScore/The Register

This statement is of course record industry BS.

Labels recoup all the money they front any musician in a record contract from royalties before the musicians are paid any money. If an album does not make enough money to pay off the advance and any other production and marketing costs, the money will be recouped from the royalties on the next album and the artist will not be paid any royalties until both albums are paid off, every penny fronted by the label. Such was the case with Frank Zappa whose second album, ‘Absolutely Free’, which according to Frank, is named as such because his first album did not make enough money to pay off label expenses so he was required by contract to record then next album for his label for absolutely free.

Historically, middlemen are expensive. Under typical major-label contracts, musicians have paid handsomely for market access. The luckiest ones receive perhaps 15 percent of what their albums earn after a label's expenses are recouped - as opposed to the 100 percent of revenues that Radiohead is getting from In Rainbows online.

Radiohead: Shaking up the recording industry, with success
International Herald Tribune

Some in the music industry worry that what Radiohead have done will devalue music. I believe that the music industry has done that already for themselves in two ways.

Music overload:

The sheer volume of tepid, uninspired music that the industry pumps out has already devalued music based on simple economics: supply and demand. The supply of music is staggering; we are inundated with it. Now with the Internet, this mass produced dreck costs almost nothing to distribute. No wonder people are downloading it for free. Price goes down with oversupply, simple Economics.

But there is also the quality aspect:

What the recording industry doesn’t seem to get is whenever art becomes an industry, whenever music becomes a product, music loses its soul. The recording industry and all those who willingly participate in it have already devalued music. Marginal utility goes down with a decrease in perceived quality. Most people do not have a passion for music, they want something to occupy the background while they do other things or as a pastime when they can’t do anything else. The music industry supplies this void with mass produced dreck in their constant quest to find the next hit by formula.

Coupled with the advent of the digital age and the Internet, which has turned many an industry on its head, which has made distribution of music almost completely cost free, as economics dictates, people are paying what they think it is worth. The innovative music that those with a passion for music are looking for does not come from the major labels except by accident. Most of the customer base that the labels regularly cater to don’t care about music that much in the first place so the constant rehash of the hit formula is good enough. This is why there is an increasing trend in free downloading.

Imagine Radiohead trying to get a record deal if they went to the major labels with ‘Kid A’ as their demo.

So here is the summary.

Radiohead had no costs for physical production or distribution of discs and with no vested interests dipping into the profits with large buckets, almost every dollar recouped from sales of downloads goes straight to the band. As Clint pointed out in the forums, anything above a $1.00 per copy exceeds what most artists are paid with even the most generous Recording Industry contracts.

So, at an average of $5.00 per copy, Radiohead are literally 5 times better off than with any recoding company.

Sounds like success to me.

 

About the author:

Professionally, David engineers building structures. He is also a musician and audio enthusiast. David gives his perspective about loudspeakers and complex audio topics from his mechanical engineering and HAA Certified Level I training.

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Recent Forum Posts:

bholz posts on December 21, 2007 14:19
Rock&Roll Ninja, post: 329989
Billboard™ tracking of indie musicians is spotty at best. XM, Sirius, and Clearchannel™ (the primary company behind broadcast FM radio) rarely, if ever, will give airtime to indie music. Mtv™ does not play indie music videos (that I've ever seen). Rolling Stone™ won't give a full article to an indie release (not that they do many album reviews anymore).

So while more artists may sign to indie labels, you the consumer won't hear about them unless you browse indie music websites, print media, or live in a major city that also has an independently owned & operated radio station that will also play indie label music (good luck with that).

Well, I can recommend Paste Magazine if you want to read about and hear (they include a sampler CD in every issue) new music (indie & major label). They even host artist videos on their website (used to include a DVD in most issues as well, but it became too expensive).

Bill
Fastnbulbous posts on November 18, 2007 22:19
Rock&Roll Ninja, post: 329989
Mtv™ does not play indie music videos (that I've ever seen). Rolling Stone™ won't give a full article to an indie release (not that they do many album reviews anymore).

So while more artists may sign to indie labels, you the consumer won't hear about them unless you browse indie music websites, print media, or live in a major city that also has an independently owned & operated radio station that will also play indie label music (good luck with that).

MTV doesn't play videos much, but they do feature mostly indie artists on Subterranean on Sunday nights at midnight. Rolling Stone has just as many reviews as they ever did, and indie artists (for example, Santogold, Puscifer, Les Savy Fav, Beirut, Pipettes, etc.) are included. Not that anyone relies on Rolling Stone to find new music anymore (though David Fricke does have good taste). People with a clue go to discussion boards, music blogs, Last fm, Rhapsody, etc.
stratman posts on November 16, 2007 16:52
As time passes, the net will play an ever bigger part of how music is obtained, published and regulated, we stand at the cusp of a shift in business models, consumer purchasing pattern change and artists' adoption of an emerging market model. Be assured that the attorneys, corporations and all concerned are just waiting to implement more control over consumer's preferences, rights and artist's wishes. Will the net break the record label's choke? Probably not. One thing is certain, the music industry complex is resilient and has deep pockets, it will ride out this wave of consumer “no confidence” mindset. It will be ready when everyone jumps on board the virtual market place along with their attorneys and marketers. The bright spot will be that indies will co-exist, producing better quality music away from the mainstream and hopefully the better talent will gravitate in their direction. Don't rule out Best Buy or Wal Mart as possible contenders in the future of the music industry, both in financing and distribution.
Rock&Roll Ninja posts on November 15, 2007 13:03
3db, post: 329909
Its my perception that the indie movement is growing in size. I don't know how much ground they gained on the major labels. Whats your take on the indie scene?

Billboard™ tracking of indie musicians is spotty at best. XM, Sirius, and Clearchannel™ (the primary company behind broadcast FM radio) rarely, if ever, will give airtime to indie music. Mtv™ does not play indie music videos (that I've ever seen). Rolling Stone™ won't give a full article to an indie release (not that they do many album reviews anymore).

So while more artists may sign to indie labels, you the consumer won't hear about them unless you browse indie music websites, print media, or live in a major city that also has an independently owned & operated radio station that will also play indie label music (good luck with that).
3db posts on November 15, 2007 08:14
Does this practise hold true for the indie producers as well?

David Waratuke, post: 327982
The article was not biased for down loaders, but rather it is decidedly critical of the music business and the record labels.

I am familiar with Sia.

If you do speak with here again, ask her if she owns her music, the stuff published by her label.

I would be most amazed if she does in fact still hold the copyrights to any of her works as part of her record deal.

Yes record companies play a part, they sponsor and promote new bands and musicians that don't have the capital to produce and distribute records and front a tour on their own. And up front, the record companies do it on their dime.

But they are venture capitalists who typically extract a very lopsided deal out of starry eyed performers. Yes if the records never sell, tickets to shows don't sell, the labels risk not recouping their costs, but when the money does roll in, they get all of theirs back first, before they pay the musicians under contract. The labels also make the artists sign over copyright to the material.

A more realistic view of the record labels is that they use the high costs to enter the music industry as economic barrier to entry into the market to leverage these lopsided deals.

Now I will point to several places where people who have been in the business for a long enough time that the stars in their eyes are gone and no longer blind them to what the record labels have done to them.

Courtney Love on the RIAA, Napster, and Lots of Other Stuff

Which leads to a much more elaborate elucidation of what the music industry is really up to than I ever would have expected from Courtney Love, but perhaps it is only her public persona.

Courtney Love does the math - The controversial singer takes on record label profits, Napster and “sucka VCs.”

Here is what Ms. Love has to say about the music industry:

Recording Industry Association of America (RIAA)

Last November, a Congressional aide named Mitch Glazier, with the support of the RIAA, added a “technical amendment” to a bill that defined recorded music as “works for hire” under the 1978 Copyright Act.

He did this after all the hearings on the bill were over. By the time artists found out about the change, it was too late. The bill was on its way to the White House for the president's signature.

That subtle change in copyright law will add billions of dollars to record company bank accounts over the next few years – billions of dollars that rightfully should have been paid to artists. A “work for hire” is now owned in perpetuity by the record company.

Under the 1978 Copyright Act, artists could reclaim the copyrights on their work after 35 years. If you wrote and recorded “Everybody Hurts,” you at least got it back to as a family legacy after 35 years. But now, because of this corrupt little pisher, “Everybody Hurts” never gets returned to your family, and can now be sold to the highest bidder.

Over the years record companies have tried to put “work for hire” provisions in their contracts, and Mr. Glazier claims that the “work for hire” only “codified” a standard industry practice. But copyright laws didn't identify sound recordings as being eligible to be called “works for hire,” so those contracts didn't mean anything. Until now.

Writing and recording “Hey Jude” is now the same thing as writing an English textbook, writing standardized tests, translating a novel from one language to another or making a map. These are the types of things addressed in the “work for hire” act. And writing a standardized test is a work for hire. Not making a record.

So an assistant substantially altered a major law when he only had the authority to make spelling corrections. That's not what I learned about how government works in my high school civics class.

Three months later, the RIAA hired Mr. Glazier to become its top lobbyist at a salary that was obviously much greater than the one he had as the spelling corrector guy.

The RIAA tries to argue that this change was necessary because of a provision in the bill that musicians supported. That provision prevents anyone from registering a famous person's name as a Web address without that person's permission. That's great. I own my name, and should be able to do what I want with my name.

But the bill also created an exception that allows a company to take a person's name for a Web address if they create a work for hire. Which means a record company would be allowed to own your Web site when you record your “work for hire” album. Like I said: Sharecropping.

Although I've never met any one at a record company who “believed in the Internet,” they've all been trying to cover their asses by securing everyone's digital rights. Not that they know what to do with them. Go to a major label-owned band site. Give me a dollar for every time you see an annoying “under construction” sign. I used to pester Geffen (when it was a label) to do a better job. I was totally ignored for two years, until I got my band name back. The Goo Goo Dolls are struggling to gain control of their domain name from Warner Bros., who claim they own the name because they set up a shitty promotional Web site for the band.

Orrin Hatch, songwriter and Republican senator from Utah, seems to be the only person in Washington with a progressive view of copyright law. One lobbyist says that there's no one in the House with a similar view and that “this would have never happened if Sonny Bono was still alive.”

By the way, which bill do you think the recording industry used for this amendment?

The Record Company Redefinition Act? No. The Music Copyright Act? No. The Work for Hire Authorship Act? No.

How about the Satellite Home Viewing Act of 1999?

Stealing our copyright reversions in the dead of night while no one was looking, and with no hearings held, is piracy.

It's piracy when the RIAA lobbies to change the bankruptcy law to make it more difficult for musicians to declare bankruptcy. Some musicians have declared bankruptcy to free themselves from truly evil contracts. TLC declared bankruptcy after they received less than 2 percent of the $175 million earned by their CD sales. That was about 40 times less than the profit that was divided among their management, production and record companies.

Toni Braxton also declared bankruptcy in 1998. She sold $188 million worth of CDs, but she was broke because of a terrible recording contract that paid her less than 35 cents per album. Bankruptcy can be an artist's only defense against a truly horrible deal and the RIAA wants to take it away.

Artists want to believe that we can make lots of money if we're successful. But there are hundreds of stories about artists in their 60s and 70s who are broke because they never made a dime from their hit records. And real success is still a long shot for a new artist today. Of the 32,000 new releases each year, only 250 sell more than 10,000 copies. And less than 30 go platinum.

The four major record corporations fund the RIAA. These companies are rich and obviously well-represented. Recording artists and musicians don't really have the money to compete. The 273,000 working musicians in America make about $30,000 a year. Only 15 percent of American Federation of Musicians members work steadily in music.

But the music industry is a $40 billion-a-year business. One-third of that revenue comes from the United States. The annual sales of cassettes, CDs and video are larger than the gross national product of 80 countries. Americans have more CD players, radios and VCRs than we have bathtubs.

Story after story gets told about artists – some of them in their 60s and 70s, some of them authors of huge successful songs that we all enjoy, use and sing – living in total poverty, never having been paid anything. Not even having access to a union or to basic health care. Artists who have generated billions of dollars for an industry die broke and un-cared for.

And they're not actors or participators. They're the rightful owners, originators and performers of original compositions.

This is piracy.


Continued

Its my perception that the indie movement is growing in size. I don't know how much ground they gained on the major labels. Whats your take on the indie scene?
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