The Radiohead Experiment
Recently Radiohead offered their new CD "In Rainbows" to consumers (http://www.inrainbows.com/) with the choice to download the entire album and pay whatever the individual feels is fair. Authors and book publishers certainly should be interested in this project and the results. While there are clear differences between the music business and the book business, there are also many similarities, particularly in the way that retail has evolved. For example, the decline in the amount of shelf space available for new titles and backlist against the number of titles produced annually is strikingly similar between the two industries.
The structure of each industry is very much the same. In each there has been a decline of independent outlets, rise of mass marketers and big box stores, and the prevalence of large active used resale marketplaces is common to both music and books. Additionally, on the production side, there are great similarities - with a small number of large publishers or labels, a huge number of independents, and now too, a rise in self produced products.
Differences of course abound; there is no radio or anything like it to promote books. Musicians make money performing in ways that most authors can only admire from afar. No one pays $40 for an author tour t-shirt either (well maybe once in a while).
Music can be consumed while doing other things and is almost ubiquitous, and the internet has broadened its reach wildly, while reading requires attention and focus. Certainly there will never be as many people interested in reading or buying books as there are who listen to music. But then again, books are used for many purposes, with academic, professional and science categories that have no equivalent in music either.
Regardless, the idea of that both businesses are going through some serious changes now would be difficult to dispute. So the Radiohead project is interesting to publishers and authors in the same way that Seth Godin’s work is illuminating for musicians and record labels.
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Here is a report on the first three weeks of the Radiohead experience: http://blogs.mediapost.com/online_minute/?p=1601.
Radiohead Results: 38% Forked Over $6 Average
Posted November 6th, 2007 by Wendy Davis
It’s no exaggeration to say the music industry is eagerly awaiting the results of Radiohead’s decision to let consumers decide how much, if anything, to pay for the group’s latest album.
And it’s probably fair to speculate that many executives are hoping that the group finds it can’t make as much money with their pay-what-you-choose pricing plan as it could have, had it sold “In Rainbows” through a record label.
Now, preliminary results in from comScore show that about six in 10 downloaders didn’t pay anything for the album since it was made available online on Oct. 10. Worldwide, 1.2 million people visited the album’s Web site last month, with a “significant percentage” downloading the record, according to comScore estimates.
Thirty-eight percent of downloaders worldwide paid something for the album, while 62% downloaded it for free. Paying downloaders forked over an average of $6, with U.S. consumers paying almost twice as much ($8.05) as those from other countries ($4.64).
Between the “freeloaders” and paying downloaders, overall revenue came to an average $2.26 per album.
But many questions need to be answered before any conclusions can be drawn from that figure. Among the most significant is, how many of those early downloaders only did so because the tracks were free? If the freeloaders wouldn’t have purchased the record under any circumstances, it doesn’t bode poorly for musicians that they chose not to pay here.
Consider also, bands typically receive only a small portion of the purchase price when their record labels sell the albums. While precise details of arrangement between Radiohead and its label aren’t known, music attorney and record exec Chris Castle
estimated to CNET that the group saw between $3 and $5 per album sold by their label and tended to sell 3 million to 4 million copies of each album.
Meantime, before anyone deems Radiohead’s initiative an economic failure based on just three weeks worth of data, the industry should consider the intangible factors — including goodwill from consumers — that could translate into ticket sales or other revenue down the line.
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This may not mean that authors will be racing to replicate this idea with their books, but some will, perhaps with variations on the theme. The truly excellent music and culture magazine from Georgia, Paste Magazine (http://www.pastemagazine.com/) is currently offering subscriptions for any price you want to pay them. Why not sell books online the same way? If you have a platform and an audience that will pay attention, it might just work well enough to provide authors with enough income to allow them to do what they need to do - which is write for a living.
