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22 October, 2007

At the end of the rainbow

Radiohead's release of their latest album as a 'pay-what-you-want' download gained them a lot of publicity (including here, admittedly) and generated breathless speculation about a future utopia controlled by artists rather than global corporations.  It seems the other shoe is dropping: it was all a promotional gimmick to sell CDs.

Quoted in the Financial Times, Bryce Edge of the band's management company said:

"If we didn't believe that when people hear the music they will want to buy the CD, then we wouldn't do what we are doing.
You can't listen to a Radiohead record on MP3 and hear the detail; it's impossible."
Well, it is when those downloads are deliberately restricted to 160 kbps rather than 320, as Radiohead have used before. In hindsight, that was a bit of a clue that they were a side-issue rather than the real release.
In fact, far from moving away from traditional CD distribution:
Mr Edge said. "We can't understand why record companies don't go on the offensive and say what a great piece of kit CDs are. CDs are undervalued and sold too cheaply."
Too cheaply! CDs are ridiculously expensive via mainstream UK retailers.

It was already known that 'In Rainbows' will be released on standard CD in 2008, but the FT provides an update: the album should be out in January, on one of the 'big four' multinational labels, and may contain further bonus material to drive the hook further into those already tempted by the mp3s. Having heard them, I'm not.

Not that this was some sort of loss-leader: sources quoted by Wired have attempted to assess the raw financial success of the download release, and come up with a figure of something like 3-5 million in the first week.

[Update 07/11/07: It seems that was optimistic, perhaps based on visitors to, not necessarily the subset who went on to become customers. Further research suggests that 62% of downloaders paid no more than the 45p admin charge, and the average amount paid by those who did pay was 2.90.
The Guardian observes that that's well below the price of a CD or mainstream (i.e. iTunes) download. However, I don't find that part surprising. I certainly paid rather less than for a CD, as I never intended to buy the download instead of the later CD release, so paid a token amount now for a stopgap before paying the full amount for a CD later (then I heard it, and decided the download was more than enough, but that's a different matter). I doubt I was alone.]


the interesting thing about the free-download thing is that it makes very good economic sense for musicians.
a little known fact is that musicians don't make a huge amount from their CD sales. even the hugely well-known ones.
the BIG money is in touring. as in, the *BIG* money. as in, 99% of most bands' earnings.

so, free downloads is essentially a costless way of fostering demand for the genuine revenue-generating product: live gig ticket sales. people hear the songs then want to see the band live when they come through their area.

i'd argued this for ages once i'd seen the numbers, and was most gratified when arctic monkeys neatly proved my point.

Posted by Saltation at October 22, 2007 06:55 PM

That's true for the big name artists, but I'm not sure that the same applies for smaller bands; especially those that sell a high proportion of their CDs direct rather than through high street record shops.

Be interested in the economics of band like Marillion, for instance. Do they make much profit from touring?

Posted by Tim Hall at October 22, 2007 08:01 PM
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