Recent study reported that “In Rainbows” was paid for by only 38% of downloaders, but do the statistics hold water?.
Curiously, ComScore Inc, the company whose proprietary data collection allows for monitoring of member’s online behaviors enabled their production of this unofficial study, which is in no way supported by or affiliated with the band Radiohead, leads its announcement with a strong anti-downloader statement made by alarmist music industry pundit Fred Wilson.
Mr. Wilson, who is managing partner of Union Square Ventures, interprets the data from Comscore’s study to mean that “62% of global downloaders of ‘In Rainbows’ chose to pay nothing, suggesting that perhaps a majority of music consumers feel that digital recorded music should be free and is not worth paying for.”
Arguably, as a venture capitalist investing in the establishment business model for the music industry, Mr. Wilson is biased in favor of the establishment rather than the artist, and would have to resort to turning the major learning of the study on its head, thereby enabling such a negative statement to be made.
In actuality, the big data point which ComScore presents is that: 2 out of 5 downloaders offered the option of paying nothing, while the other 3 chose to Pay something.
That Mr. Wilson goes on to describe downloaders who, offered something free said “Great! I’ll try it!” as “freeloaders” really makes the point that establishment folks are unable to recognize the New Media Generation as anything but criminals at worst or initiative-less “freeloaders” at best.
To say that I find it disappointing that someone so engaged in things music still can’t, or won’t, see the silver lining in the P2P cloud is an understatement.
Big corporations are desperate to find a way to engage their customers in a relationship with their product while maintaining an inflated price structure based on a business model crafted around capital investment costs long-ago paid by prior generations of customers or long-ago paid finders-fees.
The advent of a culture where millions upon millions spend hours weekly if not daily engaged in the discovery of new music, old favorites, and sharing same with anyone else they find so dedicated to music appreciation should be recognized by industry as a goldmine. Everything possible should be done to encourage and enable this behavior, of course identifying and innovating to find ways to translate such culture love into revenue-producing opportunities.
What this study proves, contrary to what has been widely reported as something akin to disaster, is that music lovers everywhere are:
a) fully engaged in a universal conversation about music
b) will gladly download music that is offered to them for free
c) will happily pay for digitally downloaded music at prices comparable to what they would be in a produced cd (given that production costs for delivering the tangible version of the product aren’t incorporated in the digital price)
and
d) there are some slight but noticeable differences between American and rest-of-world consumers in their choice-to-pay behavior. (Namely, 40% of Americans chose to pay vs. 38% globally, and the average price paid by Americans was fully twice that opted for by the global-excluding-US paying fan base.)
The data point that is screaming for attention in my mind is the point that is omitted from their press release. Specifically, I would anticipate there would be some repeat customers, who first view the site and download In Rainbows for free, then after sampling it would return and purchase the download, or loving the album go ahead and purchase the cd-release box set version. Why this behavior wasn’t studied or reported on can easily be explained by the clearly negative views promoted by announcements related to the study.
These are the findings that should be widely accessible via the news reporting media, however having chosen an industry pundit to lead the meat of their announcement, the company ComScore has enabled and even encouraged news outlets to repeat Mr. Wilson’s comments and continue to put words into the mouths of fans.
Promotion and permission of the interpretation that fans directly engaged in a dialog with the band, could accurately be termed “freeloaders”, telling us that these fans who accepted “free!” when freely given, were by that action saying “Radiohead’s music isn’t worth paying for” is quite simply put, off-base.
A viable reason a fan might choose not to pay for a “Pay what you want” album would be an unfamiliarity with Radiohead’s recent work. I know and love songs like “Creep”, their choices and performance of cover songs, such as their version of “Video Killed the Radio Star”, but some fans may have no experience at all with their music, let alone recent works.
The song, by the Buggles, was the first song ever to be played on MTV, and the title and lyrics specifically refer to a quote made on a radio broadcast in 1953, describing the impact the introduction of broadcast television had on the embedded radio industry. I contend that, by virtue both of their homage to the Buggles’ song, and by their groundbreaking first-step into a direct-to-consumer digital marketing campaign, Radiohead is taking One Small Step for Man, One Big Step for Mankind into the New Media Movement, consciously and with already dazzling results.
Interestingly, by innovating by providing a “Pay What You Will” offer and digital download, Radiohead is both the first band to actively engage in a digital dialog with their fans, whereby they have the opportunity to learn and grow in this digital age, and actively participate in a transition from one prevailing industry model to another. They are actually choosing to give up being the “radio star” referenced in their hugely popular cover of The Buggles’“Video Killed the Radio Star”, and promoting themselves instead as a Killer of their former selves. In this article, I am tempted to call the establishment music industry as a whole and the EMI-Radiohead now-defunct contract the ‘radio star’ that gets killed by video. I’d also contend that Radiohead is taking a step here to make sure that bands like themselves who engage in Direct-to-Consumer marketing of their own music have the potential to be the straw that breaks the camel’s back of the existing music establishment.
The fact that entertainment industry contributors — the actual artists themselves (whether they be musicians like Radiohead, or television writers like the artists of the Writers Guild of America, who are today on strike and forming picket lines outside network offices) — are having to fight for recognition and reasonable access to the fruits of their labors — in no small way contributes to the major issue at hand: why mature industries fail to pass on cost-savings to their partners and customers when changes, often dramatic changes in the cost of doing business become available.
Without having to incur any of the costs associated with producing a cd, the music industry could now be making their entire catalogs of past and current music available for download for free, or so close to free (a nickel, maybe, per song) that customers would flock in droves to their sites to access all the songs they’ve loved and all the songs they’ve heard the buzz about. The cost of providing these would be so small that it could be a purely-profit play. Particularly if they avoided proprietary distribution methods calculated to achieve or enable some-kind of kick-back opportunity for advertisers or enhanced tracking/spying capabilities that hamper customer experience in obtaining their music. As peer networking and distribution using BitTorrent protocols continue to prove to be the speediest, most popular, most adaptable method of sharing data files of any kind, I don’t see why industry doesn’t simply adopt it, and move on. It’s not as if companies couldn’t quantify how many copies of its data had been downloaded and how broadly popular an offering may have been.
Customers could fill up their terabyte hard drives with all the music they can imagine and plenty they couldn’t have, and never hear a song twice until they hit their third century, if modern medicine can make us live that long.
Failing that, I don’t see why the current winds of change should point anywhere but where they do already — that is: towards distributed networking aka file-sharing as the New Media protocol of record for distribution of media, and customers choosing as a nation (or globe) to create the offer of “actually free” when it isn’t forthcoming from the establishment.
The advent of YouTube and its dramatic success, or Craigslist, or FaceBook, or FreeCycle, or any number of word-of-mouth driven vehicles for consumers to assemble, “congregate”, discuss anything they wish in a free and open, manner, is showing any venture capitalist who wants to listen that the way to not just survive, but Thrive in the new millennium is to Radically Revise or just plain Eliminate whatever the former business model was.
It’s time to reduce the portion of proceeds that goes to distribution and increase the portion of proceeds that goes to the creators. Across the board. For athletes. For musicians. For writers. For coaches. For actors. For directors.
The real story from this data is the reality that New Media Marketing works.
That bands utilizing New Media methods for the distribution of their work and the enhancement of their brand — prove themselves to be ahead of the curve.
Radiohead has arguably succeeded in its effort at marketing directly to their fan base.
A look at the business model that Radiohead has employed:
In the world of the computer-nerd, “try before you buy” is tantamount. Downloadable product (initially, software) offered as “freeware” with or without donations accepted is a business model that is not just globally present, it is prevalent, and has been for over two decades.
Providers of such product reportedly have always enjoyed some, often significant, unsolicited donations enabling them to convert a hobby or thesis into a full blown company.
Many companies provide modified versions of their software either free, or free for a limited period of time, so that their customers may try it on for size before making their purchase decision. These companies believe that Packaging just isn’t enough to convey the value to the consumer that their product offers. This free or free-for-a-time business model is not new, is widely adopted, and hugely successful, or else the model would have died out.
The idea that a new product (here, a musical album), is using the same business model that has in the software world enjoyed enormous success Without the Corporate Machine, and without the “pay before you try” requirement, is exciting and important.
I’ve read several articles over the past few days reporting that Radiohead fans who paid for the download of the album were seriously disappointed that the download offered for “Pay What You Want” was of a lower sound quality than a Pay Full Price CD tangible product would be does not surprise me. That said, I think that they are mistaken to be upset with the band for offering the whatever-you-want version in a different quality than the tangible version. Naturally the hard copy is going to cost the band significantly more to product, and they will be adding the production and in-person distribution and placement costs to the product (their album). There is, of necessity, an understood requirement that the US $80 box set will be including things like higher quality sound recordings, inclusion of more and better album art than in prior cd releases, and any kind of promotable giveaway that will make embedded and new Radiohead fans feel the $80 paid is a price representative of the value they will receive in kind. Anyone who thinks that by virtue of downloading something for free with permission and grace of the artist was in some way “duped” by the band when they didn’t receive 320 kbps speed recordings are, in my book, whiners. Bottom line: either you get what you pay for, kiddo, or you don’t. If they are still complaining about not having 320 kbps after December’s release of the box set, they will certainly be able to download it for free once that quality version is leaked by the record company, as it indubitably will. For now, they should be happy to have had this opportunity to listen to it first.
[Special THX to Michelle for the guest editorial]
Looking for more stuff to watch or download?
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uTorrent – A Beginner’s guide to BitTorrent downloading
News Tip? Comment? Suggestion? jared@zeropaid.com
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What everyone seems to be missing (unless it was listed in your article and I missed it) is how much did they end up making with the online “pay-what-you-want!” system. How much money did they make and how many downloads where there total. You gotta figure if they made more than they do with CDS the band has found something perfect for them. Personally I think if they made it a mandatory $3 per cd download they would be golden… or $2 and make it bit torrent. That would be perfect. ($3 covers bandwidth costs) $2 per cd is more than they make with record companies and it is extremely cheap for all their fans to grab a copy of (especially if it was very high quality like… 320kbps stuff).