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November 21, 2007

Radiohead's "success"?

Comscore have issued a report that estimates the rate of paid downloads from Radiohead's pay-what-you-like experiment. In a nutshell, they found that in the first 29 days of October, the album was downloaded about 1.2 million times and paid for by only 38% of downloaders. Average price for all downloads was US$2.26, netting them a cool US$2.715million in October. The response to these findings has been interesting.

First, within the press release, "Fred Wilson, managing partner of Union Square Ventures and well-known music aficionado" is quoted as saying:

"But, this shows pretty conclusively that the majority of music consumers feel that digital recorded music should be free and is not worth paying for."

That's a load of shit to start with. This event has been an unusual one, so its findings can't be generalised in this way at all. I, personally, downloaded the album for nothing just to see what all the fuss was about. Had it been just another Radiohead album released conventionally, I'd have ignored it. Had I been expected to pay for it as a download, I'd have ignored it - mainly because I have no interest in Radiohead's music. I would bet that a lot of people downloaded it for free just to see if they could. I imagine many downloaded it for nothing with the intention of paying for it if it was any good (that was my intention but I hated the album so I paid what it was worth to me and deleted it from my library). This singular result proves nothing about the feelings of music consumers - it doesn't even prove anything about the feelings of Radiohead fans because lots of non-fans downloaded it as well. Coolfer agrees.

Bob Lefsetz responded differently:

I’m sick and tired of the constant debate about Radiohead’s business model. It WASN’T a business model. It was a one time stunt that is not the future of the music business and will only be replicated by fools.

He's quite right at that point but, as Bob usually does, then takes it too far and misses the point.

If name your price was such a good business model, why doesn’t GM employ it? Or Time Warner? Marketing is about establishing VALUE!

Gee, I dunno, Bob. Perhaps because music is different to cars??? Besides, marketing isn't about creating value, it's about persuading people to see value whether it's there or not. That, as you so often and correctly point out, is why the major labels are stuffed in the first place.

Digital Music News was also down on the figures, arguing that

"The result deflates the excitement surrounding the effort, heralded by many as a groundbreaking model. It also challenges the levels of loyalty that established bands can expect from longtime fans."

Hmmmm ... I'm not so sure. It's certainly not the result many people would have wanted, but another explanation might be that Radiohead doesn't actually have nearly as many fans as their critical success would seem to indicate. Perhaps that's the real reason? Or am I just reflecting my own jaundiced assessment of their music?

State of the Mind of the Art pulled DMN up on their stupidity at not expecting the album to be P2P traded despite being available for free:

“Elsewhere, large numbers of fans continue to grab the album outside of the Radiohead website on free file-sharing networks, another unexpected development.” Unexpected? How can anyone who follows the current industry trends see file sharing as an unexpected development?

Indeed, and Hypebot quoted Big Champagne's explanation in Forbes for this effect:

"People don't know Radiohead's site. They do know their favorite BitTorrent site and they use it every day," he says. "It's quite simply easier for folks to get the illegal version than the legal version."

That's another point Coolfer agrees on and I think it's probably the most interesting result of all of this. At least Hypebot saw the cup as half full, pointing to some nice earnings and a publicity coup:

Despite the P2P numbers, the Radiohead "experiment" should still be considered a resounding success - at least for Radiohead.

Finally, Idolator also sees some positives, quoting Comscore analyst Gian Fulgoni pointing to the double-digit conversion rate in the Chicago Tribune:

He noted that an e-commerce Web site typically converts about 5 percent of its traffic into sales in a given month. The conversion rate for the Radiohead album will be "substantially higher," he said. "You can see this getting up into the millions of dollars."

And the last word should probably go to Hypebot, who sum the whole issue up nicely:

Surely this model won't work for every band. But as Music 2.0 unfolds it is becoming clear that bold experimentation will often be rewarded.
Posted by Hughie at November 21, 2007 11:30 AM

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