People do pay for music
I'm here shaking my head at much of the media coverage around downloading Radiohead's Rainbows album. ABC News gives a short summary:
Last month, Radiohead announced it would let fans set the price for its new album, available for download on the British alt-rock band's official Web site.
Now, the statistics are in and it looks like offering fans free downloads turns them into freeloaders.
More than six out of 10 fans worldwide--62 percent--who downloaded "In Rainbows" between Oct. 10 and Oct. 29 paid nothing for it, according to digital research firm ComScore Inc. The 38 percent who did cough up cash paid an average of $6 each. A total of 1.2 million people downloaded the album.
Much of the news media has apparently decided en masse that these results indicate a marked failure of the voluntary payment model. (To be clear, the band's Web site does ask for payment rather than a "donation," a subtle but important difference.)
Headlines include: "Fans Shortchanging Radiohead's Rainbows?" (E! Online); "Radiohead Lets Fans Set CD Price; Most Say $0" (ABC News); and "Thanks for the Free Album, Radiohead!" (TMZ.com). Those are just the ones at the top of Google News this morning; there are many others in a similar vein.
What nonsense.
To put this in some historical context, back in the 1980s I spent many late nights working on shareware programs for DOS and Windows. In particular, I wrote a program called Directory Freedom, a DOS-based file manager, that made its way onto a number of "best of" shareware lists.
Shareware, at that time, mostly referred to "try before you buy" commercial software. In this case, the author typically set a price and requested payment after a certain evaluation period. Unlike today's software trials and demos, however, the software typically remained fully functional indefinitely. (The Association of Shareware Professionals promulgated rather detailed rules about what constituted allowable registration inducements.)
I made some decent beer money off Directory Freedom and my other software; I was hitting about $7K a year at peak. A few shareware developers, such as Bob Wallace, built real businesses on the shareware marketing model. However, most made very little even relative to my modest earnings.
There were never, to the best of my knowledge, any studies to systematically measure payment rates. However, the shareware author community bandied around figures of 10 percent or less. (Corporations may have paid at a higher rate; over half my revenue came from businesses even though I suspect my software was used far more by individuals.)
Thus (back to the topic at hand), I find that 38 percent of downloaders paying an average of $6 each a great conversion rate with an average price of $2.38. This figure may be less than what an album normally goes for, but it's actually more than what two songs on the iTunes Music Store would cost. And, as lots of folks like to remind us, many people buy CDs for only one or two songs.
The number may be less than Billboard's $5 assumption of what this album would bring in but it's really hard for me to imagine how anyone thought such a figure was likely. Especially when you consider that some of the downloaders may have been just listening to the music for the first time and, therefore, their downloads were more in the vein of a trial than a purchase.
All that said, I wouldn't read too much into this data and this data point. This is an extremely well-known band with a loyal following. The fact is that most downloaders probably had heard at least some of the music as would not necessarily have been the case for a more obscure band.
Furthermore, this was a singular, well-publicized case. As such, there's psychology involved that might not be present if this were more widespread. "We have to show the RIAA that people will pay for music given the opportunity," some might say.
On the flip side, the data doesn't reflect the many people who got the music from friends or over P2P networks--meaning that the percentage of people who paid is lower than the data indicate.
Bottom line? Digitization of movies and music will continue apace with all the broad implications for back-end infrastructures and consumer devices that implies. This particular example doesn't tell us much new about the process and dynamics involved. Many will pay but many won't, given the choice. But we knew that--or should have.
Gordon Haff is a principal IT adviser at Illuminata and has more than 20 years of IT industry experience. He writes about what's happening with enterprise servers and data centers, "Yotta-scale" computing, and related software and device trends as part of the CNET Blog Network. Disclosure. 
ever think to pay for a Radiohead album. Why? Because I?m not familiar with them
and if it hadn?t been for this free download, I still wouldn?t be.
To be fair, I haven?t actually listened to it yet; I?ve probably got too much
unlistened-to stuff in my iTunes Library to *ever* listen to it all. But if, once I do
listen to it, I find that I like it, that gives me the impetus to buy more Radiohead
stuff and bam! they?ve got a new fan and more than enough income to offset the
one free album.
In short, Radiohead?s got more of a clue that the entire RIAA combined. Get real,
guys.
I really really wanted to belive in this stuff but the Music Industry dosn't have it down. I just paid that price the hard way and they're only response is oh well we got your money. Apparently the disreputable file sharing services are the ONLY reliable online method of getting music.
They made 2.28 cents, 10 cents less than they would of made with the Music Industry. But hey thats still a lot of money and propts to radio head to show you don't have to be a label to make money.
I (illegally, considering I live outside the US) subscribed to URGE service and payed my 14.95 a month, I really believe that people should pay for music! I continue buying CD's when I like the album! and now with the switch to Rhapsody, just like russkeller I lost an entire library, what are my options? considering I cannot use any subscription music services outisde the US except Rhapsody and it sucks!! The only, is downloading it DRM-Free illegally! mp3 is the only thing you can trust!
I wish Radiohead demonstrates that the music industry MUST change!
Think of this as "Marketing 521" in the graduate school of the music business.
Smart move band. I wish more bands got the idea. Some do on bt.etree.org They allow you hear the concert knowing that a fan will pay tooth and nail to see them LIVE!
I hope, for Radiohead's sake and independent artists everywhere, that this is a viable business model.
Clever boys.
-Kyle Steed
http://www.kylesteed.com/blog
> The 38 percent who did cough up cash paid an average of $6 each. A total of 1.2 million people downloaded the album.
1.2 million x 0.38 = 0.456 million people payed money for the album.
0.456 x $6 average = $2.736 million dollars!
That doesn't sound to bad considering I would think its all going to Radiohead, no physical CDs to produce, and no record label in the middle.
much of the news outlets these days are owned by companies with a stake in
the music industry. Hence, it is in their own best interests to promote the
idea that this experiment is a big failure.
As you mention in your article many people do pay for their music and I am
one of them. I do not buy CD's that come via the RIAA. I have several sources
of DRM free music with artists that are every bit as good as the artists
promoted by the RIAA. And the artist actually gets a fair cut of the sales. The
RIAA is dying and they can't figure out why. Well, if you refuse to change you
are going to eventually go away.
producing ZERO money for the band. Why? Because the label charges the
band for recording costs, video costs, tour support, etc. These costs can
easily top 1 or 2 million dollars. Depending on how much a band earns per
CD, the band could end up OWING the label money after selling a measly 1.2
million CD's. In Radiohead's case, they earned 2.7 million dollars in a very
short time. In the "record label world" Radiohead would have had to have sold
over 3 million CD's to earn that kind of money, and would have had to wait
months or longer for the label to actually cough up the money. THIS EVENT IS
A TOTAL SUCCESS FOR ARTISTS EVERYWHERE.
- But what about...
- by TaintDeli November 7, 2007 1:48 PM PST
- ...the people who D/L'ed for free and then came back and paid after listening? I, for one, downloaded the album from a Torrent site the day it was released (Radiohead's site was swamped). After listening to it, I really liked it and went and paid them $10 a few days later. There are very few artists I will buy a CD from without hearing it before dropping $10-15. Surely there are others who feel the same way.
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- That is another problem with the data
- by ghaff November 7, 2007 2:11 PM PST
- As far as I know, it counted downloads rather than unique downloads. I can also imagine people downloading to 2 separate computers because it was easier that way. And you're also right about the quality--although I suspect that the number of people who take that sort of thing into account is a fairly small minority.
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(17 Comments)I was reluctant to pay for 160k MP3s, but I really believe in what they are doing and wanted to show my support. If they offer FLAC in the future I will gladly pay $20!