Don't miss lessons Radiohead, Trent Reznor offer

Musicians aren't merchants.

We certainly learned that through Radiohead and Trent Reznor's separate experiments with choose-your-price album promotions.

Trent Reznor of Nine Inch Nails

(Credit: Rob Sheridan)

In October, Reznor, the leader of the band Nine Inch Nails, and Radiohead attempted to promote and distribute albums online without the help of a major record label. Both offered fans the opportunity to obtain the music for free. Both saw some success.

But they also illustrated that the music business is probably better left in the hands of businessmen. Musicians are not the new labels. Artists need someone to provide financial support and business acumen. If we end up ridding the world of labels, we'll only have to re-create them--in some other, probably more nimble form.

Last week, I interviewed Reznor about the online promotion of rapper Saul William's album The Inevitable Rise and Liberation of NiggyTardust. In that interview, Reznor said he was disappointed that only 18 percent of the more than 150,000 people who downloaded the album paid for it. He and Williams offered two options: pay nothing or obtain a higher-quality audio version for $5.

By backing Williams with his money, name, and know-how, Reznor essentially thrust himself into the role of a music label. That is, a music label with a lot to learn. The first lesson was that you don't always back a winner. A music company's fortunes can often rest on its ability to discover superstars. Profits generated by a few marquee acts have always kept the companies going while all the other performers break even or lose money.

EMI said this week that only 5 percent of its acts are profitable. This kind of prospecting requires a huge investment.

Reznor said he didn't get involved with Williams to profit, but acknowledged that he spent too much making the album and said he hasn't yet recouped his money. A record company can afford to make bad bets once in a while, said Chris Castle, a music industry insider who has worked as a vice president for both Sony Music and A&M Records. Musicians, even successful ones like Reznor, probably can't.

"Trent thinks that (150,000 downloads) is bad?" Castle asked. "I'll tell you bad. Bad is zero. Bad is when you spend $100,000 on marketing and tour support and you got nothing. Do you know how hard it is to go from a cold start and just get 1,000 people to listen to an album? Welcome to the music business, Trent."

Does that mean, gasp, that record labels aren't entirely evil? Well, maybe. Charges of musician exploitation and plain old bad taste aside, they certainly have a purpose. The music business is primarily about promotion, Castle said. You build name recognition through all sorts of methods: radio play, getting write-ups in music magazines, making sure a CD is prominently promoted in record stores. That takes money. Castle offered this example.

"Finding music at record stores has always been tough," Castle said. "If you go into a store knowing what you want, or you're a music aficionado, it's easy. For the superficial buyer it's harder. Those are the people that are going to be influenced by displays at end caps of aisles or the stuff that's featured at listening posts. You don't get that spot because you're a nice person. All that stuff is paid for."

"What's unsettling is that you can't help fall into a familiarity with what works and what has worked. As much as one structure of a record deal is unfair and how little you get is bad, there was some comfort in knowing that things would work, that things like promotion and marketing would work."

--Trent Reznor

Then there is all the heavy lifting to worry about. In the telephone conversation I had with Reznor, he sounded like a guy who had been working too hard. He said he poured 18 months of his life into helping make NiggyTardust. Not only did he put up his own money, he produced the album, performed on it, oversaw all of the business tasks right down to the writing of the text on Williams' Web site.

Artists who sign with a label don't perform these chores. Executives packing MBAs and years of business expertise do. Is that a good thing? Not necessarily, but that division of labor helps.

"I'm spending a lot more time being the business guy than the musician and I really don't like doing that," Reznor said. He found the role of record executive more difficult than he had expected.

"What's unsettling is that you can't help fall into a familiarity with what works and what has worked," said Reznor, who left Universal Music Group last year. "As much as one structure of a record deal is unfair and how little you get is bad, there was some comfort in knowing that things would work, that things like promotion and marketing would work."

It's not going out on a limb to say the current music industry business is broken and that's why the likes of Radiohead, Reznor, and Madonna as well as consumers are revolting against it, said Jerry Del Colliano, professor of music industry at the University of Southern California. Nonetheless, he said that companies like the labels are needed to help develop talent and help the public discover that talent.

"The labels aren't going anywhere," Colliano said. "They're just going to have different duties in the future."

What about Radiohead, you say? Many argue giving away the digital version of In Rainbows was a wild success for the British supergroup. The band hasn't revealed the album's Internet sales figures, but last week more than 122,000 physical copies were sold, making it the No.1 album in the U.S. Nearly everybody on the Web credited the online promotion for the booming CD sales.

But Radiohead is one of the world's best-known acts. The vast majority of musicians have more in common with Williams, a little-known rapper, poet, and filmmaker. Their name recognition, unlike the British superband, doesn't count for much outside a small, loyal following.

It's also interesting to note that Radiohead's manager, in an interview with The New York Times, said he doubted the choose-your-price promotion would ever work again.

Even so, Castle said Reznor and Williams shouldn't give up the good fight.

"I like Trent, I like his heart," Castle said. "So he shouldn't get down. He should get Saul on the road and keep him on the road touring. He shouldn't come off until they can figure out where his core audience is."

And who does all that? "If you're going to market someone, you're going to have to have a publicist," Castle said. "And you're going to have to have tour support, somebody to care about you while you're on the road."

Perhaps an old-fashioned record label doing all the behind-the-scenes work isn't the best idea for the future of music. But someone has to do it.

[QuetzalcoatlUSA]

What is the lesson exactly?

I think artists know they need to become more like businessmen if they want to be more successful with ventures like this. But the fact is, all the fancy things that come along with a record contract mostly go to support the Justin Timberlakes of this world, anyway. I had some friends who were in the "next big band" during the jamband heydey of the early 90s. And despite their great contract, total creative freedom, much love from Sony, the only promotion they got was an A/R guy who would show up in each city and give 10 CD's away to the crowd.

So suck it up Trent. The grass ain't always greener. We just killed the record companies. Can't we dance on their corpses a little while before we run back asking for their forgiveness and telling them how wrong we were?

[arluthier]

Artists should have the likes of you...

If artists are going to be moving out on their own, away from big abusive labels, they should hire their own music business guys. Sort of like a PR guy... but as a music rep. Someone to give them advise and guidance. But just guidance and advise... not a manager. We have all heard the horror stories of managers 'breaking up the band'. ;-)

OR a artist oriented music rep company... like an advertising agency. Artists can shop around for the best agency, prices, and results. Didn't like how the last album was released, marketed, etc.? Go someone where else for the next one, or the re-release!

Musicians should be clients... not slaves.

[Renegade Knight]

One Lesson

Distribution. Promotion
If the album had been available on iTunes & Amazon as well as their own site...They would probbly have sold more.

I am not going to sign up with a new site every time I want to buy a song or album.

[RedZoneRecords]

I totally agree...

Pretty much what I was saying in my other post. I think artists expect to have labels do everything for them, and yet have the lion's share of profits. That's never gonna happen. The only way to keep a high profit margin is to control expenses and DYI. If a major does all the work for you, then OF COURSE they're gonna take all the profits.

[erwinblonk]

The copyright attitude is the problem

Labels in and of itself are not a problem. It is that they way they go about the copyright issue. If I want to play a CD on my CD player, my PC and my MP3 player I should not have to buy it 3 times.

The last 4 albums I bought come from Magnatune. There is a lot of music that I'd love to buy but carries the RIAA virus (and it's variations in other countries).

[GadgetDon]

Anti-Copyright Attitude also a problem

Fully agree that those copyright owners who say "if you want it on
three devices, you buy three copies" are a problem. But equally a
problem are those who say "I want it, I can just take it and listen to
it, they don't deserve to be paid for it because I know how I can get
it for free."

[dascha1]

Hire Music Industry Majors

From the late 80s, despite thousands of calls, letters, resumes,
production packages, demos, new acts, interviews, I was never
directly hired by any Labels. The main problem I faced were
those who worked at the label who mostly had no music
background - MBAs, marketing, accounting and computer
science majors, and high school graduates, or lesser education.
After banging my head against the wall, the only logic I could
come up with was I had an honors degree in Music Business &
Industry from a well-known University, and they didn't. I do
have a Billboard #2 Pop Hit under my belts as an audio
programmer, but had do that completely on my own!

Go figure!

[W Grant]

I would like to hear more.

You seem to have started going somewhere but just ended with
Go Figure.

Please make your point because after reading your comments
here you are obviously well qualified to be working for a Music
Industry Major.

Are you saying that they are stupid for not hiring you and that is
all or is there a deeper point here because I personally would be
interested if you did have more to say.

[fgoldstein]

So Trent had a label

The main point of the story, it seems to me, is that Trent Reznor really acted like a record company when he produced and promoted the Niggy Tardust record. The article describes all of the things labels do for artists, and that's pretty much what Reznor did. Back in the olden days, lots of artists started "labels" and printed vinyl disks. Nowadays they can start with downloads before printing a disk. Big deal. Trent's label, like others, took a gamble on an artist. It's a high-risk business.

But that doesn't mean that the Big Four labels themselves are necessary. Some music gets out without all of those services. The world's in flux, and record companies who want to pretend it's 1968, not 2008, are doomed.

[RedZoneRecords]

BRAVO...

...That's all I can say. Absolutely right!!!! DYI is the new business model. LOL...it's the old one as well. Meaning, the most successful artists were always the ones that promoted themselves, major label or no. I know of plenty of artists who got major deals and then wound up investing their own advances into marketing, videos, etc.

And I don't think 18% paid out of 150,000 is bad, anyway. Especially since they offered people a CHOICE of whether to pay or not. But that's from my point of view, of course.

[amasuriel]

Too much of a leap

I think the article makes too much of a leap.

Trent and Radiohead went one step too far. Cheap and easy download from their own site is good, pick your own price including free is not. They should have had even a $2 minimum, or fixed pricing with $2-3 for the basics, then throw in higher bitrate for $5 and some extras for $10 (total). They also could have procured some ad revenue.

Saying that labels are necessary just because some of the pioneers of online delivery had some high ideals and tried to sell their stuff for $0 is a bit of a jump.

[bemenaker]

What?

RadioHead is selling quite well. They had an explosive sales at the start of the actual cd sale.

[pbg3445]

Major record labels?

If Radiohead had formed OK Computer Records, or Trent stared
Nine Inch records, and sold their records over iTunes and/or
eMusic, there would have been no problems and they'd have
made lots of money, and nobody would have remarked on it.
It's a well-established model by now, and does not involve
major record labels.
Instead they tried their own quirky solutions and got bad
results.

The lesson may be that if you make it trivially easy to get
something for free and an effort to pay, then many (not all) will
take it for free.
What iTunes has shown that putting even mild impediments to
stealing eliminates most people's larcenous impulses, and
they're happy to pay money for stuff they like online. They're
even paying for TV shows they can otherwise get for free!

Major record labels? They don't make the music (as they once
did with their big studios, engineers and session men) nor do
they provide the distribution. All they provide is promotion at
this point, and jack-booted RIAA thugs. So Madonna ditches the
'record label' and gets a promotional agency. That's enough.

The major labels are doomed. That doesn't men all record labels
are doomed: indie labels will continue to flourish, since they
supply valuable services. But musiciand (and we) don't need
execuives with six-figure salaries and high-rises full of
functionaries. That gravy train has left the station.

[powerclam]

1 hit, 1 miss = pretty good!

Radiohead's experiment seems to have worked pretty darned well - sounds like they made a bucket of money on it, and it also served to push the "meatspace" sales to the #1 position.
Reznor's experiment flopped, but he was pushing an unknown with an extremely put-offish title (and the oddball FLAC format) and no promotion.

Seems to me that this model has a VERY BRIGHT future - and Reznor is a negative Nancy (but we already knew that!)

[fredmenace]

was it a miss?

How many downloads would he have expected if it were only paid?

Here's what I believe: the approximately 27,000 paid downloads he got was probably more than he would have gotten WITHOUT the free component (because so many fewer people would have heard of it or tried it). He probably would have only had 10,000 total downloads or so - so what if 100% of them would have been paid?

I don't think it was a failure at all.

[PFreak]

Good Sales? Huh?

Radiohead did so well on their own that they refuse to release
numbers and still went ahead with a physical CD release.
122,000 copies sold for this band is absolutely terrible. To put it
another way, Blake Lewis & Jorden Sparks of American Idol sold
almost the same number of CD's. Other Idol "talent" blew
Radiohead out of the water. For a band of their magnitiude this
is an utter failure and exactly the reason why they need the
labels. And for anyone that's been in a band or worked with one,
there is very rarely a single band member with the mindset to
take care of the business end. Left to their own devices, most
bands wouldn't even get a record finished never mind release it.

[KC Fehner]

Radiohead reality check

I've been in the biz since 1978 and I've seen a lot of changes in that time. There are a lot of great Indie Stores out there and they are working everyday to figure out the changing landscape of the music industry. Most of the store I talked to knew they would sell the Radiohead CD and LP like crazy once they got there hands on it. Well they were right. Look for some great thing from your local Indie Store in 2008. (If you still have one in your area.) KC - indiestoreradio.com

[Goodman.seth]

Trent made a bad business decision

I think its really easy to take the Trent/Saul thing way out of
context. Trent's big mistake is that he chose to offer it for free,
and then got mad when people downloaded it for free. This was
a new artist we're talking about here, not radiohead or NIN, but
some no-name who Trent thinks is good. And he was
downloaded 150,000 times! If Trent really wanted to make his
money back, he could have sold it for a flat $5 (with less overall
downloads buy more profit) or an even lower price to really make
it a easy buying decision and a larger profit. We have to stop
instantly pointing at Radiohead or Madonna, and just chalk it up
to a not very well thought out sales plan. NIN became popular
due in large part to their record labels years of marketing
experience and financial backing. Talk about biting the hand that
feeds....

[Draxon]

Nin made it because of labels? lol

LOl thanks for the morning laugh! NiN would have been NIN with or without the labels... they may have sold less disks but you seriously think the labels did what? Air tv commercials for them when they started? lol

[fredmenace]

would have been even worse

If he had not had the free download, I bet the TOTAL downloads would have been fewer than the PAID downloads actually ended up.

That is, there most likely would have been fewer than 27,000 total downloads. So what if 100% of them would have been paid? They would have made less money, the whole experiment would be even more of a bust, and the artist involved would still be living in obscurity.

[noldrin]

contradictory article

So in this article you demonstrate that was Trent thought was bad, would be considered a miracle breakthrough for a label, and this means Trent is doing a bad job how?? Also, are only 5% of the acts profitable for the act or for EMI, we need real numbers here. I do think some sort of label can be useful, but these dinosaurs aren't cutting it and generally refuse to even try. We can create new and better labels.

[Stephen Russell]

Money is made by putting people into concer seats

It has never been via selling disks.

So put out all the "free" media saturation you want as a band so your shows sell out faster and in larger venues.

Take DMB for instance. Their concerts were allowed to be recorded and shared. Take the Dead who were way ahead of the internet but right on target with the audience.

Put out 1 new release a year and sell it to a couple living together for a 1.00 earned by the band. Go on tour and each of them purchase a ticket @ 70.00 where the band clears 15-25.

hummm 1.00 vs 30 to 50? Who is the rich one?

[Tergon]

Kinda true but not really

"It has never been via selling disks"
ummm many bands/artists don't tour and do very well.

right now my adled brain only can think of the Beatles post SGT Pepper. But tons of hip-hop "producers" are also on that list.

That said yes Concerts and Merch are where most money currently (and in the past) comes from for bands. But it doesn't have to be that way.

I agree with those who are saying that Reznor/Williams would have done better if added the distribution methods of eMusic and Amazon (for they are DRM free) and I know for a fact (as a long time member) eMusic would "sell" quite a few tracks with either of these artist's names on it.

It is not labels that are bad it is the big 4 and the practices they use (Advances and then major recoup as an example). If Reznor/Radiohead/Madonna and others wish to get us the music they will have to redefine distribution (as they are doing) but can't cut out all other distribution . . . especially for a inaccessable artist like Williams (whose music/Books/Movies/Poetry I love).

[TimeTraveler2000]

straw man?

I dont know who this Sean Williams guy is or what his music is like. I have heard of Radiohead before, but am not familiar with any of their music.

That said, to try and compare a not well known performer with another who is on the top 40s and has much promotion and publicity, well thats kinda just dumb I would think.

I wonder what the real lesson is here. How to set up a straw man? or was it really and internet marketing attempt?

[cubeah]

Don't miss lessons Radiohead, Reznor offer

The tone of your story seems a bit like "I told you so" but fails to mention many variables into the equation. Just the fact alone that only 5% of acts are profitable shows one how much return the record companies need to make money. Which means the return for the musicians is at or near that amount for their return namely 5%. Why don't you ask the co's how many recordings would have to be sold by them for the artist to make $610,000 like the above artist made with "only" 122,000 sold. Then ask them about their share of tours and mechandise - they have their greedy little fingers into every nook & cranny. How about tour scheduling and name useage? There's good reason why Prince changed his name to a symbol, it's hard to beat their lawyers. In the end an independent artist can hire PR people or what ever service is required and be in total control as opposed to being a corporate "product". Now that artists don't need the distribution channels of the industry it levels the playing field and gives everyone artists and end users more freedom and choice. What can be bad about that?

[Sam Papelbon]

how is this a failure?

a burnt up singer from a 90s band, and an unknown rapper spent 18 months making an album that earned over $135k. that's $3,750 a month for each of them. i'd call that a success.

oh wait, are we supposed to keep alive the fairy tale that anyone who can strum a guitar is supposed to earn multimillions? my mistake.

[Tin Heart]

Is this a reading comp problem?

What part of "hasn't yet recouped" are you finding difficult to understand?

If you spent $100 growing apples and only got $80 from selling them, would math be an easier concept for you?

[frankz00]

The Artist Was UNKNOWN!!!

Trent, put up your own material and see how many pay. I paid $10 for the RadioHead album which is on par with what iTunes would have charged. You can't expect people to pay for an unknown artist until AFTER they've sampled the goods. Says more about the artist than the model...

[W Grant]

Dead On...

I couldn't have said it better. The only thing I would add to that is
make it also available on iTunes because that is where so many of
us get our music. Also make the music available on the other sites
for those that use them. Keep the business model and put up your
own work and make it available on multiple channels and I think
you will have all the success you were looking for.

[kgsbca]

Wrong conclusion

It was an experiment and it didn't work perfectly, but that doesn't mean the music labels are still needed. There was no evidence from the "pay what you want for music from this relative unknown" experiment that indicates a music label, or a "businessman", is needed. If Trent just put up an run of the mill e-commerce site that let potential customers hear 30 seconds or so of the music and then buy the songs for .$0.89 or $0.99 (sound familiar?), his project probably would have been profitable. Given his popularity, he didn't need the labels to attract people to his website, where he could market his friend's music.

The music labels are absolutely unnecessary for digital distribution. They add little value over what can be accomplished relatively inexpensively by a small web design and marketing team.

The days of the music company as we know them now, and eventually the movie studio, are numbered. The Internet has lowered the cost of distributing content, and the job of getting plastic disks into stores will soon be obsolete.

[Xtoo]

Ohhhh, Trenty, Trenty....

I like Trent's music and love NIN. At the same time, I am tired of
his complaining. What did he think in the mid 90's that all the
stuff he got done (promotion, sales, tours, merchandising, etc)
as a musician "magically" appeared. Come on.

He is just bitter because of 18 months of hard work and not
enough pay off. Doesn't that sound like 99% of the American
work force? The whole world? He's been living in a stardom
bubble.

He's sad because he is losing money? time? sleepless nights?
Welcome to the world of running a business. Whether a record
label, restaurant, coffee or show repair shop, that's what you get
lots of stress, no sleep, and the risk of losing it all.

Get over yourself and crawl out of your superstar hole to the real
world. Hey he can team up with Marilyn manson (like in the old
days) and together launch new musicians... he he!

[M C]

Reznor apparently still stuck in old ways also...

$150,000 and didn't recoup costs?? For the first album by an artist who would define the very word "indie," that wasn't pressed onto CDs or LPs or promoted heavily with media buys or payola?

Did the recording budget include hookers and blow or something?

[flowerboy2001]

They paid to much for samplings

Apparently they bought a lot of expensive rights for samplings
from other records.

[giantsteps]

Indies have been using the Internet to promote and sell our music for years

Indies have been using the Internet to promote and sell our music for about a dozen years now. Radiohead and Mr. Reznor are just now figuring out things that we've known for quite a while already...

[hunter_jc]

Agree Totally

Thats my same thought when i read the article