Crave

Still somewhere between perplexed and apoplectic after Apple had rejected the new Nine Inch Nails iPhone app update, the band's frontman, Trent Reznor, expressed himself very clearly on NIN's blog forum.

Neatly emphasizing his point with a quite liberal use of the kinds of words that Apple appears to find uncomfortable, Reznor compared Apple's attitude with that of, startlingly, Wal-Mart Stores:

"And while we're at it, I'll voice the same issue I had with Wal-Mart years ago, which is a matter of consistency and hypocrisy. Wal-Mart went on a rampage years ago insisting all music they carry be censored of all profanity and 'clean' versions be made for them to carry."

Seemingly not pausing for breath, he continued: "Bands (including Nirvana) tripped over themselves editing out words, changing album art, etc to meet Wal-Mart's standards of decency--because Wal-Mart sells a lot of records. NIN refused, and you'll notice a pretty empty NIN section at any Wal-Mart."

Trent Reznor would like to scream.

(Credit: CC Edvill/Flickr)

"My reasoning was this: I can understand if you want the moral posturing of not having any 'indecent' material for sale--but you could literally turn around 180 degrees from where the NIN record would be and purchase the film 'Scarface' completely uncensored, or buy a copy of Grand Theft Auto where you can be rewarded for beating up prostitutes. How does that make sense?"

He ends his message with: "Come on Apple, think your policies through and for f***'s sake get your app approval scenario together."

On his Twitter feed, Reznor also linked to a post from his developer:

"v1.0 is live. v1.0.3 got rejected due to content yet the app has no content in it. this was mainly a stability release to fix the bug that crashes the app for international users. the bug was fixed 24 hours after 1.0 went live and we have been waiting for apple to approve it ever since. meanwhile the app continues to get a growing number of 1 star ratings from international users understandably frustrated by the bug. but looks like our hands are tied."

The developer added: "Apple is not allowing us to make the current app more stable because there is "objectionable" content online (yes on the internet). so we are essentially not allowed to fixed bugs unrelated to the issue."

However, perhaps undercutting Reznor's apparent intransigence, the developer said: "We removed the song 'The Downward Spiral' from the server, hoping to appease apple and get this bug fix through. however i have yet to receive a reply."

I have a feeling a reply will be there shortly.

For a man who has been responsible for some of the more industrial lyrics in the music history, Nine Inch Nails front man Trent Reznor has taken rejection by Apple with a relatively sanguine spirit.

On discovering that Apple has refused to approve NIN's latest iPhone app update, he tweeted: "Apple rejects the NIN iPhone update because it contains objectionable content. The objectionable content referenced is 'The Downward Spiral.'" ("The Downward Spiral" is a 1994 album that laces a touch of earthy nihilism into a musical screwdriver of heavy psychological meltdown.)

Reznor then added in a follow-up tweet: "Not even sure where to start with that one."

Well, he might like to start with the fact that the very same content, with lyrics on the track "Closer" that suggest the author would like to have rather rough, bestial intercourse with his lover, is still happily available for close scrutiny on iTunes. And, according to MG Siegler at TechCrunch, who is in possession of one, on the first version of the already approved NIN iPhone app.

It was just two months ago that Nine Inch Nails released its album Ghosts I-IV in multiple formats, from free nine-song download all the way up to a deluxe LP/CD/Blu-ray set. Today, the band started taking orders for free downloads of its next album, The Slip; like Radiohead did with In Rainbows, the band will subsequently release the album on CD and LP format.

The download era may see a return to the kind of prolific output we saw from The Beatles and other artists in the 1960s.

Everybody's interested in the business model--has free-then-fee already gotten old?--but when's the last time you saw a band release two albums in two months? Sure, Trent's interested in making a living, but he's also got lots to say and he wants you to hear it.

And over here in the other corner, we have Beck rumored to be following the Raconteurs and planning to "surprise" release his next album within the next four to six weeks--no advance copies to reviewers, no pre-release radio single, no preparatory wave of marketing hype. Across the pond, The Cure plans to release 13 singles over the next 13 months leading up to its next album release--and some of the B-sides won't appear on any albums.

This all sounds a lot like what the Beatles and other pop musicians and labels used to do in the 1960s--quick-release tons of music, mostly singles, and let the fans decide which sink or swim. Sure, there was a earload of marketing back then as well, but the ratio of hype to music was a lot lower. Perhaps the new model's going to be the same as the old model?

Nine Inch Nails' surprise release of Ghosts I-IV today in five differently priced formats is the perfect example of how recorded music can, should, and inevitably will be sold in a world where free has become the norm.

Would you pay $300 for this? Depends on how big a fan you are.

(Credit: Nine Inch Nails)

I suggested several business models for recorded music in my post the other day, which was a response to Chris Anderson's Wired article about "free" as the future of business. Ghosts employs at least two of them.

First and foremost, it's a great example of the "freemium" model, in which the hardcore NIN fans subsidize the cheaper offerings--the highest-priced $300 edition is personally signed by Trent Reznor and includes the regular CDs, a data DVD with the entire album in .wav files, a Blu-ray DVD with a high-definition (24-bit, 96kHz) version and slideshow, four vinyl LPs, and more.

Implicitly, NIN is also using the cross-subsidy model. All the offerings include non-DRM-protected data files, and some even include lossless files, which offer the same quality as a CD. Trent Reznor isn't dumb--he knows that somebody will post these files online within seconds of receiving them. In fact, the band has even posted the first nine tracks (the free MP3 versions) to several BitTorrent trackers. But he hopes that casual listeners or one-time fans who haven't checked out NIN's recent work will be sufficiently attracted by these free files to check the band out when it comes through town, and may eventually become big enough fans to pay for future releases.

It looks foolproof to me. NIN minimizes the risk of unsold physical inventory by taking advance orders, and with downloads, there's almost no incremental cost of distribution. The only potential problem would be if the band doesn't sell enough to cover the cost of recording the album, which seems unlikely. Any label lucky enough to have an artist with a devoted following and decent live show should be paying attention--although they might find that selling a two-CD set for $10 makes it hard to pay for the upkeep on those private jets.

Rocker Trent Reznor is angry with CNET News.com.

On Monday afternoon, the leader of the band Nine Inch Nails posted a blog at NIN.com and accused me of misquoting him in a question-and-answer interview titled: "Trent Reznor: Why won't people pay $5." He suggests in his post that he did not make statements supporting a music tax on ISPs that appeared in the January 10 article. He also implies that CNET had some kind of hidden agenda when he writes in his post that the story was "written before I was involved."

It's not uncommon for celebrities and politicians to accuse the press of misquoting them. Sometimes it's true. Not here.

Below is the recording of Reznor's comments in question.

Reznor gave me permission to tape the interview and the words in the story are as he said them. I've also included what was said immediately prior and following the comments about the ISP tax so you can hear the context in which he made them.

You'll notice that I didn't quote everything he said; that's common practice. (We spoke for an hour and the final transcription of the interview was more than 4,000 words long. Normally our stories are between 1,000 and 1,200 words. We wanted to give him as much room as possible to speak and made an exception by publishing his interview at more than 1,800 words, already longer than usual.)

Reznor is a fascinating interview. He is frank and always says something controversial. He certainly was in our interview. Click the button below and listen for yourself.

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.

... Read more

UPDATE (1-22-08) at 2:25 p.m.: More than a week after this story was published, Trent Reznor accused CNET News.com of misquoting him about the issue of a music tax on ISPs. We have posted an audio excerpt of the Reznor interview here. For the sake of full disclosure, we have also updated this story to include the text of what he said following his remarks about the ISP tax.

Very early in a discussion with Trent Reznor, the front man for the band Nine Inch Nails, it's obvious how highly he prizes his collaboration with musician Saul Williams on the album The Inevitable Rise and Liberation of NiggyTardust.

Reznor produced and helped bankroll the album, which debuted November 1. All the more reason why he was stunned when fewer than one in five people who downloaded the music were willing to pony up $5, roughly the cost of a McDonald's Quarter Pounder.

Saul Williams and Trent Reznor

(Credit: Atticus Ross)

Williams and Reznor were trying to follow the lead of Radiohead by distributing music online without the backing of a label. Like the British supergroup, Williams made the album available for free in one version but he also offered the option of buying a higher-quality digital download for $5. The promotions were groundbreaking and plenty of people predicted that a profitable outcome would convince many musicians to drop their labels and use the Internet to distribute their own artistic creations.

And then Reznor ended the hoopla last week when he reported on his blog that 154,449 people had downloaded NiggyTardust and 28,322 of them paid the $5 as of January 2. In the blog, Reznor suggested that he was "disheartened" by the results.

Now, in his first interview since releasing the sales data, Reznor on Wednesday talked about his rethinking of music in the digital age. (To see an interview with Williams, published Friday, click here: "Unlike Trent Reznor, Saul Williams isn't disheartened.")

Q: Trent, lots of fans were shocked and saddened by how disappointed you sounded with the sales results. Many piped up to tell you that the numbers may be misleading. Were the numbers that bad?
Reznor: I'm not disappointed with the numbers with Saul at all. I think, particularly looking at what he's done historically and in the climate of today's music scene, that's something to be proud of.

What disappointed me is that I had thought--and this is just based on how I experience music--given the opportunity (his voice trails off). Why do I end up stealing music? Usually because I can't get it easily somewhere else or the version I can get is an inferior one with DRM, perhaps, or I have to drive across town to get it to then put it on my computer or it's already out on the Internet and I can't pay for it yet.

If I think of it a month later walking through Amoeba (record store), hmm...do I want to just buy a piece of plastic and give most of the money to the record labels, who have to be thieves because my experience with them has always been that? And you have a lot of reasons why you didn't do it. So I thought if you take all those away and here's the record in as great a quality as you could ever want, it's available now and it's offered for an insulting low price, which I consider $5 to be, I thought that it would appeal to more people than it did. That's where my sense of disappointment is in general, that the idea was wrong in my head and for once I've given people too much credit.

Saul and I went at this thing with the right intentions. We wanted to put out the music that we believe in. We want to do it as unencumbered and as un-revenue-ad-generated and un-corporate-affiliated as possible. We wanted it without a string attached, without the hassle, without the bait and switch, or the "Now you can buy the s**** version if you buy..." No, no, we said: "Here it is. At the same time, it'd be nice if we can cover the costs and perhaps make a living doing it."

I'm not saying that this is a completely accurate test. Yes, there is a possibility that people downloaded it and the same people went back and downloaded it and paid for it and that can throw the numbers off. I get all that.

It kind of gets into the bigger picture that you've had to face as a musician over the last few years, which in my mind was a bitter pill to swallow, but it's pretty far down the hatch with me now: the way things are, I think music should be looked at as free. It basically is. The toothpaste is out of the tube and a whole generation of people is accustomed to music being that way. There's a perception that you don't pay for music when you hear it on the radio or MySpace.

There's a difficult transition in the mind of the musician and certainly in the mind of the record label. If that is the case, how does one adapt to that?

How are you going to adapt to that?
Reznor: For me, I choose the battles I can fight. In my mind, I think if there was an ISP tax of some sort, we can say to the consumer, "All music is now available and able to be downloaded and put in your car and put in your iPod and put up your a-- if you want, and it's $5 on your cable bill or ISP bill."

Someone asked me recently whether I've used 4-1-1 lately. I said 'Not really." They said do you know you're paying for that every month? 'I am?' Yeah, X-amount of your money goes to a service that you don't even use.'

Was everybody in the Williams camp happy that you disclosed the sales numbers?
Reznor: I didn't see the harm in not using this opportunity--and I'll name check Radiohead on this--they've done a pretty suave marketing plan on this new record.

I think generally it's been a pretty cool thing, but what they've done is used those (sales) numbers in a way that they can spin them anyway they want cause you don't know what they are. They can present themselves as the biggest band in the world. Someone leaks out a number of a million and someone says a number of visits and someone else says that must mean they made a million and someone else says the average price was $5 or $6 and that means they made $10 million.

I highly doubt that's what happened based on my own experience.

And I'm not saying that Radiohead and Saul Williams are in the same breath in terms of popularity by any means, but it felt to me like that, partially inspired by Radiohead, we tried this and here's the results we got and I assume there's a bunch of other bands that are intrigued by the idea that may want to follow down that path. I'm not saying it was a failure or a success. I think it was both. But it wasn't 90 percent of the people that showed up paid us what we asked for. Nor did I ever think it would be. I'm not sure what I did expect.

But I've found it entertaining reading different people's perspective on the Web, what they've thought of what I've said. There's been a wave of people that said, 'Oh, that's depressing. Only 18 percent chose to pay for it.' Another whole wave of people feel just the opposite. I don't really know. That was the point of it. I've heard people say, 'What was the point of that blog?' It was just to share information with you. It wasn't any kind of concrete analysis of anything.

I'm sure I didn't win any points with the aforementioned people by doing what I did. I questioned whether it was the right thing, but it felt morally like the right thing to do. I'm not ashamed of it. I find myself a bit defensive right now, like 'Did I f**k up? Should I not have said that?'

Talk about technology and your experience using the Web as a distribution method.
Reznor: When we started the idea, we liked the clean feel of the Radiohead experience. It didn't feel like we were a sidebar on the Snocap site. Somehow that kind of thing cheapened it in a sense for whatever reason. I'm not sure why. That's based on my own perception. I like the idea of feeling kind of homemade and simple. There is a beauty to the fact that everybody has got their own distribution network that is already set up. How simple and obvious to just do this. But the reality of that is building the infrastructure that has a store and accepts the right form of payment and fulfillment and all those boring kinds of things.

What did you learn from the experience?
If I could redo everything and start again, I think having a physical product is a good thing. I think that having some more coordination on our part--and I'll take the blame on that because there was an urgency to get this done and get it out that I was the ringleader for--I think if we could wave a magic wand and do it again I think being able to offer an inexpensive version in addition to a premium physical product that could be shipped out afterward.

On day one you can buy it online and it's also in the store. But the manufacturing (of CDs) is the leak (to file-sharing sites) for everything and the leak is important to get around. The leak blows momentum. It happens and it's going to happen on every release there is. It's a fact of life. But that leak happens once it leaves mastering and goes to manufacturing, if it hasn't by then, then it certainly does at that point. I like the energy of release day, the excitement of watching blogs light up and bulletin boards. I think that's an important spike in attention. And the only way I can see to accommodate a physical release if it goes to manufacturing after the thing is in the hands of people. But I do think there is a need for presence in physical retail.

Are you going to abandon this or will Nine Inch Nails offer a similar promotion as Williams?
If I had a record to put out today, I would do something very similar to what we just did cause I don't think there is a better option. I would include a physical piece as I just said and all of the components I would make sure had value.

Saul said he doesn't have any regrets about the way the album was released. He credits the Internet with setting him free from having to deal with the labels. Is this how you feel?
Reznor: I can't tell you how great it felt when Saul and I and his team said 'Let's do this. Let's go.'

There's not an army of people saying no for this reason. To feel in control of your own destiny for a change, that's an incredibly liberating feeling. Where it needs to be worked out and fine tuned is the right way to hopefully generate enough commerce from it to justify doing it and really working on the right way and right tone to get the word out to people that doesn't feel intrusive or old school.

But at the same time there is a little bit of an element with Saul's record of a tree falling in the woods...It hurt my feelings to see it not show up on everybody's Best Album Of The Year lists, because I think not enough people knew it was out there.

In a separate interview with Saul Williams, the rapper and spoken-word artist has a very different take on the sales performance of NiggyTardust than Reznor. That interview will appear on CNET News.com on Friday.

Wall Street is taking record labels to task for lackluster Web sales, spiraling CD revenue, and the defections of marquee acts such as Madonna and Radiohead.

Nine Inch Nails' Trent Reznor

(Credit: Rob Sheridan)

Two analysts downgraded Warner Music Group last week, leading to a sharp drop in the company's stock price. One of the analysts, Richard Greenfield of Pali Research, penned a gloomy report about why he thinks the sector is headed for even greater losses.

"No matter how many people the RIAA sues, no matter how many times music executives point to the growth of digital music, we believe an increasing majority of worldwide consumers simply view recorded music as free," Greenfield wrote.

Proof of this was provided last month by Radiohead fans. The British supergroup offered the digital version of In Rainbows, the band's latest album, for whatever fans wanted to pay. According to research firm ComScore, which conducted a study of the groundbreaking promotion, 62 percent of those who downloaded the album paid nothing.

To Greenfield, what's more disturbing is that Radiohead and a growing number of top acts perceive the Internet as an attractive alternative to record labels. Nine Inch Nails front man Trent Reznor has indicated that he plans to distribute his music online. Madonna announced last month that she was leaving Warner Music for Live Nation, a music promotion company.

"The paradigm in the music business has shifted," Madonna said in a statement announcing the switch. "For the first time in my career, the way that my music can reach my fans is unlimited."

Like Greenfield, Merrill Lynch analyst Jessica Cohen downgraded Warner Music's stock from "neutral" to "sell." Both also reduced next year's earnings estimates for the company.

Following the reports, Warner Music's stock hit a 52-week low ($8.78) on Friday. The company's shares, which were trading above $27 a year ago, closed Tuesday at $9.50.

What could be unsettling to those in the music business is that Warner Music was supposed to be faring better than the other three majors--Universal Music Group, Sony BMG Music Entertainment and EMI Group--according to Greenfield. Earlier in the year, his view on the stock was slightly rosier.

"Over the past couple of years," Greenfield wrote in his report, "(Warner Music) has done an impressive job, outperforming the industry weakness."

The main cause for concern continues to be spiraling CD sales. Download revenues are growing--but not fast enough to ease the pain. Greenfield expects CD revenue to drop 22 percent in the fourth quarter of 2007. He said retailers such as Wal-Mart Stores, Target, and Best Buy are rapidly reducing the floor space dedicated to discs.

How vulnerable is the music industry?

Consider that the sector generated revenues of $14.3 billion in 2000, according to the Recording Industry Association of America, or RIAA. This year, it's expected to report revenue of $10.3 billion. Had sales growth only kept pace with the U.S. economy, it now would be worth $17 billion, Greenfield wrote.

This illustrates "how dramatically the music industry is continuing to underperform," Greenfield said in the report.

Greenfield urges music executives to embrace a new ad-supported business model, one that dramatically scales back the size of record companies and doesn't saddle songs with digital rights management. He doubts that this will happen any time soon.

The industry is "not ready to endorse such a move at this point" Greenfield wrote. "Even if it was, the...transition will be incredibly painful."

Trent Reznor of Nine Inch Nails

(Credit: Rob Sheridan)

Correction: Saul Williams' album debuts Thursday and is available for free or a $5 donation.

Rocker Trent Reznor doesn't pretend to know the answers to what ails the music industry.

But that hasn't stopped the iconoclastic front man for the band Nine Inch Nails from marching to the front lines--in lock step with British band Radiohead--in an assault on the traditional music business.

Reznor, who made news earlier this month when he left his record label, spoke Tuesday with CNET News.com about the decision. He also bashed the music industry, detailed how he persuaded performer Saul Williams to give away his latest album for free, praised Radiohead for distributing music directly to fans via the Web, and indicated that instead of fighting the so-called free culture--people who share music online--he plans to embrace it.

"Personally, I would like people to support artists," Reznor said. "After all, we as artists dedicate our lives to producing the best music we can. It's been a painful process for me personally (to see the changes in the music industry). But should I be angry at the audience that wants to hear music so much, an audience that is so passionate about hearing it they go online to get it two weeks before the music debuts? No, I want them to be that way."

Reznor has become a revolutionary figure to the file-sharing community. A video appeared recently at YouTube that showed him during a concert performance lamenting the high prices of CDs. Fans whooped it up when Reznor told them to go ahead and steal his music.

Since then, Nine Inch Nails and Radiohead have become symbols of a growing movement among performers who are trying to use the Web to cut out the traditional middlemen of distribution: record labels.

Musicians Saul Williams and Trent Reznor

(Credit: Atticus Ross)

Radiohead shook the industry earlier this month by releasing a digital version of their latest album and asking fans pay whatever price they believed the album was worth. It was unprecedented move largely because it appeared to address an issue that music industry has largely tried to ignore. Music fans, many of whom obtain songs for free through illegal file sharing, perceive the dollar value of songs as almost nothing. Unless something dramatic occurs, many believe there is a chance a large number of fans will never again be swayed to plunk down money for music.

Reznor, 42, said that the music industry is spinning its wheels trying to fight that perception. He said that in the future songs can be a way to entice fans to buy concert tickets and merchandise and he recognized that this may be how musicians make their living. He has recently produced an album for Williams, a rapper/filmmaker/spoken-word artist, called The Inevitable Rise and Liberation of NiggyTardust, which goes on sale Thursday on Williams' site.

Not coincidentally, the digital version of the album, which is free of copy-protection software, is priced for free or fans can make a $5 donation. It was Reznor's idea to give away Williams' music in a similar way as Radiohead.

"Radiohead is one of my favorite bands," Reznor said. "When they announced they were releasing that album for free, I got dozens of text messages. It gave me goose bumps. It's such an exciting way to sell a record."

Now, here's the rub. Reznor isn't the naïve artist who doesn't understand dollars and cents. He said that he knows giving away music may not make business sense. In addition, such a model could work for marquee bands like Radiohead but not for up-and-coming acts.

"Radiohead has a built-in audience and they have the luxury of being able to experiment with a new distribution model," Reznor said. "I think there were some serious flaws with how they executed but it was a good idea."

Reznor addressed some of the questions about whether artists are prepared to become merchants. Who is going to oversee sales, promotion, marketing, site supervision, and the countless other chores that record labels historically handled?

But Reznor isn't afraid to get his hands dirty. He said that he was part of the negotiations with Musicane,the company handling the online distribution of Williams' upcoming album. Musicane is overseeing fulfillment, payment processing, and customer service.

The beauty of Musicane, according to Reznor, is that it provides the backbone for distribution without requiring musicians to invest "hundreds of thousands of dollars."

"Look, we're looking for what works and this seemed like it made sense," Reznor said. "Ask me in a week about how it went and hopefully I'll be saying the same thing."

It's doubtful that even if problems crop up Reznor can be dissuaded from his belief that the Internet is good for artists. He thinks that the Web creates direct links between musicians and their fans. This is beneficial even if sometimes it's hard for performers to stand out among the countless acts trying to promote themselves online.

"The greatest thing about the Internet is that everybody is their own distributor," Reznor said. "Being your own distributor is power and the thing that labels once held over artists. The power of getting your message out to an audience is very empowering as an artist. These are exciting times and things are happening that I couldn't imagine just a few years ago."

As for the future, well, Reznor fully acknowledges that he--like everybody else in music--is unsure of how things will turn out. But he says he's sure of one thing: the old way of doing business is dead.

"I don't know what the future holds," he said. "I don't know what model is going to work. I do know relationships between music labels and artist like myself aren't going well. These days when digital elements come into play labels have dealt with them generally poorly. It has gotten to a place where it couldn't be worse. Their treatment of artists has less sympathy and it's more like 'What can we get out of you?' My only concern has always been that my audience is treated fairly."