Radiohead model of distribution

Subject: Radiohead model of distribution
From: Greg B
Date: 10 Oct 07 - 01:17 PM

I've been listening to the news of the band Radiohead's new
distribution strategy. To put it simply, they've axed their
record label, done a new album in the studio, and set it up
for distribution over the Internet--- with people paying
for it what they think it's worth. Yes, you can get it for
free. You'll also be able to buy it in 'hard' version. For
a set price, of course.

Oh--- the online version has no DRM (digital rights management)
to prevent people from re-sharing the material.

I was pondering what this means, not just to the 'pop' music
industry, but to the way music is distributed as a whole. And
what it implies for folk music.

To me, what Radiohead is saying is that the whole 'album'
distribution system is predicated upon assumptions and a model
which nobody has really questioned.

That got me thinking that 'folk' musicians really are buying
(at great price) into an artificial model which dates back to
the sale of wax cylinders at the local Sears Roebuck.

If it's worked out badly for platinum-record recording artists,
it's really worked out badly for folkies.

Take, for example, the whole Green Linnett scandal where it sort
of developed that none of the artists were really getting paid,
for various contractual reasons.

Then the model became for folk musicians to do all their own
production, or pay people to do it, then find someone to press
the CDs, probably assemble them themselves, and try to make that
money back in a decade or so.

Only there really was no distribution channel. And the festivals
where the artist generated the most 'impulse' sales routinely
shaft them for double-digit percentages which result if not in
a loss, certainly no profit on sub-US$20.00 CDs, all the while
insisting that they can't sell them on their own at the venue.

Along comes CDBaby, which seems like it might be better.

BUT--- it's still in the old 'hard merchandise' model, and one
which depends upon someone being willing to buy online, pay
shipping and handling, etc. Mostly.

They do offer MP3 downloads, but only of full albums and only
at full price (as far as I can see).

That's kind of regressive, as far as I'm concerned. After all,
there's no 'hard' merchandise cost. CDBaby claims they pay
91% of the revenue back to the artist--- which if it's true
is really a windfall for an artist who sells a $15.00 MP3
album at CDBaby without incurring any 'hard goods' costs (yes,
I know that there is a lot in production costs). Still, 91%
of $15.00 is $13.65.

If individual tracks aren't going to be sold (at the going
$1.00 per track) then the album prices ought to be further
discounted to reflect that it really usually is about half the
material on a given album which really interests most listeners.
The term 'package deal' comes to mind. $15-$20 per album is
still at the pricing level which caused all the piracy which
has gotten the RIAA and many artists' knickers in a twist.

All that said, though the CDBaby tit-for-tat model is still the
old 'record company' model, only each artist is his or her own
record 'label.'

If very successful, it would be necessary for someone to have some
really massive ftp servers and lots of expen$ive bandwidth to ensure
things kept moving.

The magic of the Radiohead 'honor system' is that it can be supported
on peer-to-peer networking. BitTorrent comes to mind. Then the
CDBabies of this world might instead host a series of links to
torrents and other P2P resources. Maybe they'd take part of a dollar
per album for their trouble, or offer a subscription service. Those
not wanting the ease of finding the torrents could find them some
other way.

Of course Radiohead don't have to work another day in their lives,
so can afford to come up snake-eyes on the experience.

At the same time, I think it would behoove the folk community to
re-examine their assumptions about recorded music and the whole
'album' model inflicted upon it by the now-dying record industry.

Subject: RE: Radiohead model of distribution
From: Grab
Date: 10 Oct 07 - 08:39 PM

I've no objection to paying a fair price for a CD which repays the artist the time that went into it and its cost of production. No worries putting down £10-15 for a CD from the stand at a gig - if I like the artist, it's worth it. (Although most artists will lose a sale with me at £15 a CD.) And it's the artist (or their mates) selling it to me, not some oik in HMV.

My main objection is simply to putting down £10 for a CD and knowing the artist is seeing £2 of that if they're lucky. Or £1 for an MP3 and knowing the artist is on an even worse percentage. And not knowing anyway whether the album is going to be any good either - "try before you buy" is the one great thing the internet gives you.

Graham.

Subject: RE: Radiohead model of distribution
From: Stilly River Sage
Date: 10 Oct 07 - 11:00 PM

I like Radiohead, so when the rush clears a little I'll probably offer up $10 and download it. It is an interesting experiment, and I'm willing to participate.

SRS

Subject: RE: Radiohead model of distribution
From: mattkeen
Date: 11 Oct 07 - 06:15 AM

Magnatune (US label ) have been doing something similar for years.

Not "major" artists I hasten to add, so they have a minimum you can pay.
The minimum is low ($5 an album last time I looked). I think this minimum idea might be ESSENTIAL for folk artists as perhaps their lack of major recognition might get too many customers paying a tiny price....   then again perhaps those customers would never have bought anything anyway so its all additional sales.

I am thinking about giving the idea a go but then again I don't have a lot to lose as a part time musician.

Subject: RE: Radiohead model of distribution
From: GUEST,Jonny Sunshine
Date: 11 Oct 07 - 08:10 AM

Thinking about it, it's like the internet equivalent of busking. I like the fact that they're placing trust in the audience's goodwill to pay for it, rather than trying to stop people getting hold of the album
without paying full price (impossible in light of illegal downloads anyway).

Of course it helps that Radiohead have a huge worldwide fanbase, no middle men to pay, and have generated unprecendeted amounts of publicity through this move.

The six million dollar question (or however much you think it's worth!) is how this works out for an independent folk artist. Anyone have any experience of this working for them?

Subject: RE: Radiohead model of distribution
From: Pete_Standing
Date: 11 Oct 07 - 08:42 AM

For folk musicians in the UK, being able to sell CDs at £10-£x at gigs is a big supplement to their income. If we want these people to be able to entertain us and also to be able to afford a decent income including saving for a pension, then I'm all for coughing up. Radiohead can make money from airplay royalties, gigs (with very large attendances) and mechandise. There are very few folk musicians that can command that kind of exposure and thus the revenue that comes with it. So, I hope folk musicians do not feel obliged or compelled to follow the mainstream.

Subject: RE: Radiohead model of distribution
From: mattkeen
Date: 11 Oct 07 - 08:59 AM

Absolutely Pete that is the real difference between RHead and the average folk musician/group.

I wonder if the model WITH the proviso of a minumum (i.e. you can pay whatever you like between £5 and £15) has any positive possibilities.

Magnatunes experience is that people surprisingly tend to pay quite a bit more than the minimum.

Either way I would love to see the net being used as a really productive vehicle for sales for independent folk musicians, ands I think to do that a new model needs to be found.

Subject: RE: Radiohead model of distribution
From: Greg B
Date: 11 Oct 07 - 09:01 AM

But, Pete, the question is how much of that 10-15 pounds is actually
profit, by the time the organizer take their cut, and costs of
production.

Versus, say, the 91% cut that the artist gets on an MP3 download
of the album via CDBabay. In other words, how low could the artist
drop the CDBaby MP3 price, and still make as much or more than he
or she does on a sale at a festival?

And I'm not saying the CDBaby model is even the optimal one for
all parties--- it could use some 'fine tuning.'

Note I'm also suggesting that the whole 'album' model might be
wrong...folk artists might be better off distributing music
track-by-track, as the stuff is ready.

Bands recording with the 'majors' often spend two weeks in the
$tudio to pop out an album, then they're done. Folk artists
sometimes measure that production time in years. Perhaps it
would be better if it were 'learn a new song, polish it, lay it
down, start selling it on the web site for a buck' instead, and
then when there was a whole collection, put them on an 'album'
if they must. Or not.

Of course, this flies in the face of "you're a legit performer
if and when you have a commercial CD." Which I'd again suggest
is folk musicians playing into rules made and designed for and
by A&M, Capitol, and the like.

Subject: RE: Radiohead model of distribution
From: mattkeen
Date: 11 Oct 07 - 09:16 AM

You could sell mini albums or samplers at gigs and then try to sell subscriptions .... e.g.£10 a year and download all thats produced that year?


Just thinking off the top of my head.

Are most folk musicians also the record label?
If not then 5 quid direct is good return I assume compared to royalty from the label they are signed to.
I would gues however, that many are the label too

Subject: RE: Radiohead model of distribution
From: GUEST,Jonny Sunshine
Date: 11 Oct 07 - 01:35 PM

Some interesting points, Pete's quite right that folk artists rely more on CD sales than the likes of Radiohead, which is certainly true in my experience- it's the difference between paying for petrol and a new set of strings, or saving up to buy a new guitar.

Greg- I think for a small-scale independent artist the crucial figure isn't how much of the £10-15 you keep, but how many you need to sell to break even. If you keep your recording costs low and press 1000 CDs you could be making profit after selling the first 150 CDs (I've done this with my own album- 47 more to sell before I'm quids in!). Less than 1000 CDs isn't much cheaper per unit, more is, but you've got to find the punters to sell them to.

If a label's involved your cut is less (you'd be buying stock from the label), but you don't have to front the production costs, and benefit from (hopefully) higher profile and sales elsewhere. I think in reality many folk artists on small labels don't see an awful lot of money from royalties, but often they'll receive a stock of CDs to sell at gigs instead of a cash advance and any royalties, which means to an extent they're in the same boat as the independent artist.

With downloads, you cut out the cost of the actual CD, which is a major saving. Also, it's never been easier and cheaper to record music, so potentially you could make recordings available for next to nothing. The flipside the net is full of cheap/ free / illegal downloads - anyone can make a record now- and that ultimately affects what (if anything) people will pay for a load of 1s and 0s.

I think the real value in downloads is the potential to generate interest in both physical product and live shows to a wider audience- it's like radio airplay, and that's exactly what Radiohead have cottoned onto. Whether you sell 100 CDs for £10 each or 100 000 downloads for 10p the money's the same. But if 1% of those who heard it came to a gig, would you rather play to the 1% who bought the CD, or the 1% who downloaded it?

But I don't think CDs are dead by a long shot yet. I have yet to see anyone buy an MP3 album straight after a gig. There's the preference for a "real" physical object with artwork and all (I notice Radiohead are doing a very nice double-vinyl collectors box), also the issue of audio quality (160kbps MP3 vs 16-bit 44.1k? No contest). And I'd like to think that the grassroots folk audiences are more inclined to support artists- or maybe they're just slower in embracing these new-fangled MP3s? (ducking now!)

Subject: RE: Radiohead model of distribution
From: mattkeen
Date: 11 Oct 07 - 03:05 PM

I am sure you are right and also that folk musicians or any minoruty taste musicians are in a different position, and face different hurdles to the big acts.

I do feel that the idea that downloads can be used as an advert has possibilities like you say.


I also still prefer a physical object, see the artwork etc too

Subject: RE: Radiohead model of distribution
From: Anne Lister
Date: 11 Oct 07 - 03:06 PM

I've just spent the day at a conference on precisely this sort of stuff, organised by the Musicians Union. There are a number of points.
First of all, I don't think the customer pays $15 or £15 for a download of an album from CDBaby - you certainly don't pay that much for a download from any other download sites, and as far as I know CDBaby send the albums to those other download sites (such as iTunes). It works out as more like £7.00 or so per full album, and people can indeed choose just to download one or two songs rather than the whole thing.
Secondly, Radiohead are being fairly canny. There's a huge amount of illegal downloads going on in the main music industry (by which I mean stuff on the bigger labels) - by making their stuff free but offering the potential for people to make a contribution they won't necessarily lose out a great deal, especially as they're also selling a special boxed set of albums at a premium rate. They also already have a big market for their stuff, most of whom are dedicated fans who will almost certainly pay a few dollars/quids to show their loyalty.
Thirdly, downloaded stuff is generally less good in terms of sound quality, so it's more than likely a lot of listeners will download a version and then buy a hard copy for the artwork and the increased quality.
Having said all of this, the economics for those of us working in a smaller market with higher overheads for recording will be different, but after all I've heard today from the experts I'll be looking into making some of my songs available for free download myself.

Anne

Subject: RE: Radiohead model of distribution
From: mattkeen
Date: 12 Oct 07 - 09:53 AM

Hi Anne

Not going to start an argument again honest\!!!

(Hope you had a good trip)

Magnatune do give the option of WAV (i.e. full CD quality) file download. I think they are really the exception though.

Still think there is a way to use download as advertising or something for minority taste musicians though I'm buggered if I know how at the moment!

Subject: RE: Radiohead model of distribution
From: Anne Lister
Date: 12 Oct 07 - 12:12 PM

There are a few download companies that will allow higher spec downloads than MP3 standard sampling, I'm told (ah, a day's worth of being educated!). All the same, that doesn't stop people from wanting the artwork, instrumentation and notes that go with a "proper" CD, which is why I hope that the majority of loyal fans might even do both.
Yes, I'm sure there is a way to allow download to work for those of us in niche genres (that's a posh way of saying minority taste!) and I'm going to have a go... I'll let you know how it goes!

Anne

Subject: RE: Radiohead model of distribution
From: mattkeen
Date: 14 Oct 07 - 02:18 PM

Best of luck Anne


You deserve to succeed with it.

Subject: RE: Radiohead model of distribution
From: Peace
Date: 04 Aug 08 - 09:52 AM

"The minimum is low ($5 an album last time I looked)."

Studio time, mixing, mastering and physical production of the actual CD plus graphics, etc., costs money. The $5.00 minimum would come close to break even for the musician. Maybe. Then add things like shipping sleeves and postage and it's easy to watch the costs grow.