p2pnet - rss feed: Radiohead DIY sales results
p2pnet news | Music:- UK rockers Radiohead sparked alarm and discord within and among the Big 4, Warner Music, EMI, Vivendi Universal and Sony BMG, when they [Radiohead] decided instead of allowing the corporate music industry to (mis)handle their then forthcoming album, In Rainbows, they’d let fans decide how much it was worth.
Music lovers could also decide whether or not to buy a discbox with a vinyl album, bonus CD and other assorted bits and pieces, for about $80 US.
Now comScore has released details of a study put together based on data obtained from its database of two million people, it says.
During the first 29 days of October, 1.2 million people worldwide visited the ‘In Rainbows’ site, with a significant percentage of visitors ultimately downloading the album, says comScore, going on:
The study showed that 38 percent of global downloaders of the album willingly paid to do so, with the remaining 62 percent choosing to pay nothing. The percent downloading for free in the U.S. (60 percent) is only marginally lower than in the rest of the world (64 percent).
Cutting out the middlemen
“Some will probably jump to the quick conclusion that with an average price per download (including both free and paid downloads) of just $2.26, the business model is not viable - or at least that a band is better off letting a record label do the heavy lifting in generating album sales,” says Andrew Lipsman on the comScore blog.
But, he says, because the band by-passes many of the costs of record label representation, “a higher percentage of sales go back into their pockets. So, all other things being equal, even a substantially lower average sale price could still mean more money going into the band’s coffers.”
Looking at the average price per paid download, it was actually $6, he says, going on:
You could argue that many of the consumers who paid zero would have pirated the album anyway, or may not have had enough interest to try and obtain the album in the first place were it not available free of charge. So this number may actually be a better gauge of price. If you accept this premise, then the $6 in sales per album sounds like a decent sum when you consider that the record labels aren’t getting their standard cut.
Another argument in favor of the Radiohead model is that it actually encourages a higher number of consumers to download the album, potentially increasing a band’s overall fan base, which could generate incremental album (and concert ticket) sales down the road.
But perhaps what I found most interesting in the research was this fact: for every $1 in sales coming from album downloads, sales of their Discbox generated $2. Now obviously not as many people were willing to shell out $80 for the Discbox, but enough of them did to generate a very healthy stream of additional revenue. (Every 1 person willing to buy the Discbox represents the revenue equivalent of roughly 35 album downloaders.) So if this new distribution method drives incremental traffic to their website that is successfully converted into Discbox sales, it could prove to be a major boost to total album sales.
So let’s take a final look at the economics of the Radiohead model. The average e-commerce site converts about 5% of its visitors to buyers, so let’s take that as a lower-bound estimate for Radiohead sales (in reality, the conversion rates we saw on the site were significantly higher). If 5% of their 1.2 million visitors spend $6 per album, that’s $360,000 in revenue. When you factor in the additional sales generated by the Discbox, we’re looking at roughly $1 million in sales during the month. And again, this is based on the lower-bound conversion rate assumption.
So I think it’s fair to say that this model, if executed effectively, can be a very legitimate sales driver.
However, Lipsman adds a note of caution.
“In Radiohead’s case, as the first band to venture into this uncharted territory they had the benefit of a media firestorm to help promote the album,” he says.
But, “If other artists decide to jump on this bandwagon, will they receive the same benefit?”
Stay tuned.
Also See:
alarm and discord - Radiohead dumps Big Music, October 26, 2007
comScore blog - , Radiohead Freeloaders Abound, But Does the Business Model Work?, November 5, 2007
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November 6th, 2007 at 9:07 am
If it was simpler to make small money transactions this model would work better. At the moment you have to fill out lots of details just to pay $6 or so it hardly seams worth it when you can download if for free. So many of the free down loaders may actually have paid. Possibly if a large site developed to manage all of this e.g create an account at somewebsite.com and then select the album and price you want to pay rather than creating accounts for each band.
November 6th, 2007 at 10:06 am
I feel the number of people wanting to freeload will always increase , so an ongoing sales model will decline in revenue , also as mentioned with this being the first it achieved its own free publicity - I would only hope the rec. co`s bounce back with a fairer cut to their artists (meanwhile pigs flying etc)
November 6th, 2007 at 11:24 am
Actually it was easier to dsownload for free and send the money via a mail to the band address.
I wnoder howe many did that.
November 6th, 2007 at 11:32 am
“I feel the number of people wanting to freeload will always increase”
Another guys that think that people pay for thing because they are forced to do so.
People basically don’t have to pay for small thing such as music recording.
Just go into a wall mart jack wathever you want and leave. No PROBLEM! And if you
carry a weapon the risk is zero.
People pay because because they agree to certain rules as social animals not because
they are forced too. Dogs could eat each other. They don’t.
People will continue to pay their favorite artists because they want them to continue to do whathever they are doing that’s all. But of cource for the rapacious criminal and anti-social music execs this is an alien concept that they are incapable to grab.
November 6th, 2007 at 12:32 pm
Most people are fundamentally honest. They’ll pay a fair and reasonable price for whatever they’re looking for - music, movies or anything else, on- or offline.
Frankly, I’m not sure consideration of the artist came into it, much, before the file sharing / download controversy was fired up by the labels as a part of their ridiculous marketing campaign, which hinges on a scenario where millions of people around the world are cast as potential thieves and criminals.
Now people are becoming sensitised to the people behind the music, and that’s great.
To paraphrase the title of a 1961 movie [http://www.screenonline.org.uk/film/id/508279/index.html], today it’s the singer as much as the song.
November 6th, 2007 at 1:04 pm
Seriously…How many people downloaded this for free and listened to it and threw it away? I paid $12 for it and threw it away within hours of downloading it. IMO it is the worst crap I have ever heard. You can’t count downloading as a lost sale.
I am not sorry I paid because I wish my favourite bands would do this. I would love to give my favourite bands money this way.
Also the stories on this are reporting that people are stealing this album which freakin infuriates me as the band said pay nothing if you want.
November 6th, 2007 at 1:28 pm
1 mill income/month is good for a new small band, it all goes to them directly too. who wouldnt kill for sutch income? ;p
The “idea” that everyone that starts into music have to make millions every month is the biggest problem, the good about this is record labels dont suck money of it and it shows theres no need to pay premiums and share income with record labels..
and imo the band sucked (sorry lol), thats why i never paid
hopefully they could improve and when/if they do they will be even more successfull. a lossless music format would be awesome aswell.
Imagine if a popular and good band would try this, they would do the world a favor and make some decent money aswell.
November 6th, 2007 at 11:39 pm
one thing not mentioned is the fact for bands with a back catalog but not on TOP 40 anymore with a central distribution web store people could discover NEW artists for the same user cost as radio(almost none) and then look, and purchase back catalog/ merchandise ETC
November 7th, 2007 at 3:27 pm
I would have paid for it if it was released as flac files rather than mp3s. That, to me, was the mistake here. I don’t pay for mp3s.
November 8th, 2007 at 8:46 am
Let me preface the following post by saying that I’m in an indie band and I’m a partner in an indie label that we started in 2005 so I’m not a fan of the current state of the music business. I think the music industry is a good example of how the US government lets huge industry, including the big labels, retain a monopolistic stranglehold on the market which in turn squashes innovation. However, one thing I think everyone forgets in this matter of Radiohead having ‘independent’ success is this: Radiohead benefits from years of promotion provided by their record companies. The millions spent on marketing and tour support is why they are able to get millions of people to visit their download site and buy their music It would take a miracle for a truly independent band who has never been on a label or has been on a small indie label to generate this kind of revenue!