What Radiohead’s In Rainbows says about the state of the music industry

Radiohead buzz jumps 1300%

It’s been nearly forty-eight hours have passed since Radiohead’s surprise announcement set off an explosion of fandom around the web. Indeed, Blogpulse shows a more than 1300% increase in the number of posts mentioning the band from September 29 to October 1. Of course, a new Radiohead album is big news, especially after a four year wait, but the real source of conversation is the band’s decision to allow variable pricing of In Rainbows. Much of the commentary revolves around how this is a shot across the bow of the record labels.

In Rainbows is Radiohead’s first record since fulfilling their recording contract. That is to say that there was no record label involvement in the financing, production, marketing or distribution of the album. It’s yet another sign of the changing economics of the music industry in the digital era. Besides the usual “labels are dinosaurs” meme being bandied about, the aspect that strikes me the most about the In Rainbows announcement is the complete element of surprise.

It’s almost inconceivable that one of the world’s most watched band’s most anticipated albums could be sprung so suddenly on an unsuspecting populace.

Radiohead fans have known that there would be a new album “soon,” but a specific time frame was unknown. In fact, until as recently as week ago (Sept. 25) the Wikipedia page for the album maintained that it was to be released in 2008. There were no details other than suspected track titles and new songs played at live shows. We didn’t even know the album’s title until the other day. The fact that the band can say, “Hey it’s done and can be yours in a little more than a week,” that’s the real game changer here.

Consider the case with the band’s previous album, 2003’s Hail to the Thief. Whereas we’d heard nary a peep about In Rainbows, a surprisingly robust unmastered version of Hail to the Thief was leaked on the net TWO MONTHS before the official release date. Albums by other artists regularly appear on the net well ahead of their scheduled release date. Now, there’s the argument that leaked albums aren’t exactly a bad thing, but that’s not the point here.

The point is about control.

Now this is pure speculation, but it seems to me that without the involvement of record label personnel, Radiohead has been able to work in a more secured and isolated environment. Fewer spoons in the pot, so to speak, means fewer opportunities for unscrupulous individuals to make off with recorded materials. When there are so few people working closely on a project, I imagine that there’s much more loyalty and devotion as a whole and fewer people who feel that what they are doing is simply a job.

Added security and more artistic control? Chalk that up as another advantage to not working with a record label.

Of course, like Trent Reznor telling fans to steal his music, Radiohead can get away with this scheme because they’re a known quantity, having already benefitted from ten years of record label backing from a time when record labels were essential to lasting success. In 1997, there’s no way that OK Computer could have become one of the greatest albums ever released without the support of a major label. The media landscape of the late 90s was such that sufficient money to go big could only be found at a major corporation (EMI in Radiohead’s case).

Having generated all that cultural capital with the help of EMI’s resources and having a fan base that is already legion, there’s not much the band has to do at this point to stir up excitement. However, while they have generated the biggest buzz, Radiohead is not the first to distribute “donation-ware” music. Athens, Ga-based label Quote Unquote Records has been working in that fashion since 2006, billing itself at the first donation-based record label. And certainly there have been individual artists with Paypal buttons on their site, asking for contributions in exchange for free downloads. Though, it’s hard to find evidence on how financially successful that approach has been for the relatively obscure.

With a big name artist popularizing the idea, direct-to-consumer sales and personal value pricing are just more cracks in the business model of the record industry.

Historically, labels served the artists by putting money down to help promote, produce and distribute physical media. Throughout the 20th century, it was very expensive to shoot a music video and get posters printed and pay for studio time and hire recording technicians. The mass-production of thousands or millions of vinyl, cassettes or compact discs didn’t come cheap either. It’s impossible to have a record go platinum without manufacturing at least one million copies of it. The upfront money to do that was essentially on loan in the hopes that public interest in the artist would recoup costs and generate a healthy profit.

But since the boom of the MP3 and the increasing affordability and sophistication of “pro-am” music production, that system has been changing. Compared to even ten years ago, it’s exponentially cheaper to record, promote and distribute music using desktop computers and the Internet. Programs like Apple’s GarageBand make it relatively simple for actual garage bands or bedroom auteurs to create compelling, professional sounding music.

Add YouTube and music blogs (such as tunequest) to the mix and artists have a lot promotional muscle at their disposal. Top it off with low-cost DIY and pay-what-you-want digital distribution and the question becomes, “Who needs labels?”

6 thoughts on “What Radiohead’s In Rainbows says about the state of the music industry

  1. I think it may be a little too soon for the “Who Needs Labels?” question, regrettably. While the direct-to-consumer idea works great in principle, there is a minimal percentage of people willing to wade through the crappy detritus to find the diamonds. We’re not all music bloggers, and while you and I may be willing to listen to 100 terrible bands to find that 1 that we love that nobody has ever heard of, it’s not feasible as a business model.

    It comes down to the fact that (as you mentioned) the only reason a band is able to make such a bold statement and execute such a masterful experiment is because the band is Radiohead, a band with 5 platinum albums and a history of label support.

    I’d love to see the fall of the current music business model as much as the next guy, but I have to believe that this will go down as an ingenious marketing idea rather than a golden path to the future of music retail.

    Loved the article.


    tunequest Reply:

    True, I do agree that record labels are going to be around for a good while longer. In fact, I do think smaller niche labels are actually beneficial to their artists. Those labels have their distinct “brands” that help listeners by way of association. For one example, I’m a fan of a lot of bands on say Thrill Jockey or Warp, so I know going in that I’m more apt to enjoy the other artists there.

    The majors can’t do that because they trade in far too many styles to be associated with any particular artist, genre, sound or movement.

    But we are entering a time when the quest for a band to tap dance in front the A&R guy is increasingly unnecessary. I forget the name, but in “The Long Tail,” Chris Anderson mentions a band that attracted a following using the internet and then turned down the record labels’ offers because they were already fulfilling the labels’ role themselves. There was no need to them to relinquish any part of their artistic and business model to a company.

    Moving forwards, I think we may see several concurrent business models emerge. One where the majors continue to use the brute force of their size, muscle and megaphone to call attention to their artists. But for a lot of up-and-comers, social media is beginning to provide an alternative means to gather an audience. I think the effect of this will become more pronounced as the older generations pass on and the digital generations assume more economic decisions.

    Using myself as an example, I’ve not listened to FM radio, watched music videos, or read music mags in any significant amount in about a decade. Yet, I’m hardly behind the times, thanks to friend recs, music blogs that I read and the “Related Artists” features at last.fm, emusic and allmusic. Of course, not everyone is going to be a music blogger, but they may trust a music blogger to point them toward the good stuff. And that’s where the DIY artist is beginning to be able to find their success.

    And finally, I’ll end this already-too-long reply with a note about technology. I look forward to the day that I’m able to discover a new band at a show/club/bar, enjoy what I hear, whip out my iPhone-like device, buy and download some of their music right on the spot.


  2. I think a lot of people are reading far too much into this. The strategy is transparent and … well … a no-brainer.

    They have two main priorities: 1) recoup costs of making the album and 2) pre-promote it as much and as far as possible. Nothing new there – that’s the eternal problem of new releases.

    On 1), my bet is that they have budgeted to sell enough units of the high-price packages to recoup. Hard-core fans will lap it up and will support the band (I’m not a fan, BTW). Anything they make on lesser packages and DD is a bonus – hence the “what it’s worth” approach. This is just differential pricing applied to music packages – nothing new here.

    On 2), well it’s gold. They’ve gotten world-wide attention for their album because of the strategy, not the album. I call this “third leg” marketing and they’ve done it brilliantly. The trouble is that it won’t work next time because it’s been done already – they will have to innovate again … and the album had better be great because otherwise it won’t live up to the hype and they’ll fall victim to the same trap as the majors in recent years. Note, also that, having made a huge splash, they’re now being “courted” by majors for the hard-copy release – I hope that isn’t seen as cynical and doesn’t backfire. *Never* disappoint the music-buying public – especially the anti-label crowd.

    As a result of 2) they will probably make a heap from merch, hard copies of the eventual release and touring but, as a strategy, that’s not gonna help anyone else much. Nice idea, but use once and throw away. A bit like their records, IMHO – though I’ll certainly give this one a listen (probably for free, initially).

    But if, as Coolfer notes, this innovation has gotten people thinking long and hard about alternatives to the dominant paradigm, that wonderful and I’m all for it. Bring on the evolution!


    tunequest Reply:

    Quoting that billboard.com article:

    “The band think they [are] incredibly proud of this record and feel that it deserves to be brought into the mass marketplace,” [manager] Hufford said. “That’s why we need a record company who have that infrastructure to deliver the CD.”

    So, I guess the answer to “Who needs labels?” is “Radiohead.”

    But to respond:

    1) Not being an insider I have no factual basis for this, but, given no record company involvement and overhead, I’m going to guess that the cost to make In Rainbows was significantly cheaper than it otherwise would have been. And it certainly costs much less to distribute digitally than to produce and ship physical goods. Estimates I’ve read say that 70-75% of the cost of a CD goes to record company overhead (personnel, marketing, etc). An artist sees about USD$2.50 from a $10 purchase.

    Radiohead has already said that most pre-orders are near retail value so the band is already making 3x-5x profit versus a traditional release (retail prices are higher in the UK than the US).

    2) A Radiohead album would generate excitement among fans no matter what, especially after a four year wait, so I don’t think the band would have to do anything especially surprising for the next album to be successful. This pay-what-you-want strategy is so exciting not because of Radiohead per se, but because of the “mainstreaming” of the *idea* that musicians can finally start taking more control of their careers and start telling labels to shove off while empowering the consumer to decide what to pay for an album. In this case, the labels are courting the band. Guess who will have the clout in that relationship?

    A new Radiohead album is the side-story here. Even if it suck (as a fan, I doubt it will), the alternative pricing genie is out of the bottle.


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