Radiohead and the Hidden Secret to Saving the Industry

If you’ve been hiding between your iTunes earphones for the last week, you may not have heard the major news about Radiohead offering their music on their website using pay-what-you-like pricing. Some people even call it “free music,” since you can pay nothing (actually there is a minimum charge of about a dollar that will go on your card, to offset credit card processing fees). The buzz is that this may save the industry.

It is very doubtful that this model could ever work as a viable one for the “industry” as we know it. It can only work for unsigned artists, which is a great thing. Many indie artists have embraced much of what the Internet has to offer in a very effective manner. Majors are still trying to play catch up online. However, as far as saving the industry, that’s farfetched.

Imagine if utility companies, or any business for that matter said, “pay what you like.” Companies that choose this model would go bankrupt. Even Wal-Mart can’t say, “pay what you like.” This is the reason you don’t see free magazines nationally distributed within retail. There’s nothing in it for the retailer. Even The Village Voice (free NYC weekly) has a cover price when it’s sold outside of the New York area. Okay, so maybe this is a stretch because we are talking about digital products and digital distribution, and in many ways we are talking about surpassing retail. However, will a label incur the expenses involved with signing artists, producing music, maintaining a staff, and promoting that product (albeit digital- no manufacturing costs) that will potentially be given away to the end user? Remember, marketing is the greater expense here, not distribution and manufacturing. Isn’t this why the industry is crying at the moment? Because consumers won’t pay for their music anymore. What makes you think that they’ll start paying when they have a choice to pay what they like? Ahhh, this is where the answer truly lies. Value.

What value do fans currently put on music? Apparently, not much. Why is this? We all know the answer. Yes…because the industry has been pulling the old bait and switch move on fans for years. We all know the formula. With a few millions dollars we can all play. Here are the ingredients. Step one: Buy a really bad song a lot of radio play so you can slowly earn a piece of each listener’s mind space (hint- aim for the youth, they absorb the world through media, and are easier to manipulate). Step two: Inundate the media with messages about the artist that made that really bad song. Step three: Use that bad song, that now everyone knows, as a catalyst for selling a disc full of other really bad songs that the fans haven’t heard yet. Step four: Now make this product available at every retailer by spending top dollar on every piece of real estate in these stores. Oh, by the way, make sure that single is still available to consumers, but price that disc at $7.99, so they’ll instead buy the entire album for a few dollars more. There you go, instant mega-sales. Oh, one last thing I forgot to mention, you need to have a lot more than a few million dollars here because you are going to have to repeat this formula over and over again. Why? Because only a small percentage of your releases will actually be profitable. The good news is that those few releases will make up for all of the other losers that you sign. Okay, so the business model is working great. Then the ball drops- Enter Napster, illegal downloads and ninety-nine cent singles. Here we are today; why would fans pay a substantial amount (if anything) for music that is not good. Notice I didn’t say consumers again. We aren’t talking about just people that need to consume a product, but fans- those who love and evangelize what they’re passionate about. There’s a big difference.

At last, we get to The Secret. Are you ready? QUALITY. Sorry to disappoint you. You already knew the answer. The labels aka “The Industry,” however, doesn’t know this. Despite the annual decline in sales, the industry continues to pump out more and more formulaic music. Sure fans will bop their heads to it, hum it for a while, but ultimately they don’t care. It’s a file on their computer or their MP3 player. They’ll make room for more files or delete those files when they’re not “hot” anymore. Music has to be relevant and timeless for the value to be there for fans. It has to be something that we will want to think about in a year, five years, or twenty years. Let’s be honest. How many signed artists today have this value in their songs? If the answer is very few, then the solution can only be to bring the quality back to music. Fans purchase and repurchase music from their favorite artists in every configuration. Why? Because it’s relevant. It means something to them. They find an irreplaceable value in those songs. That’s obviously missing today.

Back to Radiohead- Sure this is a potentially great model for them. Why? Because they have a built-in audience built from their major label releases, videos, radio play, and tours. So even if they only garner a small percentage of those millions of fans that bought their music on a major label, they will still win- whether it’s from a $1.00 sale or an $80.00 sale. This is obviously because they cut out all of the middle men- labels, distributors, retailers, radio, promoters, etc. It’s groundbreaking news for a group of their stature to do this because most well known groups would go for the instant money that would only come from resigning with another label. They stepped outside of the box and are getting a lot of media coverage for this. Will this work for the next major artist that does this? It may not if the media attention isn’t there, because it won’t be a big story anymore, someone’s already done it. So what will a major group do when that media attention is missing? They’ll crave the hype that only big bucks can deliver. Who has those big bucks? Major labels. Here we go again.

All this hype is really a good story that is specific to Radiohead, and maybe a few other major artists that go this path. But, if it wasn’t a big news story, I wonder if it would work at all. Most casual fans wouldn’t be aware Radiohead had a new album out if they don’t visit the artist’s website. As for being the NEW business model: I don’t think so. Independent artists have been selling their music direct, and even giving it away way before the Internet. I’ve seen many many artists play on the streets and subway platforms in NYC with a guitar case or a bucket soliciting donations. Isn’t that a pay-what-you-want model? Today you can visit tons of sites and find artists offering free, or near free downloads. Yes, I’ve even seen them say, “pay what you think it’s worth.” Some of these artists have found that their fans will even pay more than the standard ninety-nine cents per song that has been set by iTunes. That’s great, but it never made it to the top news of the papers. It hasn’t changed the industry yet.

Let’s look beyond the hype of the pay-what-you-want offer, the real story is the value that is being offered to fans in the Radiohead DiscBox (CD, CD-ROM, photo album, lyric sheets, all hardbound with a slipcase). The fact that they are offering their fans an alternative to the current standards- CD or download- is the value. A release that is not limited to one item is compelling to diehard fans that want to be immersed in the world of their favorite band. The exclusivity of knowing that not everyone is going to have this is alluring and has a distinct value to a fan. This is the true value. The industry should not copy the pricing structure, they should not copy the Discbox, they should just find a way to create a value in the content itself. This is called quality. -IV