Radiohead May Have Made $6-$10 Million on Name-Your Cost Album

mytrip passed us a link to a Wired article indcating that if music industry estimates are correct Radiohead has made as much as $10 million on the 'In Rainbows' album so far. This despite the estimates of widespread piracy of the album as well. "[The estimate assumes] that approximately 1.2 million people downloaded the album from the site, and that the average price paid per album was $8 (we heard that number too, but also heard that a later, more accurate average was $5, which would result in $6 million in revenue instead).

Finally!

Now there is proof that artist do not need the record labels to make money, I hope someone in RIAA sees this and trembles as they show it to their higher ups!

Re:Finally!

It's proof that well known band can make money without a record label. Which wasn't exactly news.

Re:and that is the threat to the big labels;

In 20 years, the RIAA will have been completely replaced by a set of publicists. These publicists won't own the copyright to anything--they'll be paid, on salary, to hook the musicians up with venues, hire web designers for band websites, and in some cases find places to record.

They'll have a professional organization, but no lobbyists and no power. They'll be more or less fungible--Home Managers, parallel to Road Managers. Some will even do both.

Re:and that is the threat to the big labels;

In 20 years, the RIAA will have been completely replaced by a set of publicists. These publicists won't own the copyright to anything--they'll be paid, on salary, to hook the musicians up with venues, hire web designers for band websites, and in some cases find places to record.

They'll have a professional organization, but no lobbyists and no power. They'll be more or less fungible--Home Managers, parallel to Road Managers. Some will even do both.

Unless time started spinning backwards that won't happen. There's always consolidation and incorporation of any business that lasts more than 5-10 years in the industry.

You're right: labels will lose a LOT of their power, similar to how movie studios lost their business with exclusive contracts with actors in the 70-80 period. Also some of the big labels will go away, and some will adapt to the new business model.

Where you're wrong is that those alternatives won't grow and become big companies and have their own lobbies.

The same will happen with the publishers that will replace TV channels like MTV. Look at one emerging publisher: YouTube. Is it some tiny player with no power? No. Even before Google bought them, they had influence since they had a big community going on. And with big community, comes Google, or Microsoft, or Yahoo, and buys them. Consolidation.

Clarification: consolidation is not necessarily bad.

Re:and that is the threat to the big labels;

Extensively processed music will become a thing of the past. People will play and record on devices that are much cheaper than they do currently. The lower capital costs will enable them to better weather rampant piracy, surviving on fans' CD purchases, some legitimate online sales, and concert revenues.

Re:and that is the threat to the big labels;

The cost of a quality musical instrument, as a tangible thing, might not be going down. But we're not talking about Strats or Steinways; we're talking about recording, specifically the processing end of it.

To that end, let's take amplifiers, which are the near-universal processing and monitoring side of the electric guitar. These are definitely getting cheaper. A Marshall stack is always going to be expensive, for a variety of reasons, but other amplifiers from companies like Line 6 and Roland keep bringing down the cost of quality amplification and effects. (Line 6's processor modules are also available as software plugins with no hardware dependancy, which can reduce or eliminate the need to have separate amplifiers/cabinets for each guitarist, as far as the recording process goes.)

Synthesizers are cheap, and getting cheaper. They consist largely or entirely of software, lately, and there's even a few free open-source packages that don't suck.

Commercial multi-track software recorders like Adobe Audition (formally the much more reasonably-priced Cool Edit Pro), and of course open-source products like Audacity and Ardour, allow more possibilities for recording, post-processing, editing, and mixing than were ever dreamed possible with analog gear. Multiple-input sound cards from companies like RME and M-Audio keep dropping in price and gaining new features.

It is quite possible, and has been for some years, to produce extremely professional recordings with nothing more than a few good microphones, a decent outboard A/D device, a few selections of totally free software, good engineering practices (!), a spare bedroom, a revealing home stereo (or maybe just some quality headphones) for monitoring, and the instruments that the musicians already own. Oh, and a little bit of talent from everyone involved doesn't hurt, either...

So, in reply to you, UncleTogie: Good instruments have always been expensive, and will probably only become more so as the cost of raw materials continues to escalate. But gone are the days when the only way to cut an album was to rent time in a recording studio stuffed with gear, and so the cost of cutting an album is indeed dramatically lower than it has been in the past.

And in reply to GP: Because computers are, by any estimate, quite cheap and getting cheaper by the second, it is simply not very hard to produce "heavily-processed" music without a "proper" studio. These days, they're even fairly quiet, which again lessens the cost of recording -- there's just no great need to physically isolate a modern, quiet, cheap Dell machine from the recording space. This makes the whole process a lot cheaper in terms of real estate, dedication, and cabling. Even my 2-year-old laptop is able to run for extended periods with the fan completely disabled, its Hitachi hard drive is practically silent, and it is more than fast enough to enable nearly any manner of "professional" recording thanks to the virtues of USB 2.0 and Firewire.

Nine Inch Nails' most recent album was largely recorded in hotel rooms and tour buses, for example, using the same software and technology that is available to anyone else. And while the expensive Protools rig that Reznor finished the album with is sure to enable a smoother and more productive workflow than anything being produced in Audacity, that doesn't mean that a competent engineer cannot accomplish similar results with far less.

Back on topic, these lower barriers to entry all conspire to mean that a recording contract continues to be less and less useful to a musician or band which seeks to make money selling the products of their creativity, but that by no means is any indicator that quality must suffer in exchange.

Re:Finally!

you mean like cdbaby [cdbaby.com] or more like Jamendo [jamendo.com] or DMusic [dmusic.com] and of course GarageBand [garageband.com]?

Re:Finally!

Of course they don't need labels.

With a label, if a musician has some decent pull, they might get $2 on a $20 album.

Without a label, a musician gets $2 on a $2 album.

The consumer/fan saves $18. The musician still makes just as much money. And potentially a lot more, since more people would be likely to pay $2 for an album than $20.

Re:Finally!

uh no, with very few exceptions, the musicians make $0 on a $20 album. That's because all of the costs of production, promotion, packaging, advance, etc... come out of the (in your example) $2 royalty, not out of the $16 wholesale price.

Re:Finally!

Question: How much money did it take to get the band's publicity to the level they enjoy now? At the risk of being the devil's advocate, is it entirely likely that they are using the publicity someone else (the labels) paid for to generate sales for this album? Perhaps we should subtract such an equivalent cost from the figures and see how much they ACTUALLY made.

Re:Finally!

At the risk of being the devil's advocate, is it entirely likely that they are using the publicity someone else (the labels) paid for to generate sales for this album?

What a strange suggestion. Presumably the fact that their record label has been paid handsomely with a cut from every one of the last 6 multi-million selling albums isn't enough then? Radiohead have more than paid for their previous distributor's services.

Re:Finally!

The facts are:

1. Radiohead has been in business for, say, 21 years.

2. Radiohead signed a SIX album recording contract with EMI, that promoted the hell out of them for two decades.

3. Labels were indirectly, but substantially, responsible for changing their name from "On a Friday" to "Radiohead".

4. They recently admitted that working without a label is "both liberating and terrifying"...

Yeah, that will teach those labels! Bands that have been busting their ass for 20+ years don't need them any longer! Somehow, I don't think if I put up my album under the same conditions, that I would make daily front page at Slashdot and spend an afternoon thumbing my nose at the labels.

These guys have paid their dues, toured until exhaustion, and have worked within the system for longer than a lot of people responding here have been alive. People, please, get off of BitTorrent and just pay a nickle, or a quarter or a dollar for every song you really like on their site. At least give the rest of us without the Radiohead exposure the hope that if we earn even a fraction of their commission, we'll be ok...

Clapton agrees...

From the last two pages of his autobiography -

The music scene as I look at it today is little different from when I was growing up. The percentages are roughly the same - 95 percent rubbish, 5 percent pure. However, the system of marketing and distribution are in the middle of a huge shift, and by the end of this decade I think it's unlikely that any of the existing record companies will still be in business. With the greatest respect to all involved, that would be no great loss. Music will always find its way to us, with or without business, politics, religion, or any other bullshit attached. Music survives everything, and like God, it is always present. It needs no help, and suffers no hindrance. It has always found me, and with God's blessing and permission it always will.

One thing's for sure:

They probably made more money off their album doing it this way than they ever would have made off the same album going through a record company. By the time you account for all the middlemen, marketing, and so forth, they might even have lost money on the album based on the level of sales, downloads, and so on.

Re:One thing's for sure:

and maybe it's due to the novelty of it.

would artists make the same sort of profits (eclipsing POS sales) if this model was more common place?

dunno
but it's a bit shortsighted to take one positive example and treat it as a working model

Re:One thing's for sure:

If it was culturally encouraged they might. Service people and street performers get tips even when it's not legally required, after all. If society develops around the free exchange of the arts, it may simply be the done thing to pay for what you like.

In the short term though, it's probably going to be more like "w00t, free shit lolz!!!" than the above.

I remembery trying to pay for this album

The website failed and left me frustrated. I went to my bit torrent site of choice and got it there.

Then I decided it was alright but not really worth paying for.

I wonder what Radiohead thinks about all the people who tried to pay for their music, couldn't and downloaded it / got stoned instead.

Re:I remembery trying to pay for this album

I downloaded it from their site, but paid $0 as their site was so terrible I didn't feel comfortable entering my card number.

I'd gladly paypal a few dollars to them if they'd put up a link.
(How bad must a store be when paypal seems trustworthy in comparison?)

PROTIP for firefox users

The website failed and left me frustrated.

I'm using Firefox on Linux, and I too had some trouble with the site (the flash navigation didn't work). Fortunately, View -> Page Source revealed Radiohead's secrets. Firefox users, just click here:
http://www.inrainbows.com/Store/index3.htm [inrainbows.com]

There is only one way to find out the truth.

If you downloaded the Radiohead album please reply here and say how much you paid, so that we can send a bill for our rightful share to Radiohead.

Sincerely yours,
The RIAA

Re:There is only one way to find out the truth.

Negative one hundred and two million Euro. Now go get your share.

Our accountants have put this into our Excel spreadsheet and apparently we are in for a LOT of money.

I'm impressed.

Not bad earnings, considering that this means (a) the album went platinum with no marketing help from a major label, and (b) even letting consumers name their own price (and pirate the album freely), Radiohead is making better royalties than they would through a label.

Destroys both of the arguments the labels make in their own defense. Other artists would be fools not to learn from Radiohead.

Re:I'm impressed.

A new band wouldn't turn this profit, but that doesn't mean the model can't scale down. I played in several bands for years, got put on a couple of ska complilations and our total record industry provided cut was under $500 bucks. Never got signed to a full album contract. If we'd skipped all that, put our music on a website and pushed a fan base to chip in, I suspect we'd have done more. Could we get 100 people to chip in $5 for a free download? I think so - we played show to that many people twice a month for years.

In the process, we would have gotten our music in front of more people and generated goodwill in the fan base. So there's a better growth potential, as buyers become, in a way, backers.

Completely Irrelevant

This is all well and good, but it completely ignores the fact that if people are pirating music, the artists can't make any money!

-G

for the record

Making $6-$10 million on a new album the week it comes out is _unheard-of_ in the music biz-- especially since radiohead gets to keep most of it, if not virtually all of it. (When you buy a CD in the store for $14 less than a dollar actually goes to the artist). Also-- this album went platinum in the first week! Huge success for Radiohead.

Re:for the record

In this case, bandwidth is a smaller expense than credit card processing fees - if they got a decent price for their bandwidth, by an order of magnitude. Remember that sites like Youtube exist - the larger videos on their approach the size of a music album, and *none* of their users pay money.

Re:for the record

Wow! I hadn't realized the IRS took over the UK!

Definition of Work

        I like the concept and I am glad Raidiohead tried this.

After looking at the royalty rates for software authors, musical artists, and other creative arts (movie,video,etc)...
The big companies / middle men are raking it in.
And the consumer is paying the bill.

The internet is leveling the playing field.
Lower cost of product, fewer hurdles to distribution, censorship by the consumer's choices (purchase y/n), variable/negoiatable pricing.

More money in being an artist.
Lower cost to consumer.
More artists can make a living being creative. (but possibly fewer mega-rich ones)
Fewer creative limits for the artist.
And the parasitic middle men can change careers.
Middle men that actually add value to the process will still exist. (but make a much more modest income)

The artist win ! The consumers win !

Honestly

I didn't find the album worth paying for, however I still purchased it for ~$10 (5 pounds). I did it more so to support the idea as opposed to really enjoying the music. I found it to be great background music while doing other things, but not really worth actively listening to. Of course this is just my opinion, so please don't kill me. I'm just stating that it's worth going through the trouble of paying a few bucks just to support the idea so others will do it. Hell, if you like the idea of what they're doing, but hate their music, I still think its worth your effort to pay a few bucks just to inspire other artists to do the same. On Trent Reznor's (of Nine Inch Nails) website, he said in the future he'll be participating directly with the audience now instead of working with record labels because he's now finally free of any record contracts as well.

If you don't like the music, just look at it as making a donation to the cause of destroying the RIAA.

Great! Yes, make even more money!!

I really hope all the other musicians still under the shackles of a RIAA-affiliated label will feel positively JEALOUS of the kind of dough Radiohead is making!

While I despise greed, it might just be a very powerful force in the downfall of the labels and therefore the RIAA. Just imagine all those musicians just NOT renewing their contracts (or even trying to end their current ones) and go onto forming their own label and sell their music directly to their fans!

Not as Altruistic as First Appears

Radiohead has always been planning on releasing their CD [gizmodo.com] in January. Putting out a 160 kbps crap quality version is there way to whet your appetite for the real CD, which will probably contain more content than the mp3 release and be of much better quality.

They don't have a label anymore

they are completely independent, or perhaps you could say they are their own label.

I doubt many record labels would have permitted them to do this.

Re:wtf

Piracy is unauthorized replication and distribution. A copyright holder can require that those who get something for free get it from a specific source. In this case, downloading it for free from Radiohead is not piracy, while downloading it via eDonkey is piracy.

Re:wtf

"I'm sorry, but, if it's FREE, then it's not really PIRACY."

Popular understanding of the term "copyright" is that it refers to one's exclusive "right" to how something is "copied" (hence "copyright"). Does your understanding differ?

Putting on my Nostradamus hat for a second (although I will not write this as a quatrain), my guess is that we'll see your argument a lot more in the future. Many pirates claim that they have a moral allowance to pirate music because it's outrageously priced at a buck a track, and claim (disingenuously, of course) that they'll start buying when the price hits ($_CURRENTPRICE - $_ARBITRARYVALUE). When that day comes, I suppose the argument will be "Well, now it's practically free, so if I just help myself to the torrent, it's not really piracy now, is it?"

Re:Cue Mozart's Requiem for the RIAA

There's one thing that the record companies provide that you can't typically get on your own, and that's publicity.

Radiohead is only able to cause this much of a stir and make this much money because everyone and his brother heard "Creep" on the radio umpteen times in the late 90's. Otherwise nobody would know who the hell Radiohead is and their name-your-price album would sell no better than the thousands of other bands charging $5 for a CD that hardly anybody has ever heard of.

And I don't think that's a bad thing. I think I'd like nothing more than the complete breakdown of the music industry so that you'd actually have to go out to bars to hear people play. I think with national exposure given to a select few by the media companies, great local and regional bands have a much tougher time finding an audience.

If it no longer paid to spend the millions promoting those few bands, they'd have to compete with the people who didn't win the record contract lottery, and we'd all be better off.

Re:Cue Mozart's Requiem for the RIAA

And I don't think that's a bad thing. I think I'd like nothing more than the complete breakdown of the music industry so that you'd actually have to go out to bars to hear people play.

I've never been one for going out to hear local musicians -- but in the past year I have been to several local concerts in bars and small theatres, and almost without exception I have immediately purchased one or more CDs (indie, of course -- often they're just burned CD-ROMs) from the artist. I have been frankly amazed at how good some of the these unknown local artists are. So the whole "having to go out to bars" thing has certainly worked for me.

Re:Who the fuck is radiohead?

Who the fuck is radiohead?

Karma police, arrest this man.

Re:Who the fuck is radiohead?

what a Creep

Re:Who the fuck is radiohead?

Who the fuck is radiohead?

When I am King you will be first against the wall.

Hang on a sec, that abbreviated would make a cool ID. I really should do that...

Re:Who the fuck is radiohead?

How long have you been waiting for that?

Re:Who the fuck is radiohead?

Hey, when life throws you a soft pitch like that you don't just tap it for a single, you smack it out of the park.

Re:Who the fuck is radiohead?

So you're saying the same person downloaded the same song over and over again? that's just stupid.

Firefox gets changed from version to version.

The only exception is if someone accidentally deleted it; Which I imagine would be very few people, if any.
Althoguh I am not a fan, Radiohead is very popular...at least here in the northwest.

Re:Who the fuck is radiohead?

I paid $10 but dowloaded it twice. Once at home and once at work. Seemed to be easier than downloading it and then putting it on a thumb drive taking it to work and uploading it. I must be really stupid.

Re:Who the fuck is radiohead?

Possibly true, But also think about all the people who have heard of Radiohead BECAUSE of the media hoopla surrounding the fact they have decided to sell the album direct to the public via the website and cut out the RIAA/Record Companies.

There is also the added purchase support from those who may not be big Radiohead fans who would normally buy a record from them, but who are purchasing the album in order to support their decision to embrace the web... and not something to outlaw like certain parties would appearently like to see happen.....

Re:Who the fuck is radiohead?

Who the fuck is radiohead?

Exactly. The idea that 1.2 million people downloaded Radiohead's latest is not believable given historical sales data for the band.

You mean given that since historically they've sold more than that for most of their albums [wikipedia.org] means that they shouldn't sell as much for this one, which they offer for less than any previous album?

How does that make sense?

Re:Who the fuck is radiohead?

Yes. That would be RIAA trying to buy out all the copies.

Re:Who the fuck is radiohead?

The 45 pence charge was actually a credit card admin charge. If you put 0 in the box you didn't have to pay anything at all.

Re:Who the fuck is radiohead?

Actually, no. There was a credit card processing fee of .45 pounds. So strangely enough, if you opted to pay nothing, there was no need for a processing fee and thusly no charge. That way you could check out the music for free, and if you decided it was worth it you could then pay whatever you liked.

Re:Who the fuck is radiohead?

If one in 300 people in the US and England bought the album you would have at least that many sales. Or if half of the people in New York City under the age of 18 bought the album you would have that many.

Right. And if just 1% of the cells in your body bought the album, well that would be 500 billion sales right there, so 1.2 million is no big deal.

Re:Figure for comparison?

Use this:

Number of album sales * Average Retail price * 0.1 = artist's take.

Labels, retailers middlemen and RIAA lawers generally take a 90% cut. Traditionally, the label pays for production and advertising, which was considerable pre-internet. Those costs have plunged now that the internet can hype anything and production costs can be trimmed to 2 or 3 good mics, some software and a laptop.

But all you really need to know is that the old way got them ~$2 an album, and this way got them $5 or more (estimated), while building considerable goodwill with fans. Sounds like a pretty good model to me.