Years after the Napster revolution liberated music, industry labels are still hot on fighting the war on piracy. Earlier this month, the association representing big players like Capitol Records and Sony BMG hailed their first victory ever on the legal front, a $222,000 penalty against a Minnesota woman found guilty of illegally sharing music online. But few, if any, believe this isolated win will alter the decisively linear trend of those swapping tunes on the web. At this point, people see the content issue as settled: free music is their right. If the establishment standing in their way has any knowledge of history, they’d work to find new ways to engage “the people” in order to stay relevant—or perhaps more importantly, employed.
This past week at CMJ, musicians, managers (and those aspiring to be) filled rooms at NYU’s Kimmel Center to hear industry advice on how new bands can “make it” in these changing times. One panel, “Music Business Primer: Marketing and Promotion”, had a message for the music industry—you’re not going to win this one, recognize that free music is the future and just work to control it. The panelists suggested that bands should consider releasing free downloads as a way to build community around their music. The MuseBox’s George Davis described the new revenue model well: “It’s all about tickets and t-shirts.”
Prince has been working this model with much success. The artist, who escaped his contract with Warner Music in 1994, had the music industry in a huff when he gave his most recent album away with a British newspaper. A digital music pioneer, Prince also lent early support to P2P and was one of the first to sell music directly from his website. Now Madonna is following suit by leaving Warner Music and signing with Live Nation for a $120 million 10-year deal. As she explained, “The paradigm in the music business has shifted.” While the deal will require Madonna to produce three more albums, the real focus is clearly on expanded touring and merchandise that Madonna, as her own brand, can sell to fans. The Live Nation deal includes all-things-Madonna, including everything from her website to DVDs, music-related TV and film projects, and corporate sponsorships. For someone who is a walking commodity, perhaps this is the best way to go.
But free music can actually make money again. Bands and labels should stop working outside the trend and, instead, ride the digital wave by directly engaging fans. A great case study is the Peoria, Arizona band The Format, which recognized the loyalty of its fans and stopped releasing their albums in the traditional fashion. Their 2005 EP, “Snails”, was made available exclusively online and at their concerts. In 2006, the band, having been dropped by Atlantic Records, was on its own when its new album, “Dog Problems”, leaked online two months before its release. Instead of losing out on the inevitable file-sharing about to take place, the band debated for all of two hours before releasing its CD for a discounted $7.99 on its website. Within the first hour, the site sold 600 downloads, and 2,000 within the first month. Loyal fans actually paid for music they could have gotten for free when given the digital avenues to do so.
Fast forward to this month, when Radiohead made headlines through the digital-only release of its seventh album, “In Rainbows”. Radiohead’s decision to offer their album for a customer-selected price is an unprecedented example of how bands can leverage their fan base to make money off digital music—and build hype. Radiohead made the announcement about “In Rainbows” exclusively on its website without any forewarning, shocking both fans and the press. Jeff Gerst, an independent media consultant and self-described “superfan” who worked with Radiohead in 2000 told NGT, “There it was, with a little post on the website, without some big buildup, like finding a treasure in the woods.”
Fans turned the pay-what-you-want option into a test of loyalty, with an estimated two-thirds of fans actually paying an average of $5-8 for the album. While that’s about half of price of an iTunes album, take the following into account:
1) When an estimated 1.2 millions fans downloaded the CD on its release date, many had never heard the album’s music before—it wasn’t on the radio or leaked on the web. And many paid for it anyway.
2) The band released the music on its own, giving it direct access over the estimated $6-10 million it generated on day one. With a record label, the band would have needed to sell 10 times more albums to reach that same profit.
3) While some fans voiced outrage over the download’s reduced quality (not as good as a CD, but better than iTunes) and statements by management that the digital release was only a promotion for the physical CD, a reported 700,000 orders have already been placed for the extremely pricy $81 special edition “discbox” debuting in December.
4) The 10-song digital release is a mere 43 minutes, significantly less than the average CD—meaning the band is producing less material but still marketing it as a full album. The band is actually adding 8 more songs in the “discbox” edition, which means more fans will be compelled to buy the “discbox” later on.
5) In November, the band will start planning an old-fashioned physical CD release in stores, which it still expects to do well despite the digital offering. As manager Bryce Edge told the U.K.’s Music Week, “If we didn’t believe that when people hear the music they will want to buy the CD, then we wouldn’t do what we are doing.”
Other bands are reportedly working on their own plans. Shortly after Radiohead, Nine Inch Nails announced plans to divorce from Interscope Records, saying that would work towards a “direct relationship with the audience.” Oasis just released their first download-only single, “Lord Don’t Slow Me Down.” Meanwhile, artists including Mos Def, White Rabbits, and Cold War Kids are signing up with RCRDLBL, the Downtown Records/Peter Rojas venture that pays artists for exclusive digital tracks with online advertising dollars.
So what does this all mean? Well, it means that clever marketing will help the music industry thrive again. It means that controlling one’s music instead of handing it over to old-school record labels with outdated methods will yield bigger payoffs. It means that releasing music when customers want it, in a way that makes them feel like their money is worth something—is a part of something—will reshape the music world into a reality that works for everybody.