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Media Music The Almighty Buck

Radiohead May Have Made $6-$10 Million on Name-Your Cost Album 539

Posted by Zonk
from the generous-listeners dept.
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).
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Radiohead May Have Made $6-$10 Million on Name-Your Cost Album

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  • Finally! (Score:4, Insightful)

    by HartDev (1155203) on Friday October 19, 2007 @06:10PM (#21049239) Homepage
    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! (Score:5, Insightful)

      by larry bagina (561269) on Friday October 19, 2007 @06:13PM (#21049295) Journal
      It's proof that well known band can make money without a record label. Which wasn't exactly news.
      • I used to sing karaoke a lot and our town of 35,000 had 3 or 4 people that were as good as any with record contracts (I was far from being one of them). So assuming that my town isn't special that's about one in a thousand, the USA with over 250 Million people should have 250,000 singers on the bilboard top 100 list!
      • Re: (Score:3, Insightful)

        by Wildclaw (15718)
        And they even got a lot of free advertising a.k.a. "news".

        That isn't to say that the idea doesn't work. It is just that you can't test it like this and claim to be scientific.
    • Re:Finally! (Score:4, Insightful)

      by Seumas (6865) on Friday October 19, 2007 @06:25PM (#21049509)
      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! (Score:4, Insightful)

        by burris (122191) on Friday October 19, 2007 @07:10PM (#21050177)
        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: (Score:3, Insightful)

        by no_opinion (148098)
        This is obviously false. If an artist got $2 on a $2 album, that would mean there was no cost to set up the site, no cost to take the credit card, no cost of bandwidth, no cost for PR or marketing, etc., all of which we know is false. What's more realistic is that an artist gets $2 from a $3 or $4 album.

        Even without a label, the artist isn't out there doing these things without help. Someone is getting paid to do the distribution, but the splits are much better if it's not a (typical) label.
    • Re:Finally! (Score:5, Interesting)

      by p0tat03 (985078) on Friday October 19, 2007 @06:31PM (#21049605)
      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! (Score:5, Insightful)

        by McFadden (809368) on Friday October 19, 2007 @06:47PM (#21049835)

        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: (Score:3, Insightful)

        by budgenator (254554)
        It's more likely that the band had a small but loyal group of fans enough to insure break-even at resonable expenses before the label would even touch them. Then their contract almost certainly had clauses where the band would cover production and promotional costs out of their take so it cost the record company is zip so far. Also consider that the labee is heavily subsidiarised so they only bid out jobs to companies they own so there is no competion to drive down the costs the artists pay.
      • All bands signed to labels have things called "contracts" that specify exactly how much they owe the record companies for the publicity generated by the label.
    • Re:Finally! (Score:5, Interesting)

      by smackenzie (912024) on Friday October 19, 2007 @07:28PM (#21050387)
      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...
      • Re: (Score:3, Insightful)

        by pipingguy (566974) *
        "both liberating and terrifying"

        Any major change (in any endeavour) should be like this, unless stifling and routine is preferred.
    • Clapton agrees... (Score:4, Interesting)

      by MC Negro (780194) * on Friday October 19, 2007 @07:39PM (#21050513) Journal
      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.

  • by Enlarged to Show Tex (911413) on Friday October 19, 2007 @06:10PM (#21049245)
    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.
    • by Ynot_82 (1023749) on Friday October 19, 2007 @06:17PM (#21049373)
      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
      • by slittle (4150) on Friday October 19, 2007 @06:49PM (#21049881) Homepage
        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.
      • Re: (Score:3, Interesting)

        by Shads (4567)
        Here's some interesting numbers:

        500k Albums is Gold, 1m Albums is Platinum, 2m is Multi-Platinum (double plat, triple plat, etc), 10m is Diamond.

        US Sales for Radiohead look this... Pablo Honey - Platinum 1m-2m, The Bends - Gold 500-1m, OK Computer - 2 x Platinum 2m-3m, Kid A - Platinum 1m-2m, Amnesiac - Gold 500-1m, Hail to the Thief - Gold 500k-1m... For a total of ~5.5m-10m albums sold.

        If they got 3$ per album sales (they wish) they'd have made ~16.5m-30m on cd sales alone.

        If people paid an average of $5-
  • by bit trollent (824666) on Friday October 19, 2007 @06:11PM (#21049255) Homepage
    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.
  • by ackthpt (218170) * on Friday October 19, 2007 @06:11PM (#21049267) Homepage Journal

    Six. Million. Dollars!!

    Beyond discounting the damage of piracy to RIAA partner profits, the fact a band can raise at least that much money selling their own album suggests the bar is now so low bands need not sell their souls out for a record contract.

    So Madonna is considering a fat new contract with some record company, that's their mistake. She's past her use by date anyway.

    I think I need to record some of my own music and see how it flies.

    • by Bluesman (104513) on Friday October 19, 2007 @06:18PM (#21049381) Homepage
      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.
      • by N7DR (536428) on Friday October 19, 2007 @06:35PM (#21049649) Homepage
        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.

  • by Funkcikle (630170) on Friday October 19, 2007 @06:13PM (#21049293)
    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

  • by Burnhard (1031106)
    I would be interested to know what kind of gross they could expect from a label promotion and distribution in the "old way". The figure given here is a bit useless without that piece of information ;).
    • by metrometro (1092237) on Friday October 19, 2007 @06:25PM (#21049497)
      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.
      • Re: (Score:3, Insightful)

        by Apotsy (84148)

        production costs can be trimmed to 2 or 3 good mics, some software and a laptop
        If you want it to sound like complete ass, sure. Digital technology has helped to somewhat reduce a few of costs associated with recording, but a controlled acoustic environment is still necessary to capture a clear record of the sound.
        • Re: (Score:3, Insightful)

          by metrometro (1092237)
          > a controlled acoustic environment is still necessary to capture a clear record of the sound. Like suburban basement full of mattresses and carpet samples? Check. What else you got?
  • I'm impressed. (Score:5, Insightful)

    by pushing-robot (1037830) on Friday October 19, 2007 @06:15PM (#21049317)
    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: (Score:3, Insightful)

      by RonnyJ (651856)

      this means (a) the album went platinum with no marketing help from a major label

      You have to consider that Radiohead were already hugely successful (partly down to previous marketing from a major label), and also that their new album got huge publicity from many news sites due to the way it was being released.

      It's extremely hard to imagine that a small band (let alone an unknown) could have got anywhere near the amount of publicity this has had. Even if another band as big as Radiohead released an album in t

      • Re:I'm impressed. (Score:4, Insightful)

        by Dunbal (464142) on Friday October 19, 2007 @09:43PM (#21051649)
        It's extremely hard to imagine that a small band (let alone an unknown) could have got anywhere near the amount of publicity this has had.

              Gee I guess you've never head about Chris Crocker and his "Leave Britney Alone" video have you? I'm in the fucking Costa Rican jungle and I've heard of him. I assure you, if a decent band posts some decent music, the fame will come. No RIAA required.
  • good, but.... (Score:3, Insightful)

    by illicit7118 (1176755) on Friday October 19, 2007 @06:16PM (#21049341)
    This is a first step (if true) however doesn't solve a bigger issue. Radiohead can do this because they are an established band, who became established because of the current industry infrastructure mind you. This modeal does NOTHING for an unknown band. How do you complete the bridge to the future?
  • by Ambiguous Coward (205751) on Friday October 19, 2007 @06:19PM (#21049391) Homepage
    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 (Score:5, Informative)

    by SolusSD (680489) on Friday October 19, 2007 @06:21PM (#21049427) Homepage
    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: (Score:3, Informative)

      by burris (122191)
      The artist royalty may be less than a dollar but generally the artist doesn't get any of that. That's because all of the costs of production, marketing, packaging, etc... come out of the artists royalty.

      see http://www.negativland.com/albini.html [negativland.com]
    • Re: (Score:3, Funny)

      by Tuoqui (1091447)
      Naw Uncle Sam takes 40%... Still a huge lump of cash they're sitting on though.
  • Definition of Work (Score:4, Insightful)

    by randalware (720317) on Friday October 19, 2007 @06:26PM (#21049525) Journal

            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 (Score:4, Interesting)

    by PJ1216 (1063738) * on Friday October 19, 2007 @06:27PM (#21049547)
    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.
  • by blind biker (1066130) on Friday October 19, 2007 @06:33PM (#21049619) Journal
    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!
    • If the musicians do not sign, the contracts will be changed.
      If all new group boycotted the contracts en mass, they would change, literally over night.

      I am not sure why you imply radiohead is being greedy.
      They let the fans pick the price. The amount of money someone makes has NOTHING to do with greed.

  • by Carcass666 (539381) on Friday October 19, 2007 @06:48PM (#21049855)

    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.

  • by unity100 (970058) on Friday October 19, 2007 @07:06PM (#21050099) Homepage Journal
    and starting up a band asap !!
  • by teslatug (543527) on Friday October 19, 2007 @07:39PM (#21050521)
    I'm sure I'm not the only one who went to their site to buy it, and couldn't even find a link to click on!!! I kid you not, all I saw was the psychedelic colors, tried clicking on things (or rather hovering) and couldn't even get a link. They should really find some more competent people to create their site and host it (it would have paid for itself). And by the way there should be one site, not a new site for every album they make. I wasn't even sure if it was legitimate site due to the poor design and not being their main site.
  • by HangingChad (677530) on Friday October 19, 2007 @09:16PM (#21051449) Homepage

    Darth RIAA just felt a great shudder go through the record industry. As if thousands of A&R reps cried out at once and were suddenly silenced.

  • by Tpenta (197089) on Friday October 19, 2007 @10:57PM (#21052149) Homepage
    Even without the recording industry, there are still costs associated with the production of the album, for example studio time and people to do post production etc. Estimating all sales as purely profit is short sighted and simplistic to say the least.

    It must still be said though, even with the costs involved in making the album, that's a nice wad of cash.

    Tp.
  • by HermMunster (972336) on Saturday October 20, 2007 @10:32AM (#21055143)
    An artist generally makes $.07 per song on any given album. If an album were to sell a million copies the artist would have made $70,000. Given the tax bracket the artist would have probably paid close to 50% in taxes. That leads to a $35,000 income off a million copies of an album sold. Even if the tax bracket is lower you can see that the artist just didn't make much money. In the past the artist used record sales as an advertising path for their concerts. That allowed them to make up for 93% of the income off those record sales that went to the record company.

    Now you consider $8.00 per album and the $6 to $10 million made and you know this was the right move for them. It opens up the world for them. It breaks the cartel set up by the recording industry and essentially issues a pink slip to all of them and any employee that promoted that decadent system to begin with. No more billionaire recording company, instead the artist gets the benefit of their artistic talents.

    This is really incredible because if they have made that much money they have changed the whole structure of how music will be sold. It is a very glorious day that the recording companies are now going to be removed as the middle man. It also means that if music distribution becomes primarily done through this mechanism we'll see a major shift away from those recording taxes on everyone that buys CD blanks, etc.

    Now consider this, no more lawsuits against Radiohead customers, none of their money going to the RIAA to allow them to fund lawsuits against old ladies, the disabled, and even the dead. Just amazing if other artists recognize the value of this and move to this same model. Hey, I might start buying music again.

    What a wonder the internet is. All the recording industry can say is "bad internet, bad bad". But the artists can say "good internet, good good" because they can now make the money the deserve from their efforts. This is total unequivocal proof that the recording industry, the content rights holders, and their lobbyists are wrong.

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