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!

[HartDev]

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!

One thing's for sure:

[Enlarged to Show Tex]

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:Finally!

[larry bagina]

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

I'm impressed.

[pushing-robot]

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:wtf

[Martin Blank]

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.

good, but....

[illicit7118]

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?

Re:It's not piracy, idiots

[tiocsti]

If you accept that piracy is copyright infringement (and not stealing) then you can certainly pirate free things. There's many cases of free software being pirated, for example. This is little different, the price may have been zero, but nothing gave anyone rights to redistribute that free material. Ergo, it was pirated.

Re:It's not piracy, idiots

[6031769]

Sure you can. Read the GPL sometime.

Re:Cue Mozart's Requiem for the RIAA

[Bluesman]

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:Finally!

[Seumas]

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:So what's the control?

[l2718]

Actually, even if Radiohead lost some, it would still a mean that a lot more people got to enjoy the music. In other words, the benefit to society was orders of magnitude bigger than the alternative (where most of the benefit would go to the record label). I think I'm beginning to believe Ray Beckerman's insistence that the record labels are history.

Definition of Work

[randalware]

        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 !

Re:It's not piracy, idiots

[Anonymous Coward]

Also, you can't rape a girl unless she's a hooker.

Its still not PIRACY

[Anonymous Coward]

Were any boats involved? Any rape, murder, or destruction of property? No? Then it was just "copyright infringement" or, if you will "duplication." This is not the same as "piracy" neither morally, legally, nor theoretically.

Just because some media outlet misused this word to refer to copyright infringement doesn't mean we should buy in. We are geeks, we should know better. Please stop reinforcing inappropriate connotations for this activity.

Great! Yes, make even more money!!

[blind biker]

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!

Re:Who the fuck is radiohead?

[geekoid]

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?

[DCTooTall]

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:wtf

[shark72]

"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:I'm impressed.

[metrometro]

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.

Too simple.

[Skadet]

This is an oversimplification. How much did their producer get? Their manager? Attorneys and accountants? Other support crew? In the traditional model, the label pays these people and recoups the cost from that $6m (or however much). Now, they have to do it.

It's cut out the "intermediaries" (well, aside from the payment processing people, hosting company, bandwidth providers, et. al.), but it isn't as if they're splitting $6m between themselves.

Re:Finally!

[McFadden]

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:Who the fuck is radiohead?

[Original Replica]

1.2 million people isn't really that many people when you are talking about a global release. 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. Millions just aren't as impressive as they use to be.

Re:Its still not PIRACY

[MightyMartian]

You know, words do evolve in meaning over time. Trying to win an argument through etymological fallacy only proves your level of desperation.

Re:One thing's for sure:

[slittle]

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:I'm impressed.

[RonnyJ]

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 the same way, it wouldn't get as much publicity as this one has (being the first major release done in this way).

Re:Finally!

[burris]

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:"piracy" (Re:wtf)

[MysteriousPreacher]

Yep, in the same way that an act of god is quite literally a verifiable intervention on the part of a deity. Words and phrases don't always have a literal meaning. I've been called a bastard by mates, but it was never meant to imply that I was born out of wedlock.

Piracy has been used to describe copyright infringement since the 19th century.

Re:Finally!

[no_opinion]

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:and that is the threat to the big labels;

[TheVelvetFlamebait]

Will the publicists be able to somehow offset the expensive startup costs making music? Or will professional music-making become a luxury for the very rich?

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

[Belacgod]

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;

[suv4x4]

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:Figure for comparison?

[Apotsy]

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.

FUD through name calling

[Scrameustache]

You know, words do evolve in meaning over time. Trying to win an argument through etymological fallacy only proves your level of desperation.

Piracy still means attacking boats http://news.bbc.co.uk/2/hi/africa/4584878.stm [bbc.co.uk]
Actual pirates still kill real people, still really steal real cargo.

Trying to sow FUD about file sharing through this etymological fallacy only proves the *AA's level of desperation, and your defense of their crimes against language only proves you're a tool. "piracy" applied to file sharing is the same as a godwin: it's making a mountain out of a molehill.

Re:Finally!

[budgenator]

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.

Re:Finally!

[Incongruity]

As far as I am aware, what each of those lack (despite being useful, useable and successful, each, more or less), I think, is the big act/star power that a few bands the caliber of Radiohead would bring to such a venture. Their name recognition would lend a certain authenticity to such a site in the eyes of the mass-market consumer, I think.

Perhaps not, but it'd be interesting to see...

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

[LooseIsNotLose]

Seriously, what expensive startup costs? If you want to record yourself there's the initial outlay in a powerful computer set up and perhaps Pro Tools, and some good microphones for drums and vocals. So--maybe $10,000? $20,000? And once you've got that equipment, you can use it as much as you want, with no hourly studio time.

And if you don't have the knowhow or money to do the recording yourself, there are all kinds of small studios with perfectly decent engineers that charge less than $1,000 for a day. It's perfectly feasible to record an album for $5,000-$10,000 this way, or much less if you have connections or friends in the small-time recording industry.

After that, electronic distribution is essentially free, via MySpace, or by setting yourself up on iTunes, eMusic, etc. If you also need CDs, a company like Kunaki can produce them for you on the fly for less than $2 each, *and* handle the ordering back end.

Compared to a lot of other things you could do for a living, music is *not* an expensive industry to be a part of, if you don't buy into the rock 'n' roll life style, often lived by artists who are *fearsomely* in hock to their major label for some ungodly advance money that it will take royalties years to pay off, if ever.

Re:Who the fuck is radiohead?

[AgNO3]

Please help me know when artist where NOT paid in historical times. I don't mean artist that didn't get paid I mean a time when artisans where not paid for there skills and work as a profession. The Pyramid artist where paid well from all accounts and pretty much since then I can show that artist have been well compensated for there work. Mozart was not a popper. I guess I should stop putting $ in the street musicians basket cause he is obviously not about his art.

Re:Figure for comparison?

[metrometro]

> 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?

Accounting 101

[sean_ex_machina]

Revenue is meaningless if we don't know how much it cost them to produce, promote, and distribute the album. Unless they have substantially cut recording costs, selling In Rainbows for $5 a download probably doesn't net Radiohead any more profit than releasing it through a label.

Re:for the record

[wes33]

First of all, the inrainbows.zip file is 48.4MB. Second, $17K is is .0017 of $10,000,000.00 I.e nothing.

Re:I'm impressed.

[Dunbal]

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.

Re:Not as Altruistic as First Appears

[Anonymous Coward]

Who said anything about altruism? They're trying to find a business model that works when 90% of music listeners just download mp3s for free. Their previous album was widely available on the p2p networks months before its release (ripped from review copies given to magazines which need to go out early so that the review ends up in the magazine at the same time as the album is released).

This way the people who would have pirated it still pirate it, but maybe they see a dollar or two out of people who would pirate it rather than pay full price for the CD. And they get every penny of the decreased price. It was sound business not altruism. Meanwhile they'll do a CD release later for people who actually want a shiny silver disk.

it's not all clear profit

[Tpenta]

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.

Re:Cue Mozart's Requiem for the RIAA

[gemada]

ummm....no. Creep came out in the early 90's. Radiohead is famous because OK Computer is regularly cited as one of the top 10 albums of all time. Not to mention "The Bends" is one of the great Rock Albums of all time.

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

[ravenshrike]

Actually, if the businesses were truly capitalistic, they would have flourished, as the entire idea behind capitalism is that if there is a need for something, you can make money doing it. As need for that thing drops, you will struggle. So, any true capitalist must either continually adjust his produt to suit current need(, get into a static need business(like fuel), or somehow guarantee a continued want/need for their product(the govt.).

Re:Finally!

[pipingguy]

"both liberating and terrifying"

Any major change (in any endeavour) should be like this, unless stifling and routine is preferred.

So like... they are not selling it anymore?

[denzacar]

They have closed shop?

Nobody else will get the album this way?

Whats done is done?

We have the final count now and no more albums will be sold? Ever!?

So that is the new halflife for the music these days - 10 days?
After that, go find a new favorite song/album/band?

Shit... I'm getting old.

Re:Finally!

[Wildclaw]

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:Cue Mozart's Requiem for the RIAA

[Mikelikus]

I find it deeply amusing that while you try to make a point based on music history, you fail completely.

Radiohead are one of the greatest bands ever. They revolutionized rock music throughout these last 15 years in ways I can only compare to The Beatles and still you only remember them for a song they released in 1992.

I'm sorry but if I had mod points I could only mod you either funny or troll.

Re:Who the fuck is radiohead?

[Synonymous Bosch]

In a remarkable set of coincidences, not everyone in the world has a computer, mp3 player, cd player, or buys cds and the parts of the world which are highly representative of the webs population also happen to be highly representative of the locations of Radioheads fanbase.

As of 1997, only 50% of the worlds population had actually made a phone call. The fact that the minority of the world uses the internet is representative of the fact that the minority can afford and have access to it.

It's easy for us cruisy first world types to forget this.

Tired of hearing geeks talk about the music biz...

[gary gunrack]

..but still addicted to Slashdot. Seriously, I missed this discussion because I was driving to a gig, one in a string of many out of state gigs this month in what is a grueling schedule that we've set for ourselves. I got home at 5am. After a long weekend of hard work, we might get paid enough to cover gas and expenses, if we're lucky. Half of what we make goes back to the band account to pay off our debts: the money it cost to produce our first CD, the money for our new CD, the money to buy our tour van (built in 1986), and soon, the money to hire a publicist. It occurs to us that buying our own recording gear and learning how to use it makes more sense than paying to use a studio. For what we paid to make our last 2 cd's, we could have gotten almost enough gear to do it right. But $20,000 worth of gear is a staggering figure for us. We're working so hard on the music that it interferes with my ability to make a living. (if this sounds whiny, its because it kind of is... I'm exhausted, demoralized, and a little broken). It isn't as easy as y'all make it out to be with your nice theories about business models. There's no way that Radiohead would have sold a fraction of their albums if they hadn't previously had record companies promoting the hell out of them for more than a decade. How many people here actually go out to see independent bands play? How many of you buy CD's from sources like CDBaby? There are thousands of bands in the US putting out music that is better than the Big Labels', working their asses off, and failing to make ends meet because people don't take the time to hear them. And if you do buy their CD, you will probably be dissapointed because your ears are accustomed to hearing big-budget productions, and these bands cant afford it.