Analysis of IT news

Saturday, November 24, 2007

Radiohead sold their latest album online

British band Radiohead famously short-circuited their music label, EMI, and put their latest album available for download on their Web site free of charge. Fans pay only what they feel the album is worth.

At the end of the day, was it a good move for the British band? Difficult to assess as there is very little solid information about the figures. On the one hand revenues generated from this online sale are nowhere near revenues generated by traditional CD sales. On the other hand selling directly to fans implies a very high margin, compared to $2 at most on a CD sold traditionally (and that's before production and promotional costs). There are also some side benefits: because artists make most of their money on tours, any promotion that helps spreading an album and helps the fan base growing sells more concerts tickets. But one must remember too that record labels also play an important part in the promotion of an album, cutting deals with radio to air the hit songs and TV shows to generate some publicity.

But the fact that Radiohead's move wasn't widely considered a success doesn't help their cause, as it gives little incentive other to bands to follow their path. Why not stick to the traditional and more secure way of doing business instead of taking a risk?

Now, the British band only used one of the potentials of the Internet: cutting the middleman. There are others potentials they have ignored. In particular, the ability to COMMUNICATE (this means BOTH WAYS) with their fans.

The online sales of the album are probably following a bell-shape curve, with the majority of customers paying less money than a regular CD and a few paying the same price or more (forget about those who didn't pay anything). Focus on those who paid the most, because those are likely to shell out good money to see concerts.

Consider the following scenario: paying for the album automatically grants you a complimentary ticket to a raffle, with prizes such as autographed photos of the band, free concert tickets, or even the ability to email the band and actually get a response from them. Better, make the raffle ticket "weight" linked to the amount of money paid. You paid $1, you get one raffle ticket. You paid $20, you get 20 tickets. You didn't pay anything? You're out of the game. In other words, make those who paid money feel appreciated for their good deed.

And speaking of making the most devoted fans appreciated, here's another idea: send the highest payers... a vinyl of the album. Why a vinyl? Because nothing ever replaced the experience of owning a vinyl album. Those were collectors, their covers were often pieces of art. The so-called CD "jewel box" came nowhere near that. Maybe it's the smaller size or the cold angular plastic, but CDs coms in a case devoid of any emotion. So send the biggest fans a vinyl. It doesn't matter if it cannot actually be played. Send them a fake plastic gold disk for that matter (like the ones artists get when they go Gold or Platinum), but just send them something they can proudly display on their walls.


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