Entrepreneurial Head – 8/10/2007
Sorry for the week off readers, I felt I was supplying you all with too much wordy goodness and a week off would keep you all keen. This is when I discover I’ve lost half my readership as they think I’ve buggered off from the music industry to concentrate on my real passion; topiary.
So, the age old question is arisen yet again; how much is music worth? Some, like Lefsetz for example think we’re being charged too much. Some, like Harrison for example believe the industry is selling music too cheaply.
To me it does seem a bit silly that an album on iTunes is around £7ish yet you could buy a tangible version of the same album for £8 or £9 on amazon.co.uk. The basic rules of economics state that if your overheads are lower then surely you can (arguably should?) sell the product for significantly less? But even if you did lower the cost, would more people buy it anyway? Would iTunes be willing to take less of a cut? A high majority of artists don’t manage to make back their advance from record sales so does that mean we are selling it too cheaply? Should we be willing to pay more in order to ensure our favorite artists (especially those on a lower level) will release more material in future?
I have quite a bit of respect for Radiohead for doing this. They’re pretty much conducting market research for the rest of the industry as in a couple of weeks they’ll have a whole host of quantative data that music industry analysts will be drooling over. Who paid what? How many people downloaded it for nothing? How old were the people who paid the most for it? Where are they from? Which country was the most generous? Which country was the tightest? Did anyone pay more than your average CD cost? How many people ordered the ‘deluxe’ £40 package?
What makes it brilliant is the fact that Radiohead probably won’t lose any money over this. Let’s say if they did a ‘traditional’ release where consumers would buy the CD for £8 a go from where ever. They would need to sell 5 records to make £40. So, if with this model they’re testing at the moment, 1 in every 5 people buy a deluxe package they’ll be making the same cash (probably more as it’s coming direct from them and not through a distributer) and that’s if the other 4 don’t pay a penny for the download. Even if 1 in 15 people bought the deluxe package, and the rest didn’t pay a thing, out of the 14 ‘skinflints’ may be 6 or 7 people who wouldn’t have bought the album if it was released traditionally so therefore Radiohead have the potential to make 7 new fans! If the 7 new Radiohead fans love the album they’ll probably do a bit of research and go and buy one of (if not all 3) Pablo Honey, The Bends or OK Computer! Then Radiohead have made loads of cash!
It’s new, it’s exciting and it’s bloody clever (think of all the free PR they’ve received from it). Kudos to Radiohead’s entrepreneurialism I say. More of it please! (See also: industry commentator Mark Mulligan’s Label Disintermediation: Myth or Reality and The Long Tail Blog’s piece of the economics of Radiohead’s decision).
I also want to have a chat about the rather ‘unlucky’ woman in the states that got handed a $222,000 fine for illegally sharing some music via the P2P software ‘Kazaa’. The RIAA managed to sue her for $9,250 per song!
To me it seems a bit harsh. But can you argue? She did break the law didn’t she? It’s like people who complain when they get caught speeding. Yes it’s bloody frustrating but the simple fact of the matter is that you broke the law yes? Granted, if I got 3 points and a hundred grand fine then I would be pissed off but never the less, you get my point.
Now in my youth I’ve downloaded and swapped a bit of music and I don’t feel guilty for about it as it has helped me to discover a hell of a lot. For example, a good friend of mine gave me a copy of Muse’s first album many moons ago. An album I wouldn’t even have sniffed at buying at the time as I knew sweet FA about them, but since he gave me said album I’ve bought 4 more of their albums and seen them live 5 times giving them around £300 – £400 of my hard earned cash in the process.
It’s true that not all of the music I’ve been given in the past I’ve then gone on to spend that amount of money on the artist in question but if I hadn’t heard it all together then I’d definitely wouldn’t spend my cash on it as I’d still be in blissful ignorance. I spend the majority of my ‘music money’ on gigs, I go to a lot as I bloody enjoy it and I personally don’t think nothing can beat the experience of seeing a band pull off an amazing set. A lot of times in the past I’ve gone see a band after just hearing 1 or 2 of their tracks (this obviously isn’t a rare thing for someone in my line of work to do, or for someone with an equal amount of ‘passion’ for music as I). So if you want to get your hands on my money then the best thing for you to do is give me your music for cheap/free to begin with, if I like it I’ll come see you live and if you impress me live I’ll buy whatever you bring out in the future. But then again that is just me.
Very quick mention of the Maximo Park gig I went to on Friday as well. It was ace. That is all.
What I’m reading this week: This nice little article on the BBC News website