But beyond this, I love the interconnectedness of economics, media, value, fandom, and self and communal identity that this story is demonstrating. Consider this quote from the NYTimes article on the topic:
Mr. Loewenstein, whose specialty is behavioral economics and who has studied the relationship between emotions and financial decision-making, added: “It’s almost like supporting a sports team or donating to a political candidate. You’re selling to the world how much you like them by how much you pay.” Most important, he said, “how much you are willing to pay signals something to yourself about who you are: are you exploitative? Are you a tightwad?”Has it come down, then, that our ability to be a fan (indeed, even to merely appreciate something) cannot be disassociated from our pocketbooks? I cannot help but feel as if we might be missing the more cultural and social value in Radiohead's music. In the music. In bypassing the traditional economic label relationship, Radiohead wants to put the focus back on their songs. On the other hand, their move has also been called "the greatest marketing scheme in the world."
Finally, there is a third tier of discussion here with this topic: The interactivity of the web means consumers have a chance to mess with a previously fairly rigid (or at least, rigidly adhered to) economic payment structure for information goods. Is this just an illusion? What is interesting to me is the idea that there can be a mass, bottom-up decision in capitalism at all. What do people think about the term "mediated value"? It is not a phrase I coined, but it is not usually used in this context. To me, Radiohead's decision indicates a new way of thinking about how information will be understood as a product, how its value will be determined through interactive media itself (as opposed to the specific channel being merely another attribute considered in the overall price point). Ok, this is still a bit undeveloped as a thought, but that's what blogs are for... Have at it, if you desire.
16 comments:
Radiohead's decision to offer its latest album digitally and allow purchasers to pay any amount of money for it that their heart desires is certainly very unique, and I think it will prove to be a great marketing scheme for the album.
For one thing, it provides a nice story for the media to pick up, as the New York Times Web site did. Free press, especially when it isn't negative, is always a great thing. I know, without a doubt, that I would have never heard of this album if it wasn't for the NY Times site picking up the story.
I also think this was a good move for Radiohead because, regardless whether their intentions to use this method were for it to act as a marketing ploy to make more money, or because they honestly liked the idea for fans to pay however little they wanted for their album, there's really no way to determine what the real reason was, and thus, Radiohead's image will earn a nice boost among their supporters.
McChesney's corporate media article touches upon how the internet has become an important platform for progressive and democratic communication, and this method sort of takes that to a new level. People are allowed to purchase the album by, in a way, "voting" how much they desire it by the amount of money they spend on it. Personally, if I were a Radiohead fan, I would probably spend a penny on it, because I would feel no moral obligation towards them since I don't know them personally and know that I could use the money more than them. However, I still love this idea from a marketing viewpoint.
Radiohead's decision to market their album like this does not surprise me at all.
I don't know anyone who really goes out to record stores to buy cd's anymore. The only people I know who buy records are either 1] buying something on vinyl, or 2]buying something relatively rare that they cannot download for a small price or for free.
There are a few reasons that this makes sense to Radiohead.
One, they are rich. They have more than enough money for the rest of their lives, and they don't seem to be the types to blow all their savings on drugs, women, etc.
Secondly, they are not under contract with a record company. Record companies make the majority of the money that is generated from record sales - bands make their money touring and selling merchandise. I'm not sure how much money the band actually received from each record sale for their previous releases, but I doubt it was very substantial. So even if consumers do not pay them that much for this record, the band may nonetheless stand to make more per record sale than they did on their previous releases.
Prince bypassed the big record companies and released some of his music himself a while back, pre-free download era. He didn't sell nearly as many records, but he may have made just as much money. And he didn't have to feel like he was getting screwed by the record company.
Record companies justify their cut of the sales because they provide the money needed to market the album. Most bands need marketing in order to sell. Radiohead is one of the most famous rock bands in the world - not just here in the U.S. - they are popular around the globe. They are critically acclaimed. They do not need marketing. As Danny pointed out, they will also get quite a lot of free publicity because of the unorthodox manner in which they are selling this album.
This makes sense, but only because its a band as popular and established as Radiohead is. I don't think its the greatest marketing scheme in the world. I do think it makes a lot of sense- for Radiohead. This type of marketing would not work for a small indie band that nobody knows[not yet at least-but the way music is marketed and sold will continue to change-are we officially saying goodbye to cd's??]
Personally, if I did buy it, I'd pay...maybe a buck or two. [I'll probably wait until a friend burns me a copy of it though]. I've bought every album Radiohead has put out, purchased an extremely pricey (but well worth it) ticket to see them live - I've probably even helped them sell a few records by gushing to others about how wicked awesome they are. I don't feel I really owe these guys any more money. But maybe I'm just an exploitive tightwad [who lives off of pbj's]
Radiohead is definitely making a statement with their decision. They seem to be acknowledging that music consumers today don't have to pay for music if they don't want to. I think their marketing ploy suggests a compromise between the band and their consumers. It is a brilliant way to reach all different levels of fans, and it is great marketing. I'm still a little uncertain what "mediated value" means, but if it means the value of Radiohead's album is determined through interactive media then there is the danger today that the value of the album won't have a proportionate financial gain as it would traditionally. The internet has changed this, and Radiohead recognizes that "mediated value" affects their band. I think it was a good idea to try and work with it and am curious to see if it's a successful strategy.
In my opinion, the decision by Radiohead to allow their fans to set their own price for their latest album is not only an excellent marketing scheme and PR move, but also a statement about the group's values and confidence.
Furthermore, it is a reflection of how consumers are using the internet. It is much easier today than ever before to compare prices, find bargain retailers and place bids on almost any item you are seeking. Radiohead is allowing their fans to circumvent this process.
My guess, though, is that even if fans are loyal and would normally pay the $15 or whatever for a Radiohead album, the anonymity of internet marketplace will allow people to convince themsleves to pay something nearer the $5 mark. And while this may hurt the album's initial monetary intake, I bet that the positive associations that this creates for the band will ultimately lead to additional concert ticket sales, guest appearances, sponsorship, etc.
The results of this campaign will surely be of interest for economists, those in the music industry fighting the battle against music pirating, and marketers.
Ultimately, I think that it is an interesting social/media/economic experiment, but one that will not catch on in any major way in the near future.
I’m sure the absence of a record label to launch and heavily finance the typical massive media campaign for an album release factored into this marketing decision of allowing buyers to set their own price. In an industry where new and established musical acts have to set themselves apart, this action is a creative way of spotlighting an album release.
I have to agree with the above posts regarding how this is a great marketing ploy. Look at all the media attention the album has been garnering: a story in the New York Times, bloggers discussing the merits/motives of the band, and the water cooler talk about how much people are planning to purchase the album for.
I don’t believe this method of selling albums will ever become mainstream because this works for bands with a large, loyal fan base. Up-and-coming bands or established bands with a finicky fan base would not thrive with this mode of selling music.
In regard to the question: “Has it come down, then, that our ability to be a fan (indeed, even to merely appreciate something) cannot be disassociated from our pocketbooks?”
I believe our ability to be a fan can be dissociated from our pocketbooks; it’s a personal choice. Fans can range in their show of support; there are those who buy the products, blog about person/band/organization, create webpages devoted to their object of interest, write glowing reviews, etc. Although I’m sure monetary support is the preferred method of showing one’s support, I don’t think it should be the only “true” method.
Every time the relationship between economics and the internet has been brought up so far, I always think of the musicians and their fans. The music industry is the one industry that has been most visibly affected by this information sharing technology. File sharing sites were set up to trade music, then social networking sites came and were tailor made to promote bands (even leading to the Myspace record label). The old model for how to push a record has changed, and even the most progressive labels are struggling with their marketing ideas. I don’t see what Radiohead is doing with this album as a model, but merely an experiment with the industry as a whole. It’s an obvious admission that the LP product does not have the same value as it used to. I think this sales method will ultimately result in a strong economic benefit for them, but I wouldn’t anticipate many to follow this as a model.
It’s a completely nerve racking time for the record executive, and many have their own ideas what will work because fans react to bands differently. The record label I used to work for to this day will not release any music to the press or public prior to an album’s street date because it relies so heavily on first week album sales and they can‘t risk the leak. It’s an antiquated model but safe for them because they know how to add extra value to those sales, either through bonus features within the packaging or their own self-generated hype.
Ultimately it has to be about the quality of music. A band will make money with the repeat customer. The fan may get the initial music for free or at a low cost, but they’ll make the money when that fan wants to see the band live or buy other product. Radiohead could have played it safe and put out a traditional fourth quarter album release, but they chose to try and find out more about the state of internet music sales. It is telling about the music industry that the big story of this album is not the music itself, but instead the marketing plan. I’m curious to see if the Times will consider the results as news worthy as the experiment.
I have to admire this creative and playful move on Radiohead's part. It could be interpreted as a more "pure" way to share their music with the world -- almost like art for art's sake. I'm betting that a few other bands out there are wishing they would have thought of it first.
At first blush, it seems like a very retro, "peace and love, man" thing to do. But it's actually a thoroughly 21st-century strategy. By taking a risk and making their own rules like this, Radiohead is demonstrating that they will probably be agile enough to weather the sea changes ahead in entertainment technology. Those changes are inevitable, and they will probably shake up the record industry as much as digital technology did.
As a futurist I recently spoke to said, the future has no place for those who stop learning and who stop playing. The winners in the future will be not only those who think outside the box, but those who have the ability to think outside their own industries, as Radiohead has done here.
Their novel pricing gambit also strikes me as one way to deal with the piracy issue. It seems as if the band is saying, "We trust you to pay for our music instead of pirating it, and we trust you so much that we will let you decide how much to pay for it." It could turn out to be a brilliant PR strategy in terms of creating good will. But if it doesn't pan out, they can always go back to asking a set price.
The main thing is that they weren't afraid to fail. They're showing that they "get it" in terms of how to survive in the new century. In a time of fast-paced change, everything is up for grabs, and it's better to be the trendsetter than the ones who are left behind. -- Niki Denison
Just a quick math. As for the traditional CD, the label gets about 20% and the artist gets about 10% of the retail price (about $1.5-1.8). As for online music, it's about 5-60% for the label and 14-20% for the artist, out of the appr. $10 dollar price for album downloads (again, about $1.5-1.8). But Radiohead is its own label and pays only 90 cents for the distributor. So, if the customer is willing to pay more than only roughly $3, the band makes more money than selling that album through other venues. That's the beauty of middlemen-free market, once dreamt of by the Internet optimists. The buyer pays less, the producer gets more.
I don't think the 'buying fandom' argument of the NYT article hits the nail cleanly on its head. At least for now, buying the online version of Radiohead's new album (hey, they have a $160 Discbox on sale as well) is more similar to buying Fair Trade coffee - you are buying your share of morality in the producer-friendly innovation of the market. In the "mediated value" you get from buying the tracks, there may be some (how tiny it may turn out) place for the self-perceived morality. And fortunately, the band representative recently announced that their model is working pretty decent so far with most people paying about the amount they would have spent if through other venues. Sure, it took a collapsing record industry, a super famous rock band and a radical marketing strategy to let the buyer put the price tag to place this idea finally into mainstream. But once successfully started, the concept of moral consumption in the media market could potentially spread to other media as well, including movies, software and even news contents.
Such ideas are still rough and link to 'active audiences' chapters rather than News production or PR chapters we are currently doing in class, but what are blogs for?
I think kimnakho put it best when he equated “buying the online version of Radiohead’s new album” to “buying Fair Trade coffee” as opposed to buying fandom. While it would be easy for consumers to pay a mere penny for the album, I think fans are more generous than we give them credit for. Radiohead’s marketing scheme ingeniously allows consumers to very actively communicate their values.
By connecting this concept of price evaluation with self-expression, Radiohead has developed a model that I think encourages fans to use their pocketbooks as a metric of appreciation. In this way, fandom is not being bought but rather is being expressed and reflected according to the consumer’s own terms and values. In my opinion, loyal fans who truly appreciate Radiohead’s music and image will hand over as much money as they think the album—and their freedom of self-expression—is worth. They know that how much they are willing to pay will partly determine whether they are allowed this opportunity in the future. And they also know that their money—or rather, token of appreciation—is being directly communicated to the band itself and not some big label executive. Part of the reason people grumble so much about paying $12 or $15 for a CD is that they are all too well aware the artist will never see a large majority of that money.
The Radiohead scheme gives consumers the power to do something they feel is meaningful. Cash, when used as a form of social commentary and when linked with real consequences, becomes an altogether different form of social communication. Purchasing items, then, becomes a personalized act of expression, in which people see it less in terms of financial losses and more in terms of the social gains that come with critically determining values.
In general, any marketing scheme that connects social commentary with consumer power is bound to be successful. Consider the “torches of liberty” campaign that connected female emancipation with smoking cigarettes, which was described in the Toxic Sludge article. People love using material goods to show their deeper values. Democracy and civic involvement is increasingly becoming more defined by consumerism than it is by traditional citizenship.
While I believe that this method of selling their album is a great move for Radiohead, I agree with numerous other posters in that this model of distribution would only work with a popular band that has a large, loyal fan base. Because Radiohead has numerous successful albums to their credit, fans can make the purchase with confidence that they will again be receiving a quality product. If a band that did not have such a long, emotional history with its listeners tried this method, purchase prices would be much more likely to center around the $.14 one person paid in the article versus the traditional price of a cd. However, since consumers feel so loyal to the band, even offering to pay $80 if not for financial limitations, Radiohead is stands to still make a substantial profit while developing in even closer relationship with their listeners.
However, another reason I doubt this will not serve as a widespread business model can be attributed to the “first-mover advantage” that is gained by the initial occupant of a market segment. While, Radiohead’s decision to sell their album this way was a great way to receive media exposure, thus generating word of mouth marketing “Online and in record stores, clubs, bars and label and public relations offices,” the next band to try this will not find the reaction to be the same. The novelty will be gone.
But this yet another disturbing development for the already embattled record labels. The success of file showing software such as the Napsters of the world and services such as iTunes clearly indicate a consumer shift away from the traditional method of selling cd’s in retail outlets. Radiohead’s decision to sell their record this way, along with the success they are currently having, again serves notice that consumer expectations and desires have changed and that the labels need to catch up.
Nate Hebert says...
Radiohead’s decision is a great PR and marketing strategy, but it’s likely that this first incidence of this strategy will also be it’s most successful. People already accustomed to free downloads will not pay nearly as much for just any new band’s release, especially once this strategy becomes the norm; if it does that is. However, for a band to release their full album from a single location on the web that they control is still a great harm reduction strategy. Not only does this offer a chance for their fans to donate directly to their music, which many would like to do (just not $15 worth), but they also safeguard the artistry of the album format from the single track, click and consume market created by iTunes that has play such a large role in making music disposable. Such locations on the web could also serve as merchandising outlets, ring tone databases, fan message board locations, and ticket selling hubs for live shows, thereby making the music part of a lifestyle, and in effect creating greater brand loyalty for long-term gain. The new market will probably result a greater reliance on live shows, and in fewer mega-rich stars—but they’re something that music can do without anyways. Though the money=value fed back into self-definition idea is a bit too creepily Randian for my comfort.
We are at a very interesting point in history, where technologies are essentially making entire industries obsolete, and those industries are struggling to stay viable.
It is getting to the point that musicians and listeners need music labels less and less. Once the industry gets to the point that most people are downloading music, rather than buying it on CD, there will be no advantages in having a larger, heavily capitalized corporation to move albums to consumers.
Maybe people will always want to go to the store and buy something that they can put into a player, whether that is a CD, or a vinyl LP, but that part of music listening is going to shrink dramatically. We can expect record stores to start closing.
The big labels are powerful enough that they can try to hold on for a while, despite the fact that the market will be rendering them obsolete. This is what the whole suit against Napster was about. The drive to protect intellectual property is really a finger in the leaky dike of the music industry.
Maybe these powerful corporations will be successful in using litigation and legislation to protect their interests, but if they are, it will come in the face of the natural workings of the market.
Why do consumers and musicians need labels? Can't musicians go into the studio, and pay for production, and then end up with a digital product that they can distribute themselves? And, won't they make good money if they sell this product for a few dollars? Of course they will, because the infrastructure of selling the music will be so much simpler.
Maybe Radiohead's experiment is more about finding out what people see as a fair price for service when it comes to music. Up until now, the price has be determined by the labels, which have had leverage because music had to be distributed on CDs.
People will pay a price that they see as fair for a service. But, many people feel that CDs are too expensive. When they first came onto the market, the high price of CDs was rationalized by their new technological costs. Labels said that the prices would come down to the price of a cassette tape in a year or two. But, CDs haven't dropped to $7, they have stayed stubbornly in the $15 range.
Legal downloading provides a better deal, but the price is still set by CD pricing. It's a good deal compared to CDs. But, what relationship does that have at all with the real costs of production and distribution? Not much.
People have to pay $10 for an album because that is what the labels need to make to remain profitable while burdened by the obsolete structures that are in place after years of shipping music around the world on plastic discs.
When we get to the point that people don't want to buy plastic discs anymore, where will the music labels be?
Many of you may have already seen this opinion piece from The New York Times. The piece, called "Radiohead's Warm Glow," highlights the band's marketing scheme from two very different perspectives. According to the article, from an economic standpoint, it makes no sense for someone to pay for something he or she could access for free. From a philanthropic standpoint, this phenomenon is called the "warm glow" effect, in which the consumer benefit outweighs the cost in the sense that the buyers believe they are doing something good. "[I]t could make fans feel they are helping create a new art form - or a new economy," the article's author Eduardo Porter said. I found this last part to be really interesting - the idea that consumers use their money to not only express their values, convey their appreciation and feel good about themselves, but also to actively effect economic systemic change. Here's the article: http://www.nytimes.com/2007/10/14/opinion/14sun3.html?_r=1&oref=slogin
This will be a viable business model. As someone that cannot remember the last time I purchased music or a CD (illegal downloads all the way), I paid 2 pounds (roughly $5) for the Radiohead album. Why? The money is going directly to the band and not to the record labels that are suing it's customers on a daily basis. The current model is a joke - artists making roughly $1 off a $15 CD, while labels claim the rest. Other big names are following Radiohead's lead, and it looks as though it is already a success.
Post a Comment