Radiohead Surrenders Control and Makes a Bold Move

The big news on the music marketing front this week has to be the upcoming release of Radiohead’s 7th album “In Rainbows.” The reason is simple… the extremely popular band is no longer affiliated with a major label and releasing the music direct to the public themselves… no label, no itunes. This alone is fairly radical. Some great artists have been unaffiliated with a label and releasing product for years quite successfully.

 

One example that comes to mind is one of the most successful jazz artists today, composer Maria Schneider and her constantly touring “big band”. She is a part of a cooperative record label called Artists Share and is able to offer her fans a variety of levels of participation with her recording projects… from simple album purchase to tiered access to the project’s creative process all the way to Executive Producer level for higher financial contributions… audience choice. She has been so successful with this that not only has she been able to take on and fund ever more ambitious projects, she even received the first ever Grammy for a pure digital album.

 

And others such as Prince who take the long view of their business have distributed their latest recordings for free, in his case as in insert in a newspaper or at concert events.

 

Radiohead is taking this thing to new level because customers are invited to pay what they wish for a download version of upcoming album…directly from them!

 

If you follow Marketing 2.0 Win you know that one of our 5 laws of marketing for the 21st century is “Surrender = Victory.” In essence what this law indicates is that in our topsy turvey world, like it or not customers have control and the more we as marketers are willing to surrender control to them, the more successful we will be.

 

Radiohead is doing just this…surrendering maximum control. We can argue that they can afford to, especially when you consider that they are one of the world’s most popular bands with a huge fan base and they have in effect disintermediated most of the middle men in the process. But the inverse is also true, one could also argue they have the most to lose.

 

One outstanding question what will fans do?

• My sense is that some will choose to pay nothing… which is totally acceptable.
• Many will base their choice based on the digital retail price which, depending on how you look at it is 9.99 on iTunes and 8.99 on the new Amazon MP3 service.
• And assuming people like the new album, many will probably pay more based on its emotional value.

This “feeling” will also be driven by the fact that fans will be dealing with the band directly and my guess is this will be perceived as a righteous act, worthy of support.

 

This is all good, but there is one more factor in the mix of this bold act that excites me the most. We know that iTunes has been the most successful legal distribution channel with 3+ billion tunes downloaded. This represents a tiny fraction of music that is downloaded… for free every day however.

 

This what some would call “underground audience” is in the hundreds of millions of individuals worldwide. They have contempt for licensed content and labels and believe it is their right to get the music they want for free. Like it or not, they feel entitled to it.

 

By surrendering control, I figure Radiohead is making the first real and legitimate move to capture some of this audience. If they can pay whatever price they wish, I will guess many will. The only question then is how much? No matter what, Radiohead wins… consumers win… and a whole new way to engage the largest possible audience may emerge… an audience that is empowered to dictate their own terms in the transaction. Welcome 2.0 a new day!

Sour Notes in Music Industry: Change the Beat!

One of the industries we have and continue to track in my Principles of Marketing class at Emerson College is the music industry. Watching the business implode upon itself in attempting to deal or not deal with the internet disruption over these past 6 years has been nothing short of amazing to watch. We saw Napster, which solved the problem of getting the music people wanted, when, where and how they wanted it… and for FREE completely paralyzed the industry as a whole. We also watched with horror the industry’s response… raise prices and sue the barbarians.

 

We also saw with great interest Apple do the unthinkable. First they came up a music player in what was a crowded field. What made it stand out at the time was coupling iPod with iTunes, so that for the first time anyone (with a Mac) could organize their libraries and EASILY download their music into the thing. That got the ball rolling. And then they jumped across an internal chasm, making a Windows version of iTunes to open up the market at large and get beyond a simple niche play. We all know how this transformed the industry in the process while selling hundred + million iPods, and the company which went from Apple Computer to Apple Inc.

 

I remember very well the press at the time saying the iTunes would be the proof of concept that customers would indeed pay what they perceived was a fair price for digital music… and that then the labels would finally act themselves.

 

Six years later, I am still waiting. iTunes is the undisputed leader in legal music downloads.

 

And labels continue to complain that the iTunes Store is charging too little for their content. This summer it was news that Universal Music refused to sign a long term agreement with iTunes, preferring short term agreement instead. Leverage anyone?

 

Recently Warner Music, the most digital label of them all declared a net loss of $14 million for Q3 2007, even with revenue from digital music up 27%. Perhaps after they get beyond plunging CD sales and cost associated with realigning operations and other charges, things will be better.

 

Plus the DRM (Digital Rights Management) issue. The labels still don’t get it… and Apple does. As our Law of Surrender = Victory attests, the game is over anyway… customers have control, like or not… now exploit it. 

 

However, what if once and for all labels learn what they need to learn from Apple?

 

Why not leverage their assets to which includes basically music of all genres going right back to the beginning of recorded music, and sell directly to the public themselves? They have the assets, they have brand power (although long dormant at this time) and they have retail merchandising prowess that can be extended to the web, plus there are these low cost vehicles to build audiences like never before. Labels also know how to add value, so that once they lift the constraint of DRM, they can still add value to drive revenue, beyond simply extended CD’s or other Bonus content.

 

Sure it’s risky. It probably makes no sense to anger Apple… but if you are Universal Music or Sony or other music giant, you are already probably have.  iTunes needs you too, remember. 

 

The trick then becomes, old rules don’t apply. If the first thing you do, once iTunes is removed, is jack up prices, it won’t work. Remember you are still competing against FREE after all. And there are audiences you have ignored for decades like me (25+) that offer untold opportunities… its just we go way beyond “Classic Rock” and other such genre-specific limitations. You have the content…. You have the need… you have the means.

 

I hope you stop making noise and market to win. Please don’t make us wait another 6 years!