Piracy: Scapegoat for an Entire Industry

Back in October, I posted, in excited anticipation, about Radiohead's newest release In Rainbows. You may recall that the band opted not to sign to a record label. Instead, they made the album available for download and allowed users to pay whatever they wanted.

Radiohead has not released their sales figures, but surveys indicate that most users paid very little for the album. However, whatever Radiohead did receive in payment likely exceeded their share of sales royalties under a conventional recording contract.

Now the physical version of the album is in stores, and (Guess What!) it went straight to #1 in sales for the week. Granted, January is a slow month for music sales, and the total US sales in the first week were about half of Radiohead's highly anticipated previous release. However, this supports the case (however strongly) that piracy is not the primary issue facing the ailing record business. Even here, where listeners were encouraged to download the album for free before it was available in stores, they are able to demonstrate sales most other artists would be jealous of, not to mention that every physical album sold is just gravy at this point.

Instead, the problem with the record industry is stubborn insistence on an outdated business model. They market one catchy song and sell it as a pricey album with 12 crappy songs. Yes, consumers are pirating the catchy songs, but they wouldn't if they were given an alternative with value, like a reasonably priced single (consider the success of iTunes) or an album of genuine quality (think Radiohead).

Don't get me wrong. As a budding Intellectual Property attorney, I firmly support the right of record labels to control the terms of distribution of their copyrighted works. But at some point, they have to consider the practical aspects of enforcement. If their marketing strategy encourages more piracy than they could possibly hope to control, it is bad business not to adapt. Examples like Radiohead's new album illustrate that record labels may be a hindrance to artists rather than an aid, and more artists may choose to exploit their copyrights on their own.

What Are Rainbows Worth?

Radiohead's seventh album, In Rainbows, comes out this month, and the band has opted to get a little unorthodox with their business model. Physical copies of the album don't become available until early December, but the songs are available for download beginning Oct. 10. The kicker: you get to decide how much you want to pay. Really. That's right, set your own price. No kidding!

Following the release of their last album, 2003's Hail to the Theif, Radiohead satisfied the terms of their multi-album contract with Capitol/EMI. Rather than negotiate a new one, they have opted to go sans label (so to speak). Despite Radiohead's resources and die-hard following, this was a bold move in an industry dominated by monopoly powers. This pricing scheme is probably their best bet to succeed as an 'independent,' and their success will be a great thing for music lovers in general.

Radiohead has two things it needs to accomplish: 1) make money from sales of the album and 2) get their music out there so that people will come to see them play live.

They don't have the benefit of a label paying to get their songs on the radio. (Oh, did you think that was illegal? That's cute.) So they need to make it inexpensive for new fans to get access to the music. Old, die-hard, must-get-my-Radiohead-fix fans like myself are more likely to pay a fair price (I'm thinking 9 Pounds). Also, we're suckers for the hard-copy which is just tailored made for us suckers. It includes: the CD, two 12in. vinyl records, album art, lyrics, and a bonus CD with b-sides. Price: 40 Pounds Sterling! That's $82! Did I mention we were suckers?

Anyway, Radiohead is resorting to price discrimination. It sounds bad, but it isn't because this is voluntary price discrimination. Its bizarre, but it is the smartest thing they could do.

They are going to get a bunch of new fans to listen for cheap and perhaps buy concert tickets, while squeezing every dime out of us old-timers (who will also buy tickets). Plus, the fervor around this just might get their stuff on the radio without having to pay.

That last bit is the best. Record labels have had a deadlock on airplay for years now. It is the only service they actually provide to a band, that a band can't get done themselves. Hopefully Radiohead is paving the way for a lot of other bands, new and old, to cut out the middle-man and open up the marketplace of music.

I'm just so excited, I can hardly wait. Coming soon: The Martian Cat Problem Experience... From Space! We're gonna be the best band ever!