NEW YORK (Hypebot) – A NEW ERA OF MONETIZING MUSIC:
Guest Post: Alex Grange, CEO of Pure Play Music.
October 10, 2008 marks the one year anniversary of Radiohead’s “In Rainbows,” which was initially released as a digital download, and immediately thereafter, as a standard CD. The album was released in North America on January 1, 2008. “In Rainbows” was Radiohead's first release after the end of their contract with EMI and the end of the longest gap between studio albums in their career.
“In Rainbows” innovated a new way that music could be distributed online. This was a release that smacked the face-of convention, and took a bold step towards the future of independent distribution.
Some say it was brilliant. Others like Trent Reznor called it a “Bait and Switch.”
Whatever the case, now in its aftermath, we are left with the burning question: what is the future of music distribution? The simple answer of course is, “it is always changing.”
Radiohead revolutionized the independent distribution model. By allowing listeners to determine the value of their blood, sweat, and tears, our very consumerist society was turned on its head. Radiohead offered their album online for three months at an open rate.
In the spirit of experimentation, people were encouraged to pay what they thought a fair price would be for the download. According to ComScore, many listeners offered approximately $6 for the CD. Some priced the album lower, some substantially higher, and yet others deemed downloading the CD at no cost was their right as a Web user.
Radiohead is not the first band on the planet to exploit the promises of the Internet and online distribution, but they were the first world renowned rock stars to do it. As one of the first major label bands to kick-start the model of online distribution, Radiohead’s unprecedented experiment raised discussion in the music industry about the viability of the Internet as the latest musical distribution tool.
Radiohead’s bold rejection of a dying model of distribution for their music cleared the path for indies, unsigned acts, and even more seasoned pros, to follow suit and to turn to the Internet monetization model.
The online music monetization model is not without frustration or peril. The traditional music distribution channel and record companies are worried that they are losing a huge market share to online players—which they are. According to the International Federation of the Phonographic Industry (IFPI), digital music sales generated around $2.9 billion in revenue in 2007, up roughly 40 percent since 2006. Tracks are now available through over 500 legitimate online services, representing 15 percent of the total global music market; and there is no sign of it letting up.
IBISWorld Senior Analyst Mr. George Van Horn anticipates, “an increase of up to 25 percent market share within three years,” as quoted in a recent press release.
As a result of increased demand for digital music, fights and disputes over copyrights and fair use abound. Peer-to-peer music sharing channels unleashed a fury of lawsuits from the RIAA. Individuals and students became victims of these lawsuits, in an effort to stamp out infringement. This dispute rages today, becoming more volatile, and far reaching.
Cracking the code to online monetization of music, while retaining the artist’s publishing rights, seemed as fruitless as the effort to untie the Gordian knot. But the rogue and rebellious spirit of the independent music distributors—a.k.a. the artists— welcomed this paradigm shift. The opportunity finally emerged for artists to chart their own course, and steer the direction of their own careers. It appeared as a breath of fresh air to the talent of the industry.