How Radiohead’s Experiment Turned Out

radiohead.jpgIn mid-Octo­ber, Radio­head released its lat­est album, In Rain­bows, and began a fair­ly nov­el exper­i­ment. They cut the record labels out of the equa­tion and let fans down­load the album direct­ly from the Radio­head web site, for what­ev­er price they saw fit. A few weeks lat­er, some finan­cial fig­ures are com­ing out, giv­ing us a sense of how well the exper­i­ment went.

Accord­ing to a study by com­Score Inc., 62% of the esti­mat­ed 1.2 mil­lion vis­i­tors (in Octo­ber) to the Radio­head site down­loaded the album and paid noth­ing what­so­ev­er. The remain­ing 38% paid an aver­age of $6. Over­all, the band aver­aged $2.26 per down­load and net­ted about $2.7 mil­lion dol­lars in total, a num­ber that’s well below the ear­li­er esti­mates of $6-$10 mil­lion. In the end, it’s impor­tant to remem­ber that the band gets to keep all the rev­enue (instead of shar­ing it with the record com­pa­nies), and appar­ent­ly the traf­fic to Radio­head­’s web site gen­er­at­ed hand­some incre­men­tal sales of high-priced dis­cbox­es. It’s esti­mat­ed that for every $1 spent on dig­i­tal down­loads, anoth­er $2 was spent on hard copies, which makes Radio­head­’s over­all take even high­er. What con­clu­sions to draw? One is that Radio­head fans did­n’t exact­ly deliv­er the goods and demon­strate the pow­er of this new direct dis­tri­b­u­tion mod­el. It may have worked mod­er­ate­ly well for Radio­head. But will a less­er band take the risk? Not so like­ly. At least not now.

A quick PS: It looks like Radio­head is plan­ning to do its first web­cast in five years. Watch for more infor­ma­tion here.

Source: com­Score press release and blog

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