Convenience Can Be More Important Than Free

from the it-ain't-all-about-the-price dept

There's some buzzing about a recent Forbes article concerning the fact that even though you can get Radiohead's new music "legally" for free at their site, many, many people are still downloading it from unauthorized sources. This shouldn't be surprising or even remotely controversial. Of course people are going to download it elsewhere. They do so because it's convenient. If there's one thing that we've seen over and over and over again is that convenience is everything in this market. It can even trump price. The success of AllofMp3 had nothing to do with "free" music, but with the convenience the site provided. People are willing to pay for that convenience, even if it's free elsewhere. So, if it's more convenient for people to get the music from other sources, that should be seen as a good thing. That's why media companies have to learn to let go of the control and recognize that there are many, many different ways that people will want to get their content, and they should learn to embrace them all, rather than demanding that everyone does things their way.

The Forbes article on this (linked above) has some really odd quotes from Intellectual Property law professor Doug Lichtman, who seems to think that people downloading the album from unauthorized sites is somehow a bad thing that has hurt Radiohead's experiment. It appears that he, like so many others, seems to have ignored the full explanation of Radiohead's business model here. What they make from the digital copies is rather meaningless. They're trying to get the music spread as far and wide as possible, and then are trying to give fans a real reason to still buy the CD by providing many valuable extras. Lichtman claims that this shows it's hard to compete with free -- but I'd actually take the exact opposite lesson. It's easy to compete with free. If you provide convenience, flexibility and focus on selling services or tangible goods that are made more valuable by the free distribution of content, competing with free isn't that hard at all. Radiohead seems to be proving that quite well.


Reader Comments (rss)

(Flattened / Threaded)

  1.  
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    Duncan, Oct 18th, 2007 @ 12:33pm

    tried to buy it

    I tried to buy the album @ inrainbows.com when it came out but the site was overwhelmed and incredibly slow. So I grabbed the torrent and then came back and bought it later...

     

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  2.  
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    RandomThoughts, Oct 18th, 2007 @ 12:51pm

    This is beginning to sound like Intel hyping WiMAX. I know you are all for this, but can we wait to see how it turns out?

     

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  3.  
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    Dustin, Oct 18th, 2007 @ 2:01pm

    facts not checked....

    I read earlier that they are selling the album at $8 a pop on average and sold over 1.3 million. I would call 10 million dollars in less than 2 weeks pretty successful. But thats just me.

     

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  4.  
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    Mark Evans, Oct 18th, 2007 @ 2:07pm

    Radiohead

    Another key element of the Radiohead distribution strategy is expanding the audience who will attend live shows.

     

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  5.  
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    RandomThoughts, Oct 18th, 2007 @ 2:08pm

    "Radiohead this week released their online-only record, , pricing it at $USas-much-as-you-want-to-pay, and subsequently took in an estimated $US9 million in sales (average of $US4 per download) in its first few days."

    Two questions. Would they have taken in more with a traditional release? Probably not. Does this translate to other artists without the draw of Radiohead? That is the $64 question.

    Radiohead produced this record themselves, how many others have that ability?

     

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  6.  
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    Jason, Oct 18th, 2007 @ 2:13pm

    sheeesh.

    From the article:

    "Hundreds of thousands of Web users who frequent copyright-infringing file-sharing sites, including The Pirate Bay and TorrentSpy,"

    The slander campaign continues. neither of these sites are copyright-infringing... At least according to the law.

    On a related note, Amazon cleaned up the interface to their MP3 site, making it easier to use. A few days later, Apple lowers its DRM free prices. Coincidence?
    It seems that ease of use is better than free.

     

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  7.  
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    Morgan, Oct 18th, 2007 @ 2:36pm

    Meaningless?

    "What they make from the digital copies is rather meaningless. They're trying to get the music spread as far and wide as possible, and then are trying to give fans a real reason to still buy the CD by providing many valuable extras."

    I don't believe for a second they'll make more from the physical than from the digital copies, but we'll see. Unless they make significantly more via physical, I wouldn't call the digital 'meaningless' just because it toes the digital-information-is-free meme.

    As always, suggesting there is another business model for someone does not entitle me to force them to use it, nor to rationalize stealing as some sort of altruistic cosmic sharing lovefest.

     

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  8.  
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    GearsofWar, Oct 18th, 2007 @ 2:58pm

    "Lichtman claims that this shows it's hard to compete with free"

    I'd think iTunes incredible success selling music that is available online for free is proof enough that:
    1) yes, convenience is better than free (or rather, some of us are willing to pay for convenience and laziness :D)
    2) you can compete successfully with free.

     

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  9.  
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    Scott, Oct 18th, 2007 @ 3:12pm

    The other thing to think about is that all of this money, be it $4 an album or $8 an album, is going directly to the band, which is a LOT more than their cut from record company sales.

     

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  10.  
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    Daengbo, Oct 18th, 2007 @ 3:40pm

    Other Pay=what-it's-worth Services

    Magnatune.com lets you stream their music for free and download high-quality music by paying whatever you want.

    Jamendo is completely free.

     

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  11.  
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    chris (profile), Oct 18th, 2007 @ 4:33pm

    i'd pay for an effective search service

    i would pay to use a service that would find the movie/song/book/whatever that i wanted in the format i was looking for and download it quickly.

    i use emusic.com and blockbuster online to get some things, and the pirate bay and EZTV for everything else.

    when emusic has what i'm looking for, it's effortless compared to TPB and EZTV where i have to locate something in the format and language i am looking for (in xvid/NTSC/english), wait for it to download, unrar it, and all of that other madness. sure it's free, but it's a lot of waiting and working.

    so, if i could get everything in one place (one site, one tool, one search) fast and without unraring/transcoding/whatever, hell yes i would pay for that.

     

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  12.  
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    Forrest Green, Oct 18th, 2007 @ 6:04pm

    Overlooked Value

    One frequently overlooked value of sites like Allofmp3.com is that they have variable pricing for variable service. I buy music from them for the purpose of listening on an mp3 player while exercising. I don't need/want the whole CD; I don't need/want CD quality. So I buy what I need/want (the tracks I want at the quality I need/want) at a reasonable (to me) price. The recording industry, unfortunately isn't interested in what I want/need. John

     

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  13.  
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    Marc Cohen, Oct 18th, 2007 @ 7:05pm

    Financial success is a big assumption

    So far Radiohead has only proven that they can get a lot of publicity. You are assuming that they will be successful in selling a lot of CDs. That is a big assumption. The distribution of In Rainbows has not been a great financial success to date and I don't think there is any empirical reason to believe it will. Check out the Ad-Supported Music Central blog: http://ad-supported-music.blogspot.com/

     

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  14.  
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    PaulT, Oct 19th, 2007 @ 3:33am

    Re: Financial success is a big assumption

    "The distribution of In Rainbows has not been a great financial success to date"

    Really? All the reports to far is that over 1 million albums have been sold at an average of $8. A platinum record (or triple platinum under the UK system) in less that 2 weeks and $8 million going direct to the band (minus server/bandwidth costs) isn't financially successful?

     

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  15.  
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    fuse5k, Oct 19th, 2007 @ 5:31am

    on and on with the same old bullshit

    Right, I'm sick of hearing about how bands will make money on live shows by giving away free music. A tour for a band of any size (except possibly the biggest of bands) will never make much money. The costs of touring are huge.

    The reason why radiohead are able to do this is because the do not have a record label. Basically they paid to record the album themselves, and now they are giving it away, for donations. None of this money will go to anyone else but radiohead, and they are probably making more money from this album than they would from any of the others, as royalty rates for even the biggest stars will be only around 20%. In order to surpass this amount on a record lable they would have to pull in gross sales of over £50 million, and even then, before any royalties are generated they will have to repay the record company for all costs. (have you seen any TV ad's for the new album)

    Basically by having enough money to record the album themselves, and having a big enough fanbase to discount the need for marketing on the album, radiohead have found a good way to make money.(and giving the album away as a donation counts as marketing for the physical disc)

    Will this change the recording industry? No. Because the point is that smaller bands dont have the cash to make a proper studio album on their own, or the fame not to have to market them. You can think of the record company as a kind of bank, who instead of giving you a straight loan, will take a hefty chunk of your future earnings instead.


    My only other point is, will radiohead still be smiling when the "bonus" features available on the physical copy of the CD, get ripped to bittorrent? I think not.

     

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  16.  
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    RandomThoughts, Oct 19th, 2007 @ 6:56am

    Fuse5K, I think that is the point. It works for RadioHead, it doesn't work for others who have yet to reach that status.

    Is free a good idea? For some, yes. For others, no. Depends on the situation.

     

    reply to this | link to this | view in thread ]


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