Battle of the Bands (Business Models)
Let’s compare a couple of bands: Radiohead vs. The Eagles.
Wait, wait, wait…I know what you’re saying. There is no category in the world in which these two can be compared. Different genres, different fan bases, different eras – this list of differences between these two bands goes on and on. But here’s where they are similar. They have both had a large amount of success in the past. They both have had a long spell between their last album and their most current release (4 years for Radiohead, almost 30 for the Eagles). Both bands are sans a record label. The latest albums for both bands are receiving good reviews – but most importantly, they both agree on the ineffectiveness of today’s music industry. But when it comes to how to handle that displeasure, their approaches differ.
Radiohead decided to go straight to the source. Market directly to the fans and mount a pure digital distribution channel. In addition, they established a new pricing model – pay whatever you want. Reports from the band and other industry pundits have between 1.5 and 2.0MM units being downloaded/sold in the first couple of weeks after release, at an average of somewhere between $6 & $8 per download (I paid $10). They are also following up that release with a deluxe version (with vinyl copies, additional songs, and some other value adds).
While I love Radiohead’s vision, I couldn’t find a way to download the album for free, then once I decided I liked it, to go back and settle up our arrangement. That would be the perfect setup. If I don’t like it, it’s gone – and I won’t feel bad about not liking it, and I didn’t have to “steal” it to find out it wasn’t worth anything. Now, I could always just go back and download it again with a payment added, but then it looks like two transactions: one from a deadbeat, and one from a fan.
What Radiohead needs to do next time, is allow fans a way to download the music for free, but then allow them to come back and add an amount to that transaction at a later date once the true value of that album becomes more clear to the fan. Then as the music’s impact grows with each listener, allow them to come back again, and again to continue to show their appreciation. That way, they establish their own royalty payment system. Someone who downloads the music to day for free, gives them $2 tomorrow, $5 in six months, then $10 in 2 years. Additionally, they now have a fan for life.
The Eagles however, decided on a more traditional approach and negotiated a deal with Wal-Mart for exclusive selling rights. Wal-Mart would charge $11.88 and handle the marketing and distribution. Presumably, The Eagles get, coincidentally, between $6 and $8 per copy but will still handle the production cost and the royalty processing internally. I believe the initial production run was 1.5MM units. Of course, I can also buy it from Wal-Mart’s online store, but apparently they only let MS Windows users download censored music.
While I do like The Eagles, I am not really a fan of exclusive lock-ins with a distributor (refer to the moronic attempt at money-making by The Smashing Pumpkins and their Zeitgeist release) – unless the distributor is the band itself. I have relationships with many music distribution avenues – and Wal-Mart is not one of them. I’ve been buying more and more music from bands directly and the absolute ONLY time will I go into the store to buy anything is for local/indie stuff.
While they’ve taken the music industry out of the equation (which is a good thing), there is absolutely no reason to keep the distributor/marketing aspect of their relationship with Wal-Mart (I didn’t find out about The Eagles new album until I saw the 60 Minutes special talking about it. So much for Wal-Mart’s marketing efforts). With The Eagles panache (old, though it is), they could have simply made the talk-show circuit or stirred up the press a la Radiohead and done just as well, if not better on their own.
There are albums I own that are not worth the electricity it takes to charge the bits on my hard drive and send them to the speakers, yet there are some that I bought 20+ years ago that I would gladly kick in another round of funding to the band for the impact they’ve had on my life. But only to the band. Not to the label. Not to the distributor. If every band put button on their web site that said “Love this album? Show us the love!” I’d click it. It gives me a connection to the music I love and the people that make it. That’s how I would show I’m a fan.
Regarding The Eagles latest album? I’ve got Hotel California naturally, as well as some of their earlier stuff. But if they would like me to try out their latest release, they need to come out with some convenient, legal options for me – the fan. Otherwise, they risk going the way of the rest of the clueless music industry.