Radiohead Adapts Our Business Model

John Paczkowski used to write "Good Morning Silicon Valley" (He’s now at Digital Daily).

Way back when, John created the "Great Recording Industry Business Model Contest:

The recording industry needs your help. It can’t seem to figure out a business model that takes advantage of the way the Internet has changed the economics of music distribution. Perhaps you can. Beginning today, I’ll be accepting submissions for "The Great Recording Industry Business Model Contest." I’ll post the best in GMSV as I receive them and I’ll reward the author of the winning entry with the appropriate plaudits and a t-shirt in CEO-prison-scrub orange. Have at it.

The first model I proposed was the Napster Cooption Business Model:

"Napster would have been more like a multi-user programmed FM radio. Ideally, the Napster download medium would be of a lower burn quality (ripped at 128kps), somewhere between AM and FM. Napster traders would only be able to download these modest fidelity versions.

The last aspect involves the conversion of downloaders to buyers. This would be aided in part by giving music fans an additional incentive to purchase an old school, manufactured and shipped polycarbonate disc, or in the alternative, download a higher quality MP3 . . ."

A few years later, we rolled out a variation: The Grokster Cooption Business Model:

Use the technology as a promotional tool. Turn it into a modern, on-demand, web-based radio. Put out low-fi mp3s (96k or so) as way to expose new artists, promote special releases, rarities, etc. whet people’s appetites for more content which history teaches us they are willing to pay for.

Jiu Jitsu the concept of piracy into a terrific tool for the industry to track, more precisely than anything else before, what artists and songs are attracting which listeners, and where. Custom tailor tours around it, marketing and advertising campaigns, etc.

Create the holy grail of algorithms:  Use it to roll out new music, artists and content via our clever algorithm that can tell, based upon what you have already downloaded, what you may like, will like and will definitely fall in love with.

Turn the recording industry from an asteroid doomed dinosaur to a warm blooded furry mammal. Coopt the technology. Embrace people’s love of digital music. Be smarter business people.

Well, it seems that someone was listening: RADIOHEAD:

Radiohead MP3 release a tactic to lift CD sales

Radiohead’s much-debated decision to let fans choose what they pay for its new album online is a promotional tactic to boost sales of compact discs, the band’s management said yesterday.

"If we didn’t believe that when people hear the music they will want to buy the CD, then we wouldn’t do what we are doing," Bryce Edge of Courtyard Management told Music Week, the UK’s industry magazine.

Nice to know someone was paying attention . . .


Radiohead MP3 release a tactic to lift CD sales
Andrew Edgecliffe-Johnson
FT, October 11 2007 03:00 | Last updated: October 11 2007 03:00

The Napster Cooption Business Model

The Napster Grokster Cooption Business Model

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What's been said:

Discussions found on the web:
  1. Norka West commented on Oct 23

    Why don’t we go back to the 19th century publishing industry’s business model? The author would create a novel which would be distributed via magazine serialization. He would receive a pittance from the magazine publisher. Book publishers would promptly steal the content and print unauthorized versions of the book. The magazine serials and the bootleg books would act as advertising for the author/artist who would then go on tour (lectures, etc.) where he would make his serious money via speaker fees.

    In place of magazine serialization, substitute iTunes.

    In place of bootleg books, substitute Youtube.

    In place of speaker fees and lecture tours, substitute ticket proceeds and concerts .

  2. Mark Hessel commented on Oct 24

    The music companies should just sell their songs based on the size of the
    download. Offer all or most of the digital formats. I thought I read
    recently on this site that Rhapsody or some download music service offered
    songs at half the price and sales were increased 5 fold. They could
    let users preview the songs at a lesser bit rate to decide.

    Seems like a no brainer to me.

    Volume, volume, volume.

  3. Richard A. commented on Oct 24

    still the best way to find music and buy music. it’s too bad that the IRAA wants to kill it.

  4. alexd commented on Oct 24

    I have no argument with any of the idea except expecting all authors to make their living by giving lectures. Perhaps it is more reasonable for entertainers to entertain live than authors.

    As far as degraded bitrate versus buying a better bitrate Ithink we have another problem there in that currently most music is so compressed in order to achieve loudness that getting a high bit rate inferior recording is still problematic.

    I think websites and critics might soon control the music business. Unless the music companies have something better to offer their model is outmoded. These are the people who charged more for a cd than a tape, far in excess of the manufacturing cost differential. They did this because they had a monopoly. So who among us feels they deserve a break?

  5. Todd Mentch commented on Oct 24

    I bought the download – it was the soundtrack for my trip to NYC – and look forward to buying the CD when released. This is a great b-plan. Can’t wait to hear how many downloads they churned.

    BTW – it is a great album. Their best since OK Computer. So if you’re even a mild fan, go download it.

  6. crack commented on Oct 25

    Isn’t it sort of the NPR business model. Periodically ask for money, then offer licensed products throughout the year?

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