Over the past decade, the music industry has experienced extreme change due to digitization. Not only has it affected the way that music is recorded and produced, but it has also affected the entire business model of how music is promoted and distributed to the public, as well as how revenue is earned. Prior to the digital era, major labels were one of the primary distributors of music, and physical record sales were the one of industry’s main revenue sources. But when recordings were transformed to electronic format and free music sources such as illegal downloading and streaming evolved, this main revenue source was taken away. However, music digitization also opened many doors for ...view middle of the document...
Take, for example, the music industry. While it’s true that CD sales have been dramatically declining for years, the music business is actually experiencing a boom in live concerts. While consumers won’t pay for copies of the work of their favorite bands, they will pay for the privilege of seeing them live.” Keen also argues that “in the old industrial economy, artists played concerts to sell recordings; in the digital economy, artists gives away recordings in order to sell concert tickets,” which is why artists such as Radiohead and Nine Inch Nails are now separating from major labels and giving away their albums online as a means of promoting tickets for live events (Keen, 2009).
While conducting research on this subject, I used Radiohead as a case study, and analyzed the history of their album sales, concert sales, and how their music is produced, distributed and consumed in the digital era.I also analyzed the turnout of their "name your own price" self-release of In Rainbows.
Radiohead’s debut album Pablo Honey was released in 1993, and was followed by the release of The Bends in 1995, both of which have sold over 1.3 million copies to date (Elberse, 2008). But their peak album sales was in 1997, when their third album Ok Computer was released, which has sold over 4.5 million copies worldwide (Sexton, 2000).
In 2007, after Radiohead’s contract with EMI Records had expired, the band decided to self-release their new album In Rainbows as a digital download from their website, and allow users to select their own price for the album. The worldwide results showed that an average of 60% of users downloaded the album for free, while the other 40% paid for the album. The average price per paid download was $6.00 worldwide, and in the U.S. was $8.05 (Cabral, 2009).
In its first week, In Rainbows sold 122,000 copies, which was a significant drop from the band’s 2003 album Hail to the Thief, which sold 300,000 copies in its first week (Kafka, 2008). To date, it is estimated that In Rainbows has sold approximately 3 million copies, also a significant drop from their Ok Computer sales of over 4.5 million (Randall, 2011). However, even though the consumption of Radiohead’s music had changed, shifting from paid physical album sales to name-your-own-price digital downloads, production and distribution also played an important role in their changing business model.
Michael Laskow, CEO of the world’s leading independent A&R company, TAXI, states that “While the band, its fans and artists alike are celebrating what looks like a success for Radiohead's bold move in releasing their new album using the ‘pay what you'd like’ model, I think everybody has overlooked one very important aspect of this, and it doesn't bode well for the future of the music industry: Radiohead has been bankrolled by their former label for the last 15 years. They've built a fan base in the millions with their label, and now they're able to cash in on that fan base with none of...