Filed under: Products and services, Launches, Marketing and advertising, Entrepreneurs

To an inordinate degree of fuss, British rock group Radiohead self-released its seventh album, In Rainbows, on its website back in October, employing a pass-the-hat pay model whereby downloaders could pony up what they wished for the album, from as much as 100 pounds (about $200) to as little as virtual pocket lint.

The band has kept mum on the actual download figures, as well as their take, but a comScore study on In Rainbows‘ early success estimated that just 38% — less than two in five downloaders — bothered to put up anything at all. comScore’s findings — which Radiohead has disputed — advocate the band gave out some 744,000 duplicates of the record for free, not to mention all those unrestricted downloads that bewilderingly saturated the file-sharing piracy sites, despite their free availability.

If the comScore numbers are to be believed, then discarding Radiohead’s freeloading fans, an average of $6 was paid for downloading In Rainbows, for an overall average contribution of around $2.25, some 77% cheaper than an iTunes album download, and about 84% less than the disc’s list price of $13.98.

However, using the royalties formula found at A&R firm TAXI’s website, we find that Radiohead, given “superstar status,” would clear in royalties only about $2.10 per compact disc, and closer to $2 for a $9.99 iTunes download (or 20 cents per 99 cent song)!

So according to comScore’s figures, Radiohead actually comes out 15 cents ahead per download rather than a CD sale, and a quarter to the superior over an iTunes album download.

Of course, In Rainbow will be released on CD in the next week or so, varying with locale. How deeply will In Rainbow’s on the internet release dent CD sales?

Be sure to check out other Money Losers of 2007.

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Filed under: Products and services, Marketing and advertising

I’ve seen too many high-flying fashion stocks crater back to earth to take bullishness with companies like Deckers Outdoor (NASDAQ: DECK), the maker of Uggs, too seriously. Remember L.A. Gear?

But Deckers has had an extraordinary run this year, hitting a new 52-week high on Friday, making it a solid triple for the year.

According to Fortune, “Now, analysts are predicting even more upside for Deckers’ stock. The reason? While other brands have been heavily discounted this holiday season, Ugg boots, which can cost upward of $200 a pair, are selling at full-price in most major department and specialty stores. More full-price sales mean fatter profits for the all-important fourth quarter.”

It’s all very exciting but I think investors need to be very careful. Uggs account for nearly 90% of Deckers’ revenue, far outshining their Easy and Teva brands.

A bet on Deckers is a bet on the continued success of a pretty bizarre fashion trend — at 50 times earnings and more than 5 times sales.

It’s simple to be bullish when everything is going well, but traders will be dumping this one like they dumped Crocs (NASDAQ: CROX) at the first sign of slowing growth. And at some point, won’t people have all the Uggs they need?

With about 19% of the float short, it looks like more than a few investors are lining up to bet signs of weakness are near.

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Filed under: Consumer experience, Marketing and advertising, Sony Corp ADR (SNE)

Here’s a sure sign that a product is a hit: a market develops for call options on it. People actually fork over money for the right to buy something.

According to CNBC, that has happened with the Nintendo Co., Ltd (ADR) (OTC: NTDOY) Wii: “Here’s the m.o.: shoppers get wind of when a Wii shipment is due to arrive, either by greasing a store manager, or by watching ads carefully, and begin lining up hours before the store opens. A store employee will then come out, hand out tickets or numbered placeholders to keep things orderly, and then the buying and selling begins.”

Those tickets to purchase Wii’s can, according a Best Purchase employee interviewed by CNBC, fetch $300-$1000. The ticket is only good for the first few hours the store is open.

To make it more interesting, some people buy the “options,” acquire the Wii’s … and then list them on eBay.

For years to come, the Nintendo Wii will probably be the video game success story by which all other future consoles are measured. Look for other companies to duplicate Wii in the next few years with more user-friendly, less arcane, games, and also possibly exercise components.

The video game industry appears to be dividing into two groups: casual gamers who enjoy the fun of the Wii, and hardcore gamers who want graphics like Sony Corp. (ADR) (NYSE: SNE)’s PlayStation 3.

As some point, I think companies could actually introduce two systems during each product cycle — one for each market.

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Filed under: Consumer experience, Marketing and advertising, Sony Corp ADR (SNE)

Here’s a sure sign that a product is a hit: a market develops for call options on it. People actually fork over money for the right to buy something.

According to CNBC, that has happened with the Nintendo Co., Ltd (ADR) (OTC: NTDOY) Wii: “Here’s the m.o.: shoppers get wind of when a Wii shipment is due to arrive, either by greasing a store manager, or by watching ads carefully, and start lining up hours before the store opens. A store employee will then come out, hand out tickets or numbered placeholders to keep things orderly, and then the buying and selling begins.”

Those tickets to buy Wii’s can, according a Best Purchase employee interviewed by CNBC, fetch $300-$1000. The ticket is only good for the first few hours the store is open.

To make it more interesting, some people buy the “options,” acquire the Wii’s … and then list them on eBay.

For years to come, the Nintendo Wii will probably be the video game success story by which all other future consoles are measured. Look for other companies to copy Wii in the next few years with more user-friendly, less arcane, games, and also possibly exercise components.

The video game industry appears to be dividing into two groups: casual gamers who enjoy the fun of the Wii, and hardcore gamers who want graphics like Sony Corp. (ADR) (NYSE: SNE)’s PlayStation 3.

As some point, I think companies could actually introduce two systems during each product cycle — one for each market.

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Filed under: Competitive strategy, Marketing and advertising

Berkshire Hathaway (NYSE: BRK.A) vice chairman Charlie Munger once said that “It’s a finite and very competitive world. All large aggregations of capital eventually find it hell on earth to grow and thus find a lower rate of return … The one thing we’ve always guaranteed is that the future will be a lot worse than the past.”

An apparel company with a red hot product line and booming growth would appear to be a prime target for Munger’s wisdom, and the wolves appear to be circling around Lululemon’s (NASDAQ: LULU) high-margin business.

According to the Globe & Mail, companies including Roots, La Senza, Nike and, most recently, Calvin Klein, are all trying their hand at high-performance yoga clothing. The piece quotes Robert Gibson, head of research at Octagon Capital Corp.: “Look out, Lululemon. Everyone is getting into the act.” Lululemon’s success “has made everyone realize there is money to be made in ‘performance’ clothing. Anyone who can will get into the act. … More competition isn’t a good thing.”

Whether Lululemon has the chops to stay ahead of very savvy, well-funded competitors remains to be seen. But this is probably the biggest risk factor that the company’s shareholders need to be on the lookout for.

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