Money Losers of 2007: Radiohead — Hail to the thieves?
Posted by: in Marketing and AdvertisingFiled 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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