Pay What You Want

Radiohead and Nine Inch Nails gave their music away. But how does that work for smaller artists?

Earlier this year, Radiohead released its new album, In Rainbows, on its website using a pay-what-you-wish model. A few months later, Nine Inch Nails released Ghosts I-IV employing a similar scheme with more business savvy; there was a tiered scale; prices ranged from free (low-quality digital audio files) to $300, which included a Blu-ray slide show. Did that strategy work? In Rainbows debuted at number one on the Billboard charts when released in the physical format. NIN's extra deluxe package sold out.

Is pay-what-you-wish the future? It's hard to see why not for bands with followings as large as Radiohead and NIN; not only do their releases have built-in audiences, but self-releasing brings an artist 100 percent of the revenue.

Bands that have never had the backing of a major label are getting inspired. Fort Lauderdale's genre-jumping rocker, Timb, just released his latest effort, 30 Days, on a pay-what-you-want pricing policy. "It was a combination of what Radiohead did recently and what They Might Be Giants did a long time ago with their EP Working Undercover for the Man," he says. "TMBG sold you the MP3s for a set price and then mailed you a CD, so you got both." Modeling his strategy on TMBG, anyone who pays $10 for 30 Days will receive a physical, pressed copy of the CD.

Smaller musicians face a different set of obstacles. Though recording is now dirt-cheap (Timb acknowledges that he created the album for "basically no money"), they may lack the management to recoup funds from pressing the record. But since when did small bands ever make tons of cash anyway?

"If you look at the numbers from traditional record contracts, only the elite of the elite, the top 1 to 5 percent, would make any money whatsoever off their albums," says Aram Sinnreich, a managing partner at the Los Angeles-based media consulting firm Radar Research. Bands who sell 1,000 copies of an album on a major or independent label are no more able to quit their day jobs than those that give away 1,000 copies of an album. And because of record labels' profit margins, many wind up in debt to labels after signing their contract. Using the aforementioned criteria, "over 90 percent [of bands signed to a record label] would never see a royalty check. That's a sad secret of the industry," Sinnreich adds.

Although giving away music is novel, unknown bands aren't guaranteed a return. But they can improve the chances their music will be heard. "In the end, it's more important that someone hear it than not, so I am more inclined to give it away for cheap or for free than to have someone miss out on it entirely," Timb says.

So what does giving away music do for promotional efforts? According to Ian Rogers, former Yahoo Music VP of product development and now CEO of Topspin, a new digital music marketing platform, a good example is Saul Williams' recent release, Niggy Tardust. "He sold about as many copies as he sold with his last release, which was on a label," Rogers says. "But [because of the free downloads] he was heard by ten times that, and that's affected his ability to tour; it's affected his entire livelihood. For him, the pay-what-you-want thing [has] absolutely been crucial to him or crucial for his career." While Williams' collaboration with Trent Reznor undoubtedly provided ample promotion (although fewer than 20 percent of buyers chose to pay $5 for the album online rather than download it for free), it increased his chances of gaining a larger fan base.

An artist's livelihood comes not from copies sold but from asses in the seats. "Even at its peak, when it was a thriving industry, recorded music only brought artists a fraction of the revenue that merchandise and touring brought them," Sinn­reich adds. "Today, that disequilibrium has been exaggerated by the plunging music retail market and by the expanding music merchandise and performance market."

Evidence corroborates: Lyle Lovett recently confessed to Billboard that after two decades and 4.6 million albums sold, he's "never seen a dime" in royalties and has made his living primarily off touring. That's a sure sign that business-wise musicians must find new ways to survive.

Instead of vying for record deals, Rogers says, most savvy musicians now aspire to name recognition needed to strike deals for downloads, ring tones, T-shirts, website ads, and licensing for song placements for soundtracks or commercials. Essentially, there has to be strategy behind such a decision. By going directly to the listener, many bands may deny themselves the chance to develop relationships with gatekeepers who could help them in the future.

"So many DJs have gotten gigs just from being in my store," says April French, owner of Karma Records in Fort Lauderdale. "They're almost cock-blocking themselves by doing everything at home and being introverts." French recently scored a gig for 25-year-old Miami DJ Phase 2 at this year's Warped Tour after the Pompano Beach-based rapper Peanuthead's regular DJ canceled and he called French for recommendations. "So now this kid can forever be known as the kid who spun at Warped Tour, and it's only because he made an impression on me here for the last year."

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