30th September 2007, Radiohead announced the adoption a new strategy on how they were going to release their upcoming new album dubbed,” In Rainbows.” This announcement was made on the group’s website. This new strategy acted as a new dawn for both Radiohead and their worldwide fans because it was the first time the group was going to handle everything that involved their music digitally after ending their recording contract with EMI.
The new strategy was inspired by the current change of the market trends in the music industry that is being taken over like a storm by digitization of music. They described their previous policy as a decaying business model thus, the need for changing strategy for survival. The new strategy was dubbed,” It’s up to you”, with In Rainbows as the debut album. From the title, the new strategy was going to be customer friendly to customers who wished to purchase the album.
In Rainbows was produced and was to be released by the artists themselves. As from 10th October 2007, customers would have access to download the music album from their website. In the newly dubbed” It’s up to you” strategy, customers will have an option of choosing what price to pay for music downloads in British pounds. This will attract a standard service charge of 0.45 British pounds for one access the download.
Furthermore, customers who would want to purchase a deluxe box version of the album would have it delivered to them by 3rd December 2007 at a fee of 40 pounds. This box will be designed to feature two compact discs with extra music tracks, a vinyl LP record, a hardcover book of the artwork and they will also have an interim digital version of the album. On the d-day,10th October, British rock radio X FM would premiere the launch of the album by playing the whole album uninterruptedly. The ATO group would distribute some of the tracks to US radio stations even though they have not signed any formal agreement together.
In comparison to other digital music marketing platforms like iTunes where customers would select individual tracks, In Rainbows album would be available as a whole and this is why the group refused to allow the album to be on iTunes. The audio quality of In Rainbows will be slightly better than those played at iTunes. However, iTunes provides a digital rights management (DRM) feature to all the downloads from their store. This feature helps to limit the number of devices and computers on which the downloads would be played on, but Radiohead’s album does not have such restrictions on its downloads.
Besides, Radiohead would retain all the rights of the album, and they also negotiated for a better payment with their longtime music publisher, Chappell Warner for publishing royalties. Since Radiohead does not have any contractual obligations with any recording company, they are free to produce and release music at any time they want.
ADVANTAGES
- Radiohead group will enjoy a considerable amount of the proceeds from the sale of their album than before. This is because they do not have any contractual agreement with any recording company that needs to be paid since they have all the rights for their album. Previously, more proceeds earned from their album was retained by the recording label company EMI. Statistics from the music industry shows that a physical album would retail at $14.25 where artists would earn 15% of the amount,50% would cater for the overheads,35% would be retained by the recording company. Statistics from iTunes shows that a digital album retails at $9.99 where an artist gets 14% of the amount, the recording company earns 56%, and iTunes gets 30%. The new strategy will favor Radiohead by retaining more proceeds from their album sale.
- “It’s up to you “strategy will attract many customers who will wish to purchase the album because of the option of the amount to pay. The inclusion of the service charge on the downloads will help them to make a profit even if the customer does not pay much. This strategy might influence loyal fans to pay more as a token of appreciation for their music.
- The absence of a contractual agreement with a recording company will enable them to retain all the rights of album, and they will also be able to release or do anything with their music without any restriction unlike when working under a recording company.
- The digital audio download quality of the album will be of a high standard than that from iTunes. In Rainbows will have 160 kilobits per second(kbps) while iTunes has 128 kilobits per second(kbps). As a result, this will attract many customers thus leading to more sales.
DISADVANTAGES
- Unlike iTunes, the audio downloads of In Rainbows are not equipped with Digital Rights Management (DRM) which is a way of limiting the number of computers or devices in which the download can be played on. Statistics show that pirated digital music has been increasing thus causing losses to artists due to low sales volume. For example, in the USA, there are 20 tracks produced from every downloaded track. Therefore, the absence of this DRM feature might lead to low sales volume leading to losses.
- Radiohead will be marketing their album mainly through their website and radio stations. This marketing strategy will only be limited to their fans because only loyal fans will check their website for updates and this might leave out many potential fans. Unlike before, the recording company was the one running the adverts thus attracting many customers.
3. Lack of an informal agreement with the ATO group might lead to future disagreements.
SOLUTION
The new strategy has a lot of advantages to the Radiohead group. However, the group should come up with a marketing strategy that that will create more awareness of the upcoming album launch. This will help to boost their sales because many fans will be curious on an experience of the upcoming In Rainbows album. Radiohead should also consider working on incorporating the Digital Requirement Management (DRM) feature on their downloads. The feature will help them curb the problem of digital piracy because, without the feature, people will steal their music by creating other links to accessing the audio on the internet. As a result, their expected revenue will decline due to the decrease in the number of downloads. The group should also work with ATO towards signing a legal agreement that will enable ATO group to distribute the In Rainbows album without any future confrontations. Lack of a legal binding agreement might lead to filling of lawsuits by either of the group leading to legal battles in case of a disagreement that will cost a lot of money.
Work Cited
Elberse, Anita, and Jason Bergsman. “Radiohead: Music at your own price (B).” (2008).