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Is Reznor Reshaping a Market?
by
Paul Resnikoff, Publisher
Digital Music News, March 4th,
2008
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Ghosts is a variation on a theme created by Radiohead. The latest NIN album is
part free, part paid, part digital, and part traditional. And a broad range of
consumer preferences and budgets are accommodated by the
initiative.
Reznor and Radiohead are important market-movers and fearless
risk-takers. But are these experiments really relevant to the broader music
industry?
The problem is that only part of the consumer population is
going to play along. Radiohead found that a disproportionate number of fans
downloaded In Rainbows for free, an offered option. But an even larger number
of fans downloaded the album for free outside of the Radiohead page, on
BitTorrent, P2P, and other sharing protocols.
These fans wanted the album
on their turf, not Radiohead's. And that has been the bigger story for the
recording industry for the past ten years. Sure, the iTunes Store has sold 4
billion downloads, but that is just a tiny fraction of the free downloads
obtained from other channels.
Outlets like Limewire offer instant,
on-demand bulk downloads and comprehensive recording catalogs for free. The
iTunes Store offers a cleaner copy, but for a price that makes collection volume
difficult to achieve.
Now, Trent Reznor is about to learn a similar
lesson. Most likely, fans will grab the first, free volume of the album in
heavy numbers, and a smaller percentage will pay for the expanded
collection.
But that is only part of the story. Outside of that sandbox,
volumes II-IV will quickly creep onto Gnutella, BitTorrent, and IM. Sure,
Reznor seeded the first volume onto BitTorrent. But who are we kidding? Fans
are in charge of this channel, not Reznor.
That means far lower volumes
for NIN, or any other established artist, compared to the 90s. Other factors
are also sapping energy, including an increasingly-fragmented media market, and
the lowered attention spans that come with it.
Then again, who needs 90s
volumes when the major label is suddenly optional? After all, Reznor can now
keep the revenues (almost) all to himself, and achieve robust revenues on far
smaller volumes.
The math is alluring, and a major disincentive for
signing with a label. Marketing specialist Seth Godin urges artists to
cultivate targeted, niche audiences, and any business school graduate will
lecture you on the value of consumer targeting. Why not translate those
principles and percentages into a healthy, more controllable career?
The
question is becoming less and less academic, and artists like Trent Reznor are
putting the possibilities into motion. But it remains unclear if artists can
healthily sustain themselves using this philosophy, at least in scalable
numbers.
And smaller artists will have difficulty applying the Radiohead
model, at least until their recognition grows. Why? The reason is that most
lesser-known artists have trouble getting people to download their content for
free, much less pay for it. Why pay for something blind? That is a game for
pre-2000 consumers.
In contrast, Reznor and Radiohead have established
names, thanks to a massive, major label publicity machine. That tailwind is a
critical component of the current models - and a major reason why media outlets
are focusing heavily on their initiatives.
In the middle are artists like
Saul Williams, a poet and rapper that exists outside of the mainstream. Reznor
actually helped Williams create a Radiohead-like model with the help of
Musicane, and the results were mixed. Less than 20 percent opted to pay $5 for
the album - a total of nearly 28,000. Then again, that translates into roughly
$142,000, a revenue total that easily pays the bills.
And any starving
artist knows that six-figures is a goldmine for a life in the arts. A major
would drop Williams in a heartbeat after a performance like that. But sailing
solo, Williams could command a decent and consistent payout.
So is the
Radiohead model relevant? For more established, post-label artists, the concept
probably maximizes recording profits, and creates momentum for other revenue
generators. And the results are boosted if the recordings are dispersed across
a broad number of sales outlets, including the artist page, iTunes, Amazon MP3,
and even traditional brick-n-mortar.
Sure, the result is smaller than
90s recording sales potentials, but it is something nonetheless. And if the
consumer elects to pay, they have the opportunity to do so.
What about
everyone else? For mid-size artists, the concept can translate into meaningful
revenues, and for smaller artists, the idea is probably premature ahead of
broader audience awareness. But more than ever, artists have the potential to
reach super-targeted audiences, and that greatly increases the chances of a paid
transaction.
-----
Paul Resnikoff is the founder and publisher of Digital Music
News (www.digitalmusicnews.com), a premier industry source for news,
information, and analysis. Digital Music News has quickly grown from its humble
roots as a small, executive news service to the most widely read information
source in the field. |
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