Remember Radiohead’s experiment, in which they let people choose how much they wanted to pay for their latest album, In Rainbows? Call it a publicity stunt or an innovative business model, but the initial numbers show that the experiment was a success.

Now, the final numbers are in. In short, In Rainbows sold better than their last album, selling 1.75 million copies of the physical CD, 100.000 box sets, and 30,000 units on iTunes in the US in the first week of availability. The album was number 1 in both the UK and US for the first three months; it was played 17 million times on Last.FM, and even to this day it’s in the top 200 UK & US as far as sales of the physical CD go.

Yes, they’re a big band. Yes, their audience is not the same as, say, Shakira’s. Yes, this was one of the first such experiments and it caused a great deal of attention regardless of the music.

But with these numbers, it’s impossible not to call it a huge success. Essentially, Radiohead has shown that - in some cases, at least - it’s possible to completely cut out the middleman (read: the record label) and still have a very successful record. Furthermore, they’ve proven that alternative business models are possible, and that fans aren’t all mindless zombies who are only looking to get as much as they can for as little money as possible. Now, it’s time for the record labels to start changing their business models - or perish.

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What is it with us denizens of the Internet?  Free isn’t cheap enough for us, apparently. When a band like Radiohead comes out with an album, puts it up on a website for us, and gets more press coverage than just about any album release in recent memory, and says “Hey, pay us for it if you want to,“  we still feel the need to “steal it” off Bittorrent.

So says a research paper from P2P monitor Big Champagne, according to PaidContent today. By the numbers, according to the paper, around 2.3 million folks decided that free wasn’t cheap enough and went to BitTorrent to grab the files instead of going to Radiohead’s In Rainbows website to grab the album while it was still legally available as free.

The obvious answer is the one that the report gives - venue familiarity. The theory goes that folks are far more familiar with downloading files through these networks than they are with going to Radiohead’s website, and so it was far simpler just to click around till they found it there rather than go to the site. It certainly has a ring of truth to it, but PaidContent’s Robert Andrews isn’t convinced:

But that’s wishful thinking. In Rainbows torrent downloads peaked on the first day data was collected, October 27, at 400,000 - what Page and Garland call “a bloody big number”. How big? More than double the top torrent through March and May (Panic At The Disco’s Pretty Odd) got in a whole week (ie. 10 times Panic’s daily average).

[…]

Counterpoint - Nine Inch Nails’ free The Slip album was downloaded more from NIN.com than torrents. And In Rainbows reached number one on both sides of the Atlantic on proper sales.

I’m a bit puzzled at the counterpoint, and don’t have a ready answer, but the hypothesis put forth by the research paper certainly jives with some of the correct analysis I’ve put out in the past with regard to the same issue in the video market.

Remember when we were all talking about the foolishness of NBC pulling out of iTunes and YouTube so that they could make sweet sweet love to their new fling, Hulu?

NBC’s withdrawal from other sites like YouTube and iTunes mean that Hulu is a step backwards instead of forward. Was it worth it for NBC to remove their content from YouTube and iTunes? Absolutely not. As I’ve stated before, they’ve significantly limited their distribution, and therefore the advertising inventory and marketing footprint online. There are, without a doubt, less people who will view NBC’s content as a result of them pulling it from iTunes and YouTube. This means less money in advertising from online views, less purchases of individual episodes and season passes, and ultimately less profit. In effect, they’ve looked at everything successful about new media and done the opposite.

Same thing, and we’re seeing it reflected in the numbers.  Hulu is absolutely dwarfed by the usage of YouTube, and by not using it as a distribution platform, the Old Media set severely cut the legs out of the potential of what is possible in terms of viewership numbers.  You take the content to the users, not make the users trek on over to where your content is.

Bringing it back around to Radiohead for a minute though, that simply isn’t something that’s possible for bands right now.  There really isn’t much of an option for bands like Radiohead who want to do a “name your own price” scheme where one of the options is free where they can expect to have absolute mainstream audiences.

That not withstanding, they did alright for themselves, particularly when you realize that estimates on their earnings for the release are comparable to other major record label’s yearly net revenues.

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Nice, ain’t it? No cameras were used to create it - only […]

Record label EMI will lay off 2,000 and shift its focus toward digital music, private equity investor and company topper Guy Hands told the Financial Times. Hands said the music industry operates on fallacies with origins in “the phenomenon of the 1990s and the CD” and as a result, companies like EMI are hemorrhaging cash. EMI, for instance, spends $50 million a year destroying unsold CDs. Guess whose model Hands said the industry should follow to turn itself around?

Hands said to look to Radiohead, a band which spurned EMI when it allowed fans to download a low-fidelity copy of a new record and pay whatever price they chose. (Photo by wwhyte1968)

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