Transcript Radiohead: Music at Your Own Price

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Radiohead: Music at Your Own Price
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Radiohead: Music at Your Own Price
Team Name
McCallum High School: Austin, Texas
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Radiohead Background
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British alternative rock band
Founded in 1985, by Thom Yorke and 4 friends
1st US hit, was Pablo Honey in 1993
Sold 2 million copies in US by 1995.
EMI published 5 more Radiohead albums by 2003
selling 8 million copies in US alone.
Band attracted huge, loyal following.
In 2006, 7th album, In Rainbows, to be published
online by Radiohead
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to find other ways to attract more followers
“we earned the privilege to do things our way”
Song from concert posted on You Tube by fan.
Yorke said. “… Boom! It was up on You Tube. I think it’s fantastic.”
The Music Industry in 2007
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$29 Billion,
 9%
drop from 2006
CD sales
 13%
that is 2.46 $B
Digital sales
 34%
that is 726 $M
2007: CD sales 82%
of global market
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Record stores
30%
Discount stores 37%
Amazon
7%
iTunes
10%
Total digital sales 15%
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2006
2007
WW Music Sales ($B)
Music Industry Pricing in 2007
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Retail
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Label share
Retail share
Artist share
$14.99
$9.50
$3.00
$2.25
Fighting Piracy
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Itunes
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Itunes share
Label share
Artist share
Piracy 20:1
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$9.99
$3.00
$5.60
$1.40
20 illegal copies for
every track sold for
$12.5 B in lost sales
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Greatest threat to industry damage or loss of income is
Billions of dollars.
Value of product is greater if
accessible to wider users base.
Labels began by prosecution and
penalties.
Second step was so-called DRM
(Digital Rights Management)
protection of music files.
Some offered music online for
free with sale-related products
and concert tickets.
Some will charged subscription
(Rhapsody).
Some charged for every song
downloaded to personal
computer.
The future of the Music Industry
is to partner with Internet
technologies, not fight them.
Talents must find a new way how to sell.
Radiohead’s new Business Model
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Radiohead’s Album – In Rainbows – ‘Sold’ direct-to-consumer
Business Model: NAME YOUR OWN PRICE
 Let customers choose what price to pay for album.
 62% paid zero
 17% paid between 1¢ and $4
 22% paid between $4 and $20
New Music Business Distribution Model?
 62 percent of the people downloaded for free…
 38 percent of buyers paid an average of $6 for the music
 If Free is same as “Pirated copies,” then only 1.5 copies
pirated instead of 20.
Radiohead made roughly $7.2 million from digital sales of In
Rainbows (estimated 1.2 million units sold).
Avg. $ per copy
Radiohead
via Label
via iTUNES
Radiohead share
$6.00
$2.25
$1.40
When this album came out, Radiohead was not on iTunes.
They sold another 1.75 million when it was officially released.
Results
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1.2M sold direct
@ $6.00 ea.
Plus $1.7M sold via iTunes @ $1.40 ea.
Radiohead earned $9.6 M on In Rainbows
But the increased market earned them $2.4M more than alone
and twice what they would have earned through a label
Conclusion
Talents must find a new way how to sell.