Radiohead's recent decision to make their new album In Rainbows available in an "honour box" system, exclusively on their own website, has sparked plenty of discussion. The band, out of contract with their label, financed the recording themselves and asked fans to pay what they thought the album was worth before downloading. It seemed to be the ultimate acid test to settle the debate every music biz employee wants an answer to: will I have a job this time next year? Or, less bluntly: does the general public still believe that music is worth paying for?
According to online research firm ComScore, the answer is a resounding no. According to their figures, 61% of the people who downloaded the album thought it was unreasonable to pay anything for it at all.
Only 4% of the Radiohead fans who downloaded the album paid anything approaching a normal high street retail price (between $12 and $20). 12% of the fans paid the average price of an album bought online (between $12 and $8 - iTunes average price is $10). Another 6% coughed up the cost of a mid-price album (between $8 and $4) and 17% paid a token amount (between $4 and a penny).
Last week, two Wall Street analysts downgraded the stock of the Warner's Music group, triggering a sharp drop in share prices. Richard Greenfield of Pali Research wrote: "No matter how many people the RIAA sues, no matter how many times music executives point to the growth of digital music, we believe an increasing majority of worldwide consumers simply view recorded music as free."
In recent weeks other top-selling recording artists including Madonna and Oasis have announced plans to change their business model. Nine Inch Nails Trent Reznor is currently contemplating his next moves after announcing the end of his relationship with Universal Music. Reznor, while acknowledging that Radiohead's model has some "serious flaws", also concedes that in the current climate, the relationships between record labels and artists such as himself "has gotten to a place where it couldn't be worse". Raising concern over the high price of CDs and expressing concern for his audience, Reznor questions why any artist should be angry at fans that are "so passionate about hearing it they go online to get it two weeks before the music debuts? I want them to be that way."
Meanwhile artists like Prince and Ray Davies have opted to give their albums away, and Paul McCartney, James Taylor and Joni Mitchell have chosen to work with Starbucks, more commonly known for their $5 coffee than their music business acumen.
So does anyone know what the future hold for the music industry? Back on Wall Street, Greenfield urges music executives to embrace a new ad-supported business model, one that dramatically scales back the size of record companies, makes music available for free download, and doesn't shackle songs with restrictive DRM. He doubts this will happen anytime soon. "The music industry is not ready to endorse such a move at this point, and even if it was, the economic model transition will be incredibly painful.”
So...will I have a job next year? Luckily I work in part of the industry that has always been "scaled back", and personally have continued to scale back our overheads in the last five years. Our growth comes from the niche markets which remain strong for us: vinyl, limited editions, outsider music. But is it sustainable? That I can't answer yet, and I join Trent Reznor and the rest of the industry in searching for answers. The only thing I know is that it won't be the 'big four' - the traditional industry major labels - who lead the way.