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Did Radiohead Change the Music Industry?

by Elaine Schwartz    •    Aug 19, 2012    •    1196 Views

  • “The fact of the matter is that popular music is one of the industries of the country. It’s all completely tied up with capitalism. It’s stupid to separate it.” 

                                                                                                        -musician Paul Simon

 

On October 10, 2007, the Radiohead online release of In Rainbows was revolutionary for 2 reasons. Using no record label, they provided the digital download directly to us. Then, at the online checkout, instead of price it said, “It’s up to you.” If you clicked a second time, you were told, “It’s really up to you.” The media later estimated that those who paid selected £4 ($8.20) as the average amount.

 

At the time, Billboard Magazine published the following cost breakdown of a typical CD.

 

Source: zeropaid.com

 

Looking at demand, supply and technology, had Radiohead transformed the business model that drove the music business? Are record companies still necessary?

According to a recent Nielson report on “consumer interaction with music in the United States,” yes, we still need record companies because radio remains the most typical way that listeners discover new music:

Here is how Nielson’s 3000 respondents discover new music:

  • Radio: 48%
  • Through friends and relatives: 10%
  • YouTube: 7%
 
 
Here is how teens listen to music:
  • YouTube: 64%
  • Radio: 56%
  • iTunes: 53%
  • CD: 50%

 

Thinking of demand, supply and technology, Radiohead’s 2007 revolution reflected massive changes in the music industry. But artists still need record companies to connect them to radio.

My Sources: Thanks to NPR’s Planet Money for their blog on the Nielson “Music 360″ report and here is more on the report directly from Nielson. In addition, this NY Times article tells more about Radiohead’s 2007 download experience and, for the economics of the music industry, although this Princeton University paper, “Rockonomics,” is from 2005, it is fascinating. (My Paul Simon quote is from “Rockonomics.”)

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