Nine Inch Nails/Radiohead

As you may have read (links below), in recent days Trent Reznor and NineInchNails have released some new material (Ghosts) using an alternative business model. The options include nine tracks for free; 36 tracks and a 40 page PDF file for $5 as well as other combinations of material that scale to a higher price. This takes a similar format to the release by Radiohead last year where listeners were able to download the songs for free prior to the release of the CD for sale – when the CD was released it went to number one in both the USA and UK.

These examples provide interesting illustrations of artists experimenting with new business models. However there are a few points I think should be made to contextualise their use. First, this model works for these artists because they have had the benefit of the marketing power of a major label in the past. Of course the Arctic Monkeys have already illustrated that encouraging music sharing can help independent or unknown artists to reach wider audiences, but this has been one of the few examples. To my mind, the Nine Inch Nails/RadioHead model works for those that have had a reasonable level of exposure in the past.

Indeed I find it frustrating that some of the commentary considers ‘only’ 20% of customers paying for the release as an indication of failure. This type of characterisation fails to account for customers that download for free first and then later purchase, purchase other goods, recommend the songs to friends or attend a concert as a flow on from the free download. Furthermore commentary that considers this level of paying customers a failure in comparison to levels of CD purchases last century, fails to consider that the music is being produced and marketed with far less overheads and therefore does not need to sell to that level to be considered successful. This type of thinking does little to measure the success of a business model. As I have discussed earlier, there are also serious problems in equating financial success to the authenticity of an artist or their work and the dollar amount recouped by these models should never be used as a basis to discuss artistic success.

The bigger question for me, however, is whether this business model is sustainable across an industry or for a greater number of artists. As noted above, those without an established listening base are likely to have difficulties with the model (see also articles below relating to Saul Williams), but even more to the point, if a much broader sector of the existing market were to attempt to engage this model, and a range of competing offers introduced, it seems likely that its financial sustainability would be further fragmented to the point where it would not be viable. When you start to consider previous artists and back catalogue material it becomes even less likely that these artists could employ such a business model.

This serves to illustrate why collective licensing would be more beneficial in the long run as an alternative model employed on an industry wide basis. While the NineInchNails/RadioHead model seems to work in isolated instances, what society needs (and indeed is the point of copyright law) is the maintenance of a professional sector of artists that are sufficiently free from the influences of capitalism (this will never be absolute but can be achieved to a much greater degree than now) in order to produce material capable of reflecting on events and attitudes within society. By producing a pool of money through collective licensing and then dividing this up amoung artists based on popularity, both society and artists would enjoy a much more certain future.

Unlike others that have considered the collective licensing model in the past, I do not believe that such a pool of funds could be divided between every musical work on the Internet for an unlimited period of time (or life plus seventy years). I consider that there will always be a sector of amateur or hobby artists and that the term of copyright protection as it stands is both undesirable and unsustainable regardless of whether such a model were to be embraced. However I do believe that a collective licensing model could be developed where a significantly greater number of artists could realise a reasonable return over a reasonable length of time; that such a model would encourage and sustain diversity and that artists would have a more equal chance of gaining success. I also believe that should a collective licensing model be introduced that (at least in the short term) there would still be some demand for physical purchases and that artists should be entitled to recoup funds from these as they are now.

The other point to note from this NineInchNails experiment is that their servers could not cope with the demand for the downloads. I went to the site yesterday and was greeted with a message to the effect that there was such an overwhelming response that they had to pull the site down for maintenance - even though they anticipated a massive response, NineInchNails were unable to cater for the demand using a centralised architecture. This is one of many examples of where file sharing architecture comes into its own by being able to provide large files in a high demand environment. However it needs to be part of an overall distribution structure that works within the business model to be successful. With the Radiohead release there were concerns about the level of file sharing despite the availability of the files for free and whilst this may have been offset by the later level of CD purchases, a collective licensing model could have addressed this issue from the outset.

The future is a collective licensing model built on the basis of open file sharing architecture. The future is now – as they say; and it is the future that the regulators and courts are risking every time they cast dispersions against the legality of file sharing architecture.

Update:

Latest reports indicate that the limited edition (2,500) "Ultra-Deluxe Limited Edition Package" that included high quality downloads, two CDs, a data DVD, a Blu-ray high def DVD and assorted extras in an autographed package, for $300, has sold out. This package on its own has therefore returned $750,000 in two days to NineInchNails.

Further Reading:

The Register, Nine Inch Nails cracks net distribution (maybe) (3 March 2008) <http://www.theregister.co.uk/2008/03/03/nine_inch_nails_album_released_online/> at 5 March 2008

Digital Music News, Resnikoff's Parting Shot: Is Reznor Reshaping a Market? (3 March 2008) <http://www.digitalmusicnews.com/stories/030308parting> at 5 March 2008

Digital Music News, NIN Experiment Gets Off to a Slooooow Start (4 March 2008) <http://www.digitalmusicnews.com/stories/030308nin> at 5 March 2008

TechDirt, Trent Reznor Continues Business Model Experiments: Releases Latest Album Online (3 March 2008) <http://www.techdirt.com/articles/20080302/234646401.shtml> at 5 March 2008

Digital Music News, NIN Injecting Steroids Into Radiohead Model (3 March 2008) <http://www.digitalmusicnews.com/stories/030208nin> at 4 March 2008

TechDirt, Saul Williams Agrees That It's Way too Early To Be Disheartened (11 January 2008) <http://www.techdirt.com/articles/20080111/111158.shtml> at 18 January 2008

Digital Music News, Reznor Pet Project Yields Mized Results, Some Cash (7 January 2008) <http://www.digitalmusicnews.com/stories/010707nine> at 11 January 2008

TechDirt, Radiohead's Physical Album Selling Well (8 January 2008) <http://www.techdirt.com/articles/20080107/191334.shtml> at 11 January 2008

Digital Music News, Radiohead Perches Atop US Album Sales Chart (9 January 2008) <http://www.digitalmusicnews.com/stories/010908radiohead> at 11 January 2008

Digital Music News, A More Traditional Radiohead Scores British Top Slot (7 January 2008) <http://www.digitalmusicnews.com/stories/010707radiohead> at 11 January 2008

The Register, Radiohead top UK album chart (7 January 2008) <http://www.theregister.co.uk/2008/01/07/radiohead_album_chart/> at 8 January 2008

TechDirt, Dear Trent Reznor: Don't Be Disheartened Yet (4 January 2008) <http://www.techdirt.com/articles/20080104/015516.shtml> at 8 January 2008

TechDirt, Getting Millions Of People Listening To Your Music, With Many Giving You Money Voluntarily, Is Dumb? (18 December 2007) <http://www.techdirt.com/articles/20071217/135346.shtml> at 23 December 2007

TechDirt, The Second Stage Of The Radiohead Experiment (11 December 2007) <http://www.techdirt.com/articles/20071211/004849.shtml> at 13 December 2007

Digital Music News, Radiohead Questions Album Sales Report, Sets CD Release Date (8 November 2007) <http://digitalmusicnews.com/stories/110807radiohead> at 18 November 2007

Digital Music News, Radiohead Numbers Emerge, 62 Percent Paid Nothing (5 November 2007) <http://www.digitalmusicnews.com/stories/110507radiohead38> at 18 November 2007

FreedomToTinker, Radiohead Album Available for Free, But Fileshared Anyway (18 October 2007) <http://www.freedom-to-tinker.com/?p=1215> at 31 October 2007

Digital Music News, Heavy File-Swapping Cools Radiohead Enthusiasm (18 October 2007) <http://www.digitalmusicnews.com/stories/101807radiohead> at 31 October 2007

Digital Music News, Radiohead Sales Estimates Surface, New Wrinkles Emerge (15 October 2007) <http://www.digitalmusicnews.com/stories/101407radio> at 31 October 2007

TechDirt, Radiohead's Marketing Ploy Not A Stunt; Just Good Business (23 October 2007) <http://www.techdirt.com/articles/20071022/011057.shtml> at 29 October 2007

Digital Music News, Radiohead Tickles Executive Fancy, Majors Lukewarm (4 October 2007) <http://www.digitalmusicnews.com/stories/100307radio> at 7 October 2007

TechDirt, Radiohead Tells Fans To Name Their Own Price For Latest Album Downloads; Gives Them A Reason To Pay (1 October 2007) <http://www.techdirt.com/articles/20070930/214524.shtml> at 7 October 2007

ZeroPaid, 'Limitless Potential'- Official Nine Inch Nails Fan Remixes Now on BitTorrent (6 September 2007) <http://www.zeropaid.com/news/8988/'Limitless+Potential'-+Official+Nine+Inch+Nails+Fan+Remixes+Now+on+BitTorrent> at 10 September 2007