Reznor’s experiment: Results mixed

This seems to be a real music-blogging day for some reason — first there was the RIAA vs. Washington Post post, then the Sony-DRM post, and now we have some stats from indie music darling Trent Reznor of Nine Inch Nails about his experiment with offering a “pay what you want” album for download. Not long after Radiohead launched its In Rainbows download, Reznor announced his intention to release an album by rapper Saul Williams (which Reznor produced) in the same fashion.

So how did it go? Mixed at best, it seems. Unlike Radiohead, which hasn’t said anything about how many people downloaded or paid for its album (apart from saying that the estimates from comScore were wrong), Reznor has provided detailed numbers, and it appears that less than 20 per cent of the people who downloaded the album paid for it.

As Mark Hopkins notes at Mashable, there are a whole bunch of reasons why this might be, including the fact that Saul Williams isn’t exactly a household name, that he and Trent Reznor don’t exactly have huge crossover appeal with each other’s audience, and so on. There’s no question that a “pay what you want” strategy is likely to work better for an artist with a solid, dedicated community, such as Radiohead.

That said, however, Saul Williams still got more than 150,000 people to listen to his album (compared with about 33,000 for his previous album) and got almost 30,000 of those who downloaded it to pay $5. Reznor says that after paying for the studio time and engineers and so on, no one is “getting rich” from the download experiment — but when did that become the sole motivation for making music? Chris “Long Tail” Anderson has some thoughts here.

What can we learn from Wal-Mart?

As more than one person has already pointed out, the demise of Wal-Mart’s video download service comes as no real surprise. In many ways, it was stillborn to begin with. Why? Simple. Even when it was launched, it was obvious (to everyone but Wal-Mart, apparently) that the service was too restrictive. Only Windows format, and only on one computer, with no burning? It would have been a miracle if it had survived.

As Ian Rogers of Yahoo Music said in his recent call to arms for online music, “inconvenience doesn’t scale.” Wal-Mart is the size of a Latin American country in terms of revenues ($370-billion) and population (it has 2 million employees), not to mention market capitalization ($200-billion), but it still can’t make something as crippled as its movie service was popular by brute force.

Wal-Mart’s massive size might have helped it get deals with the studios for their content, but it apparently didn’t help the retailer pressure said studios into giving up the handcuffs they like to place on that content — either Wal-Mart wasn’t able to convince them, or it didn’t try hard enough. Let’s hope the failure of its service doesn’t convince others that it wasn’t worth it to even try; Wal-Mart’s effort was doomed from the start.

Radiohead album: Half-full or half-empty?

In one of the first comprehensive looks at who paid what for Radiohead’s recent In Rainbows launch, comScore says that more than 1.2 million people used the download site in the month of October, and only 38 per cent of them paid anything for the music. In the United States, according to the traffic measuring company, about 40 per cent of the people who downloaded the album paid for it, and they paid an average of $8 (on a global basis, the average was $4).

There are a couple of ways to look at this. One is skeptically — after all, there were reports that Radiohead had 1.2 million downloads in the first two days, so it’s hard to imagine that it didn’t get substantially more in the next 20 days. As with most traffic-measuring firms, comScore also has a certain methodology that may or may be entirely accurate. It’s not clear what the survey was based on or how the firm got the numbers it is using (but like Ethan Kaplan, I think there are some big holes).

Another way to look at it, however, is that almost 40 per cent of people paid for something they could have had for nothing — and in the U.S., they paid the same amount as it would have cost to buy the album the regular way. That may not be great, but it’s not bad. On an unrelated note, the comScore press release contains a quote from a somewhat unusual music expert: Union Square VC and music fan Fred Wilson, who has more here.

Radiohead pulls in $10-million in a day

(this is cross-posted from my Globe and Mail blog)

When Radiohead’s “pay what you want” download experiment was first announced a couple of weeks ago, it seemed obvious that fans (particularly the poor ones) would like the idea. But would it actually work? And would the band make any money, or would most people download it for nothing?

Despite some early glitches caused by a rush of would-be downloaders, and some carping from fans about song quality, the early indications are that the experiment has been a raging success, and that a majority of people are willing to pay as much or more for such an album as they would if they bought it through iTunes or any other traditional method.

In fact, if some of the early reports about the project turn out to be true, the trickle of interest that some bands showed in the idea initially (including Oasis and Jamiroquai, as well as Nine Inch Nails) could soon become an avalanche: According to some estimates, Radiohead may have made over $10-million (U.S.) in a single day.

The day after In Rainbows went on sale on October 10th, music-industry blog Gigwise said it had learned from sources close to the band that Radiohead had already sold more than 1.2 million copies of the album. And while it’s impossible to know what everyone paid for those downloads, industry polls showed that a majority of people buying the album were paying between $1 and $20.

In other words, Radiohead could easily have made over $10-million in the first 24 hours, and likely made substantially more than that in the first two days of offering downloads. And those figures don’t include the number of fans who chose to pay $80 for the deluxe boxed-set CD of the album. Some fans actually paid the maximum amount the system was set up to process: 99 British pounds, or about $200.

Considering the group will keep the vast majority of that estimated $10-million-plus in revenue — in contrast with the small percentage most groups get with the traditional record-label process — more than one band has to be looking at Radiohead’s move as a model

Welcome to the video race, Wal-Mart

In what shouldn’t come as a surprise to anyone who has been watching the video download race heat up, retailing behemoth Wal-Mart is announcing a download service today that will feature both movies and TV shows from all six major studios: Walt Disney, Warner Brothers, Paramount, Sony, 20th Century Fox and Universal. Movies will be $10 to $20 and TV shows will be $2.

Obviously, having all six studios taking part will help Wal-Mart by broadening the amount of content it can offer (theoretically at least). One of the biggest issues with other ventures such as the virtual ghost towns known as CinemaNow and MovieLink — which were put together by the studios themselves — is a lack of compelling content, much like the Video On Demand channels that cable providers like Rogers have in Canada, where you get the dregs from the theatres.

wal-mart video.jpg

As Mike Arrington at TechCrunch points out, there are plenty of players in this particular game, including the aforementioned MovieLink and CinemaNow, as well as Amazon’s Unbox.com (A note to Canadians: none of these are available to Canucks, just as we are banned from watching the TV shows that NBC and other networks are streaming from their websites, and just as we can’t get movies and TV shows on iTunes for that matter — don’t get me started).

Rafat Ali at PaidContent and others have noted that Wal-Mart’s foray into movie rentals a la Netflix was kiboshed after a brief run, and an analyst says in the the New York Times story that the results of this latest venture will likely never be more than “a freckle” on the giant company’s earnings. He’s undoubtedly right about that — Wal-Mart’s revenue last year was $340-billion, and it made a profit of almost $12-billion.

In case you’re wondering, that makes Wal-Mart about 10 times the size of Walt Disney Co. in terms of sales, and about four times as large in terms of profit. In fact, it’s probably larger than all of the six movie studios put together. Which makes me wonder: why doesn’t Wal-Mart offer movies for free? Time-limit the downloads so you only get them for a day, and use them as a loss leader. Of course, the studios would never go for that kind of deal.