If consumers were kings
By JASON LIM
They’ve told you that in market economies, you really are King.
The internet has recently taken the concept of market economies and the adage of “consumer is King” - one step further. Radiohead, the seminal brit-rock cum post-grunge post-rock band, has come up with a new album called In Rainbows and is releasing it first on the internet.
Hardly shocking these days, that a band should choose to release “soft copies” of albums ahead of actual album drops, but what’s really got fans and non-fans alike buzzing is the fact that listeners can pay any amount they choose in order to download it off their website.
Aside: Afdlin Shauki, Malaysia’s own Jack Black - comedian and singer extraordinaire - tried this method of marketing his Fuuyo album, whereby he promised to send fans copies of his album in CD or cassette form and let them decide on how much to pay him.
What do you do when you’ve been given the power to set prices?
Using the Radiohead example, let’s examine four possible things you could choose to do.
A. Pay the price a similar album would cost
Never mind the fact that store prices already factor in many extra costs which are directly related to putting the album on CD store shelves (such as transportation costs to music stores/Apple, payments to distributors etc. which shouldn’t really come into play anymore since this particular marketing method cuts almost all third party involvement out of picture) and pay the exact amount the album download would cost if you had gotten it off an iTunes store or CD store.Doing this would mean you’re sending a message to Radiohead’s record company that you’re actually quite happy with the status quo way and price of purchasing music.
B. Pay more
If you really like the music, and feel it’s worth more than other albums out on market shelves, you can pay a premium over store prices. This will send a message that as King, you’re willing to recognise and reward value.Record companies are likely to be very happy with this outcome and may even spend more on bands that release music that induce such behaviour.
C. Pay less
As King, you may be happy with the product, but feel that it’s not worth paying store prices for the album download. Taking this route, you may be considering the fact that (as mentioned in (A)) you’re still paying what the album is worth, but you’re stripping out the costs that were never incurred since third parties were not involved in getting the music to you. Or you may just pay less if you feel that, relative to other albums out there, you’re not getting your money’s worth.D. Pay nothing
What’s interesting and sometimes exploited, is how you can even choose to pay zero dollars - ie: nothing - for the album download. In this case, assuming you’re still behaving rationally, either you think the music sucks and you’ve wasted your time or you’re just cash strapped and enjoying the option of getting a freebie.Whilst some may say fans who take advantage of this option are cheating or even stealing the band’s music, in reality, bands like Radiohead hardly see much of the money made from album sales. Fans who pay nothing for the album may still be good for Radiohead, if you take into consideration the fact that the downloads these fans consume, still count as “albums sold” and showcases the band’s overall influence in the music scene. Record companies may suffer some lost revenue, but what the band and gets in terms of word of mouth positive publicity may benefit them more than if fans miss out on buying the album altogether because they’re unable to purchase them conventionally.
If you are King and have purchased a product which allowed you to pay whatever you want, do consider your judgement carefully and as long as you’ve made a fair decision, you’ve earned the tagline - the “consumer is always right” - and you’ve truly earned your title of King.
—
JASON LIM is a former treasurer for theCICAK.
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ahhs. King. this eliminates altogether the role of the Pirate, because the Pirate is King too. doing this can actually do the record companies lots of good, because they can drive Pirates out of business.
although simplistic economics will say that rational consumers will not pay to enjoy a good that they can enjoy without paying for it, we find that most of the human population falls short of being rational. after all, if you were a true fan, would you mind paying? and anyway, some people are beyond being rational that they are farsighted and wise - if nobody pays for it, in the long run, there will be no such good and nobody gets to enjoy it. how simplistic economics can be.
and we find Radiohead challenging the simplicities of it. commendable. because they seem to be using a subtle form of legal and laudible predatory pricing to undercut an illegal competitor. anyone who would have bought from Pirates would now have no need to pay at all if they downloaded the music off the internet for free.
if only every record company followed suit. i imagine, if that happens, only bands/artistes that have real quality and appeal will be promoted. we will hear less half-baked music and even fewer pretty faces with fragile voices. what good it would do for society.
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Radiohead is a class above the rest. They could sell their album at 500 pounds and I would save up to buy it cos it would still be lower than my utility equivalent.
Personally I would choose option B.
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I’m not a big fan of Radiohead, so let me just argue on the issue instead of the quality of their music and how much it’s worth.
When you put the people in charge of the price of the album, I would like to pose a few questions
1. How are you going to start off your career as a musician?
Radiohead’s a very popular band (so I’m told) and they’ve been in the industry for quite some time, so they can actually make do if this recent album does not make them multi-million dollars.
2. How would budding musicians, who have yet to mature cope with this style?
Not all artists start off with a bang. It took Kylie Minogue two decades before finding a captivating audience.
3. What about recording labels?
Will they still be able to keep their profits high enough to send their musicians out on tours with no capitol whatsoever? Can they cope with the losses caused by cheap music fans who haven’t a care for the artistic value behind the music?
I honestly don’t agree with this move if the artist was talented, especially if it were a budding Malaysian artist, because let’s face it, Malaysians are cheap.
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Shahril, spoken like a true economist. Radiohead are ace. In their case, they’re not tied to a record company -only to XL Records for the release of the physical album and distribution. But for the most part, everything was done by Radiohead and Nigel Godrich. The sale of the physical album will work under the standard record company market structure, but the online release was the initiative of Radiohead themselves, and the record companies don’t feature in that structure. So I didn’t understand the relationship cited between the ‘pay what you want’ model and record company’s profits or decision-making tendencies when the four options were laid out.
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Cut the middle man out. Especially now that we have digital music.
Although, will people eventually abuse the system and take for granted the concept that you don’t have to pay for music?
You may pay a dollar or ten dollars or even more, but when the time comes, will your children still think that way?
I’m all for cutting out redundant middlemen. But I don’t think we’ll be seeing many more outfits doing what Radiohead did — allowing consumers to pay nothing for something. Simply because value must be matched by price — everything is worth something. Surely you economists know a thing or two about that.
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Aput
1. If your music is good enough, you will find an audience. Plus, its simpler, as anyone with basic computer skills are able to put their music online, and remember, if its good enough to make an impact, its good enough to generate an audience.
(case in point- Arctic Monkeys, whom owe the rise to fame through Myspace)
2. It is way better than the old way of going through soliciting demo tapes in hopes that it would fall in the hands a talent agent whom might or might not take interest in your band. At least with the net, a budding musician would be able to give the public access to their music directly, generating potential fans.
(Kylie, btw, started of as an actress in a TV show, I would actually liken her to all those actual budding musician, they were initially capitalizing her fame as a popular actress in order to sell CDs)
3. The recording labels are rich enough. Why does the public have to continue lining the pockets of these corporate businessmen who, we all know, are the ones whom profits the most through an artist success. Remember the time N’sync and Back Street Boys tried to sue their managers because the only received a tiny weenie fraction of band’s profits while the rest went to their managers.
(if i’m not mistaken, an artist only makes around 10 cents to every dollar generated through album sales, the rest goes to the label)
As for tours and concerts, their man purpose is to promote the band’s album. If there is no albums to be promoted, then there is no need for an artist to go on tour. If the public is buying singles online (songs per songs instead of full albums), then there is really no need for the artist to go on extensive and expensive tours, promoting their album. There is always other source of promotion which can be done such as TV and radio appearances.
And if there is enough demand for a concert, then an artist could stage a concert which main purpose is to generate revenues from ticket sales as oppose to staging it for the purpose of promoting the album.
Another great thing about this whole music revolution is the fact that now, a musician need to actually make good music in order to survive. And those who do survive does so because of great music, minus all the fake imaging and publicity.
All in all, everyone have to accept the fact that Web 2.0 is making changes to almost everything, including the recording industry.
They will have to adapt or lose.
But, i still have to agree with you. Malaysians are indeed cheap.
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Also i have to agree with ‘Philip’
If the public can pay whatever they deem worthy, this eliminates altogether the role of ‘pirates’
Why pay some samsengs rm 8 for an album if with could simply go to the musician’s site and directly buy that entire album for rm 8. True, it might be a small amount, but that revenue is rm 8 more to the artist than if I would to simply purchase a pirated CD. (truly, would u rather at least pay the artist for the materials or some rude and loud thug on the street selling his copy of a pirated CD?)
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check out scott adams (author of dilbert) discuss the economics of “free”. the context isnt music, but there are some interesting, related points to note.
http://online.wsj.com/article/SB119388143439778613.html?apl=y&r=669399
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I don’t think this method will work in Malaysia…I’m not saying Malaysian is cheapskate but most Malaysian just won’t buy music anymore…they just download it illegally from the internet or just go to imeem…Radiohead rocks though-kicking squeling gucci little piggy-
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I dont quite care what the article is about (no offense), but I just wanted to say that
RADIOHEAD ROCKS MY SOCKS!
(NOTE : Trying not to sound like a bimbo here)
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(you’ve succeeded, sadly)
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(you’ve succeeded, sadly…in your quest to sound like one, i mean.)
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