RADIOHEAD ANSWERS MY QUESTION: They aren't selling out!

by John Davidson
1 October 2007

I’m not going to break my arm patting myself on the back, but I’m thrilled that RADIOHEAD took the advice that I pitched them in a column over a year ago . They’re ditching the major label system and taking the music distribution business into their own hands, and it’s exactly what they should be doing. The major label cabal doesn’t serve them well anymore, and while they are not going to fundamentally change the music business, they are addressing its most fundamental problem head-on: the value transaction.

Sure, not every band can function without a record label or for that matter, a major label. Some artists do not have the business acumen or the desire to handle the business part of the business, and there is a system in place to address that. Some artists do not have the ability to market themselves enough to be profitable, and there again, the labels serve that purpose well. But most of the business problems that record labels address are related to scale: it takes money to make money, and businesses typically have more on hand than artists do. To reach more people takes more cash, and in that manner record labels typically serve primarily as a banking role for artists (loaning them money or services in expectation of repayment.)

Today, the more successful an act is, the less they need a record label. Yes, there are some superstar acts who probably function better in the marketplace with a large corporate backing due to the complex arrangement of their place in the market, but that’s largely self-inflicted and relatively rare. The vast majority of working musicians do not require the hit-making services of a major label nor the cashflow. And sadly, the major labels are wildly inept in consistently creating superstars or even moderately successful careers in music. As I’ve noted many times previously, the industry is in decline and going through classic shakeout.

Radiohead, on the other hand, is creating a classic value proposition. Operating from a position of strength, they can essentially give away their music for free and leverage their history against an expensive box set and touring income. If you like Radiohead, you can get their new album for whatever you want to pay for it. If you LOVE Radiohead and you love the songs that you can download for free, then you can go off and buy the geeky box set. Are we really at the point where the commoners and freeloaders get the basics for free and the dedicated fans fork over $$$ for the deluxe set? Absolutely we are. After all, consumers could always get the hits off the radio for free and really, now that anyone can steal anything on the Internet, isn’t that basically the same thing?

This is what PEARL JAM should have done. This is what DAVE MATTHEWS should do. This is what legacy groups like THE PIXIES or BUFFALO TOM or SMASHING PUMPKINS should do. The deal is that if you aren’t in the market to swell your fanbase significantly, then you should be in the market to serve your current fans to the utmost. Why? Because they’re the ones who want to give you their money. You just have to figure out what they’ll pay for.

Filed under music industry music technology