The Speckled Mind

Thursday, October 04, 2007

R-I-AA...It's fun to make fun of R-I-AA


Well, the case has come back from the jury, and the Recording Industry Association of America (RIAA) lost.

That's right, I said they lost.

Sure, you're going to see all kinds of news stories tomorrow morning about this case. And they will tell you that a single mom from Brainerd, Jammie Thomas, now owes the RIAA $220,000 in fines and damages. You will be told that this is a landmark, precedent setting case. You will hear from record executives all over the country that justice has finally been served, that the tide has been stemmed, and that internet users will soon terminate their illegal file sharing behaviors.

That's what they'll tell you.

But they're wrong about all of it. Except Jammie Thomas and her fine--she's (to quote Shrek 2)
"up a chocolate river without a Popsicle stick." But the RIAA did not win for the long term. Today's court decision was one of the final nails in the coffin for an industry that has shown itself consistently unable to be imaginative or forward thinking. Seriously--how messed up is it (from a marketing standpoint) to sue your potential customers? It's unprecedented, and it spells further doom for Sony, Virgin and the others. Because, the truth is, people are waking up to the reality that they DON'T NEED record companies to find music anymore. And, as online music stores like iTunes and myspace continue to crop up and synchronize file formats, people won't need the record companies to buy music either.

If you want further evidence that the RIAA is in its final throes, read Peter Carlson's excellent blog about Radiohead's plan for their new album. The short version: they are releasing it independently and are allowing downloaders to choose how much they will pay for it. Thus, if you value it, you'll drop 10 bucks or more. If you're just checking them out for the first time, you can download it for free with no guilt involved.

So, just to be clear: Record Labels=dying; Radiohead=brilliant.

When this pans out financially for RH--and I'm sure it will--there will be execs at the major labels turning their ties into nooses. A decade of reactionary and antagonistic behavior toward its consumers combined with an utter lack of imagination has guaranteed the end.

posted by timmer k. at 9:55 PM

7 Comments:

  • Agreed, record companies are dead. It's sad that they went after a single mom, did they think about the way that looks?

    By Blogger Jerod Lucius, at 11:02 PM  

  • I honestly don't think they did, Jerod. They're kind of like a boxer on the ropes who is so woozy he turns around and clocks his own ringside manager. They'll go down soon.

    By Blogger timmer k., at 7:11 AM  

  • Hmmm. I'm not sure I agree with you about the Radiohead thing. If people really valued music and paid for it out of their affection for a band, we never would have had problems with free filesharing in the first place. Sure, you and perhaps I, may show our support for our favorite artists by giving them some money for the album, but generally humans are selfish, and I don't see Radiohead making a ton of money from this endeavor (unless of course ditching the record company and producing the music themselves, combined with a lack of cost for producing CDs is actually worth giving away most of the music for free... who knows).

    I do agree with your other observations though. :)

    By Blogger Jess(ica), at 3:27 PM  

  • I think Jessica brings up a good point about people not paying for music. It really says a lot about the value we place on art in our culture. We simply don't value it but we consume it and let it shape us all the time.

    FYI I heard on NPR that Radiohead did produce this album but honestly the cost of studio time, instruments, softare, etc...would make it nearly impossible for less well known bands to turn a profit. Radiohead is in a unique position and I admire what they are doing, even if it's not completely altruistic.

    By Blogger Jerod Lucius, at 11:29 PM  

  • Well, if Radiohead is the test case, then the evidence is against jes(ica) and jerod. It is reported that the vast majority of people, when given the chance to pay anything, are paying around 10 dollars (us).

    Most record companies give the artist 30% of the proceeds from their records.

    So, if we just look at sales in the 1st week, "Kid A" sold 207,000 copies and entered at No. 1, "Amnesiac" debuted at No. 3 with 231,000 copies in the first week and "Hail to the Thief" sold 300,000 copies in its 1st week.

    So doing the math using their most recent release, and assuming an average CD price of $12:

    300,000 x $12 = $3.6 million

    Radiohead's cut = %30 or $1.08 million.

    So, if crashing their website with presale orders is any indication, and the conjectured average sale price is around $5 (reports the BBC and the NY Times), the math is:

    Crashing a website = half of the average of the last 3 albums to be very conservative = 123,000 sales in the 1st week.

    123,000 x $5 = $615,000

    Now, if the record does as good as the average of their last 3 albums in their 1st week:

    246,000 x $5 = $1.23 million

    And because the consumer sets the price point, the international press has completely gorged on this and because radiohead is phenomenal... I predict that in the first week, radiohead will sell well over 600,000 copies.

    So, if my prediction for JUST THE 1st week of sales in anywhere close to correct,

    600,000 x $5 = $3 million

    I think it's not only a safe bet, but it's good business sense.

    Humans may be selfish, but record companies are more selfish. And that is what radiohead are betting on.

    By Blogger mjonthemove, at 2:15 PM  

  • Wow MJONTHEMOVE. That is some good math. As I said, that's the only way I thought they could possibly make money. It's kind of sad too that record companies take so much money that artists can offer music for almost free and still make more money than using a record co.

    By Blogger Jess(ica), at 2:24 PM  

  • Yes, early reports on the Radiohead experiment are that they had 1.2 million downloads of the album on the first day of availability. The AVERAGE price people chose to pay was $5. That means many paid more and many paid nothing. And someone paid $1,000.

    http://www.purebuttons.com/pr/

    And none of that figures in how many people purchased the discbox (~$81). So by the look of it, the Radiohead lads are looking like geniuses right now. The press alone is probably worth it, since Radiohead is planning a tour for next year.

    By Blogger Unknown, at 1:32 AM  

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