By Steve Rowen, Partner
12/4/2007
Radiohead may have revolutionized the post-grunge music scene of the late 1990’s with its release of OK Computer (the album that makes every serious music critics’ list of most influential music recordings), but apparently, the band’s influence has now extended well into retail.
Earlier this year, the band released In Rainbows. And regardless of your musical taste, the album was highly important – if not for its content, because of how it was sold.
Fans were invited to download the entire album (two months before its tangible release) at the band’s website, for whatever price the fan desired. $10? Ok. 0$? That’s ok, too. The band felt both free enough from obligations (having completed the terms of a six album recording contract with major label EMI) and confident enough in its fanbase (comprised in large part by musicians) to release a record that took more two years to record without a set price. In fact, the band’s frontman, Thom Yorke, told Time Magazine that “I like the people at our record company, but the time is at hand when you have to ask why anyone needs one. And, yes, it probably would give us some perverse pleasure to say (expletive) to this decaying business model.”
So far, final sales details have yet to be released. But current estimates range from $2-10 million in sales since the album was made available on October 10 – enough to get the attention of such artists as Prince and Nine Inch Nails, who are also exploring the option of label-less release.
What can we learn from this newest and fairly drastic “tech-enabled delivery model?” That the lifespan of a middleman is rapidly shortening.
Take Zazzle.com. The company calls itself an on-demand service, creating customized retail items (think t-shirts, coffee mugs and calendars) at the time of order. Clientele include both individual and corporate clients (Lucasfilms and Disney, for example), and all but the largest orders are guaranteed to ship within 24 hours.
In its own words, Zazzle has been doing the “hardcore software development” required to take the “heavy lifting” out of launching a retail enterprise. And while the site offers a tremendous service for fraternity boys looking to create that perfect tee-shirt to force pledges to wear around campus, small and start-up designers, artists and bands utilize the service to get quality printed materials published and produced. How does Zazzle set the price? A few weeks ago it launched a system called “Name-Your-Royaty,” where the designer sets the royalty anywhere from 10 to 99 percent of the retail price.
One interesting caveat to “name your price” applications? Dr. Melissa Bateson, a behavioral biologist at Newcastle University in the UK conducted a study on what prompts honest action out of unsupervised sales transactions. Each week, a poster was placed above an “honesty box” in a lunch cafeteria where people were supposed to deposit money for hot beverages purchased without supervision. On weeks when the poster featured glaring eyes, three times as much money was left in the box than on weeks when the poster featured flowers. Perhaps even the feeling of being watched has some influence.
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