Friday, October 12, 2007

Pricing the superfluous: a revolution

The power of the Internet on consumption habits is undeniable. Especially when it comes to entertainment. The music industry is feeling it in a big way, with the complete break-down of its current business model.

In just a matter of days, 3 music heavyweight acts have announced in some form or other that they are dumping their label, digging the grave for the record industry's tired-a** model.

1. On October 1st, rock band Radiohead announced they will be releasing their new album through their website ONLY, for downloading. And as the cherry on top, visitors will choose on the spot WHAT PRICE THEY WISH TO PAY FOR OWNING THE LP. If they wish to download it for free, they can, but if they wish to contribute, or 'donate', to Radiohead's efforts, they can too!

According to BFM Radio (France), as of today, only ONE THIRD of people who have downloaded it have decided to get it for free! Unbelievable.

Consumers will most often buy packaged sliced bread, considered a utility, at the lowest price in supermarkets. But entertainment, and more so fashion, a.k.a. the superfluous, triggers a self-esteem mechanism which stimulates the consumer to be willing to pay a premium to own a Diesel pair of jeans or a Radiohead album.

2. On October 8th, Nine Inch Nails leader Trent Reznor announces on the band's official site that they will go direct to the fans, as they have not renewed their recording contract with their label. Here's a paste of Trent's post:

08 October 2007: Big News
Hello everyone. I've waited a LONG time to be able to make the
following announcement: as of right now Nine Inch Nails is a totally
free agent, free of any recording contract with any label. I have
been under recording contracts for 18 years and have watched the
business radically mutate from one thing to something inherently very
different and it gives me great pleasure to be able to finally have a
direct relationship with the audience as I see fit and appropriate.
Look for some announcements in the near future regarding 2008.
Exciting times, indeed.
posted by Trent Reznor at 10:45 AM.

Here's Techcrunch's take on it.

3. And last but not least, putting the nail in the coffin, here comes Madonna signing a deal with a promotion company, not a record label! A $120 million deal that is, with LiveNation, to distribute three studio albums, promote concert tours, sell merchandise and license Madonna’s name.

Here's the story, from the Wall Street Journal: Deal Journal - : Live Nation's Breathless Madonna Deal, and from Techcrunch: And The Walls Came Tumbling Down: Madonna Dumps Record Industry.

It's definitely getting hip to dump your record label! Who's next? Let's just say that the pioneers aren't small local acts...

But if I remember correctly, the first major platinum-selling music act to go direct and online-only, was legendary rap combo Public Enemy, in 1999, with their There's A Poison Goin' On LP. The group's leader, Chuck D, toured the US, urging artists to bypass the established record-label power structure through the use of technology.

Long live trailblazers and paying music fans!

Bonus: video for PE's new single

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