Free of their contract with EMI, Radiohead released their album In Rainbows as a pay-what-you-want download in the fall of 2007. While the majority of fans decided to download the album for free, In Rainbows generated more money for the band than their previous album with their record label, Hail To The Thief. And that was even before it was eventually released as a physical album and subsequently taken offline as a pay-what-you-want download.
Although Radiohead wasn’t the first pioneer of pay-what-you-want downloads, the prominent band did seem to spur a movement for musicians all over the globe to attempt to make money based almost solely on the generosity of their listeners. Apparently, the success wasn’t enough for Radiohead, however, as the band decided to release their follow-up album, The King of Limbs, for a set price of $9 for the MP3 download.
With digital sales surpassing physical album purchases for the first time ever in 2011, and the SXSW festival in Austin, Texas wrapping up, Digital Trends reached out to some forward-thinking music professionals about where the industry is headed in 2012. Can pay-what-you-want downloads save an industry many say is failing due to out-of-date business practices?
Not always a yellow brick road
The pay-what-you-want model as proven to be an excellent way to raise money for charity through the gaming project Humble Bundle, and the idea of people deciding how much to contribute to a product is becoming something so trendy even a Williamsburg restaurant has tried adopting the system. But, as Radiohead’s shift in distribution may have signaled, banking on the goodwill of consumers may not be a sustainable practice for artists or record labels.
Several young entrepreneurs have attempted to provide independent music directly to fans, however, not all have survived. Patronism, for example, launched last year to some acclaim, providing a subscription based model where fans connect through an online portal with their favorite band, paying on average $10 a month for exclusive material. Currently though, the service is still in beta and hosts a seemingly small base of musicians who are relatively unknown.
The music aficionado website Daytrotter recently changed from a free-download system that was supported by advertisements, to a private and ad-free subscription model starting at $2 per month. According to a statement on the organization’s website, the costs of recording and distributing music for free could not be sustained by hosting ads. Whether or not the new subscription model will be enough for Daytrotter to continue recording and releasing music remains to be seen. Site founder Sean Moeller declined to talk about the financial success or failure of the new subscription program when reached for comment.
San-Francisco-based pay-what-you-want music service Kroogi (translated means “circles”) boasts over five hundred artists under its creative umbrella with a focus in Russia, and is looking to expand into South America and beyond. But according to the site’s founder Miro Sarbaev, only 20 percent of the music downloaded on the site is paid for by customers, and the average given to an album is only $3. Plus, 15 percent of any payments made to an artist through the website go to Kroogi for hosting the service.
Sarbaev says his startup hasn’t broke even yet, but that the company is “getting there,” and notes that it’s the musicians who make the extra effort to engage with listeners who see higher contributions.