pampelmoose Dave Allen of Gang of Four’s Music and Media Blog

I wrote the opinion piece below for our local paper, The Oregonian, but it didn’t run so I thought I’d expand on it here so that you, the infinitely wise and more-intelligent-than-me reader, can leave your comments. I wrote this because it dawned on me that as the CD disappears so too does that CD retailer unless they come up with a solution….anyway, read on.

So Radiohead, arguably the world’s biggest unsigned rock band, deliver to the recording industry what I would consider the worst possible news - the band is releasing its new album itself, on its own terms without a record label, no strings attached. That they chose to do this and send this message on the first day of the final quarter of the year is compelling. Traditionally the music business reaps its rewards in sales terms as we head into the holiday period. They now enter this critical period hobbled by the fact that they will not have a CD at retail outlets from Radiohead, who would have certainly created a huge sales gain for the industry, and by the fact that they have just been given a not-so-subtle reminder that music fans of all stripes are very happy to purchase their music online. And as if to rub salt into a very raw wound Radiohead has the audacity to allow fans to name their own price when it comes to buying the album as a download; you can download the album for free if you wish.

There is a very clear lesson here for the recording industry; they must give music consumers what they want. Radiohead is offering a very attractive package - send us £40.00 ($81.00) and we ship to you anywhere in the world at no extra cost a ‘Discbox’ that contains a vinyl album, limited edition artwork in the form of a book and the CD plus bonus tracks. Upon ordering the package you will then be able to download the album for free on October 10th. The ‘value’ that the consumer places on these options may determine how they replace the devaluing of music that has taken place in the last few years. Do Radiohead fans ‘value’ the band’s music as an art form high enough that they will pay for either the package or pay for the download even though they can get the music files for free? Judging by the comments on this subject that I have read on the New York Times blog, The Lede, (as of this writing there are 254 comments), the vast majority of those readers say they are paying for the music files. And the band’s guitarist, Jonny Greenwood posted on the Radiohead blog Monday night that the company handling the online sales had been overwhelmed with orders and says “it’s getting busy in there, busier than they expected.” No doubt. And by the way it is also worth noting that the album will not be available through Apple’s iTunes service.

This story will of course continue to unfold. On October 2nd The Los Angeles Times wrote in an editorial - “The results of this experiment will be hard to judge unless the band reveals how many albums it sells and what people paid. It should share that information because it could be vital to the health of the music industry.” That goes without saying and I for one hope that the band do reveal the numbers. Meanwhile the recording industry has to come to terms with yet another blow to its credibility. The industry must take the bull by the horns and begin to be more proactive; recently they had a good try by getting Kanye West and 50 Cent to face off against each other in a race to outsell each other which created good press and decent sales figures the first week, but sales soon dropped off the following week.

The music buying public has clearly reached a tipping point when it comes to buying music. Music sales have declined year over year that much is true, yet the reasons for the decline are not so easy to define. The Recording Industry Association of America, the RIAA, would have us believe that illegal file sharing has caused the most harm but not so fast says Koleman Strumpf, Professor of Business Economics at the University of Kansas Business School who co-authored a paper entitled “The Effect of Filesharing on Record Sales.” Two points in his paper stood out for me; he says album sales fell 18 percent between 2000 and 2006, after accounting for paid digital downloads from online stores like iTunes. While these numbers are not good, other industries have experienced similar downturns. For example, new car sales are currently down 22 percent for U.S. automakers. And he goes on to say the current situation (the sales slump) closely mirrors the post-disco bust in the early 1980s. Specifically, real revenues fell by the same percentage during the years 1979 to 1985 and 1999 to 2006. He then goes on to point out that the record business always recovered from these slumps by finding new talent. This time around, he argues, the labels panicked and laid off thousands of staff thus self-inflicting more damage to an industry already in disarray.

Clearly the recording industry faces an uphill battle if it intends to turn things around as the music buying public has not been impressed with how they’ve gone about things lately - let’s not get into the fact that they are still suing their customers. Recently I was fascinated to read the letters page of the New York Times magazine the week after a cover story that they ran about Rick Rubin the famed music producer and now head of Columbia Records. The article informative and laid out Rubin’s plans for turning around Columbia which is part of the Sony Corporation. The letters were interesting to me in that a) people felt compelled to write in, and b) they were all negative about Rubin’s plans - here’s one such comment: “The suggestion that artists give record companies up to 50 percent of their touring and merchandising revenue — revenue streams in which record companies play no significant part — shows the degree to which record companies have lost the plot. The functions of production and distribution that record companies traditionally performed have been eclipsed by software and the Internet. Yet, curiously, though Rick Rubin recognizes this, he continues to play on as the ship sinks.” - Jacob Tummon

If the general public thinks that “record companies have lost the plot” then something is rotten in Denmark, to paraphrase the Bard. Maybe the public and Radiohead knows best. Who is listening?