Smart Media, free Music, dumb Bloggers and captive Fans

I picked up the point that Radiohead will not be delving again soon into the world of FreeConomics from two blogs I follow. Sadly the blogs misunderstand the game theory here. When Radiohead say that:

"I think it was a one-off response to a particular situation," Yorke said of the band's downloading policy for the album "In Rainbows."

"It was one of those things where we were in the position of everyone asking us what we were going to do," he said. "I don't think it would have the same significance now anyway, if we chose to give something away again. It was a moment in time."

...they are not saying that it worked wonders and the wondered why they shouldn't pursue FreeConomics from here on, as all the Web 2.0 orthodoxists would like. No, they are saying that it is a less economically advantageous outcome than flogging the stuff for cash, even with all the piracy. But my blogfriends somehow misinterpreted these signals:

Sarah Lacy:

Others are reporting today the news that Thom Yorke of Radiohead is (kinda) backtracking on the free release thing (vaguely). Here's a post on Mashable that says what artists should do. HINT: charge nothing or very little. I agree. I can't think of the last time I paid for music and yet -- magically! -- I have more of it at my fingertips than ever before.

But be forewarned, if we keep going down this free path, ads and product placements are going to increasingly dominate music and videos. Really-- wasn't that what Lip Gloss was all about anyway???

Mashable:

There’s a number of opinions on how bands should distribute (and profit from) their music; here’s mine. A band should:

a) charge very little or even nothing for the actual digital copies of their music, especially if it’s quality is lossy (MP3). Digital copies of music can be infinitely copied at zero cost, and therefore their actual value is inherently very small.

b) make sure to offer a variety of choices for purchasing their music, including some added value - CDs, LPs, limited editions, signatures, t-shirts, stickers, concert tickets, vouchers - for the more expensive versions.

c) cut out any middlemen which don’t really provide value to the customer.

No Web 2.0 devotee could disagree with Sarah. Except that economically it is cra.....won't work. As I wrote earlier today in my post on Lessignomics, there is a total contradiction in terms in the belief system of most Journo 2.0's when it comes to the actual economics of Web 2.0. How do you expect to have near-free music, and then NOT have your music and videos dominated by placement ads and so on?. Something (or someone) as they say, has gotta give. Money. Content creators in the real world find no-one is willing to give them a free lunch while you are eating theirs!

And Mashable's advice is very right-on and sensible to those living in Web 2-land, but those stupid musos by and large aren't buying it and aren't doing it - because it doesn't f*c...it is less beneficial than you may suppose unless you already have a large customer base to mitigate the inherent supply chain costs of shifting physical product....(maybe musicians should be advising bloggers to sell T shirts and limited edition collections of their finest posts to make up for the free content deficit )

This is not to say that the Labels are not evil money grubbing corporate capitalists etc etc - they are, they are - its their job after all. But Free means Free, so it also means the poor old Muso doesn't see the $1 or so per CD she currently makes.

(Update - now this is interesting - ASCAP looks like it has won an agreement of its own, without the Labels:

The United States District Court for the Southern District of New York today made public a decision in the proceeding to determine reasonable license fees to be paid to the American Society of Composers, Authors and Publishers (ASCAP) by AOL (Time Warner Inc., NYSE: TWX), RealNetworks Inc. (Nasdaq: RNWK) and Yahoo! Inc. (Nasdaq: YHOO) for their online performance of musical works.

ASCAP represents more than 320,000 songwriter, composer and music publisher members. It does not represent, and this decision has no relation to, the rights owned by record companies)

In fact the only blog comment I saw even vaguely "following the money" here on all this was from The Register:

Despite investing £20,000 in new servers to cope with the demand for the digital preview, Radiohead benefited from the "honesty box" release in several ways. There's the one I've mentioned: the bet that people would pay twice - once for the preview, and again for the physical release.

There was an instant cash-flow dividend, too. There was no waiting around for a royalty statement from the Accounting Department of the Mega Label. And best of all, the renewed interest from overseas - particularly the United States - gave the band far higher royalties than they'd gain from a physical release with a major label.

So although fewer fans put less money into the honesty box than many people claimed, it didn't really matter. Enough had done so to recoup the one-off costs - and the album was available as a sampler for weeks.

But one-offs, by definition, are not to be repeated. Neither Trent Reznor nor Coldplay have generated anything quite like the publicity that In Rainbows digital preview enjoyed.

Without the Freetards, the publicity coup could never have happened. Even the most inventive major label marketing genius with the biggest budget would have struggled to get such an indifferent "product" to the top of the charts on both sides of the Atlantic.

And the real money, you'll note, is in the CD, and getting fans to pay twice. Which looks a lot like the Old Business Model to me. ®

Now despite the Register's somewhat disrespectful tone (which we would never condone, of course), this analysis actually does explain fairly precisely why Radiohead will go back to the Olde Ways. Until they need to pump up da volume (of sales) again sometime