A decade after the beginning of the dot-com boom, and six years after the bust, not every product or service has moved over to being sold via the Internet.
Although companies such as Amazon and Netflix have largely altered the way we shop and rent movies, other companies are either unwilling or unable to adapt to the complexities and realities of the digital age.
One reason for this is that it can be difficult to determine what a customer is willing to pay for something sold online. Often, when a business model built around online sales is presented to a customer who is neutral (i.e., he or she does not care, at all, whether this venture succeeds or fails) the knee-jerk response that comes back is “Screw that — I’m not paying for that.”
An innovative solution to this challenge recently emerged from the world of music. This is perhaps not surprising, since the emergence in the late ’90s of peer-to-peer Web portals that allowed songs to be downloaded (illegally) dragged the recording industry into the 21st century kicking and screaming.
Since then, this industry has seen sales decline at a consistent rate, and innovation is now a requirement for survival.
Services that facilitate purchased downloads have proven to be a growing market, but the issue of how much consumers pay and what they get for their money has fluctuated.
Often, purchased downloads are tagged with digital rights management technology (DRM), which is technology that protects a piece of intellectual digital property such as a music file. With DRM, copyrighted material downloaded from the Web might be restricted so that it cannot be freely distributed.
The recording industry has struggled with whether inserting such technology in purchased downloads restricts its use to such an extent that it holds no value for the customer, how to sell downloads (with or without such technology) and at what price and even whether to keep manufacturing CDs at all.
The English rock band Radiohead, in arranging the release of its new album, has come up with a way to answer all these questions at once.
The hugely popular band has been blogging about the creation of this album for more than two years. It’s been more than four years since its last release, and in August, Radiohead announced that the new album would not be out this year. To say it had become one of the most anticipated albums in music would not be hyperbolic.
Then, early in October came the sudden announcement that the album, “In Rainbows,” would be out in 10 days — initially only as a DRM-free download the band sold independently of any record company.
The biggest twist is that fans are allowed to pay whatever they want for the tracks. They can even pay nothing. The album will then be released in December as a deluxe package, including a vinyl copy of the album, an enhanced CD with extra songs and artwork. This package costs £40 (about $80) and includes access to the download.
Finally, the album will be released as a traditional CD later this year or early next year.
Part of the reason the recording industry is tanking is that albums now invariably leak online in advance of their release, with fans downloading free copies before the album hits stores. Then, the album comes out to lackluster sales.
Many artists are now creating deluxe editions of their albums that come out months after the basic version’s initial release to give their product new life after sales have faded.
This move by Radiohead flips the model. The album first comes out as a download of its own design, then as a deluxe edition, making it a big-ticket item just in time for the holiday season, then eventually comes out as a standard CD, allowing for easy purchase by people who become interested in years to come.
Putting the cost of the download in the hands of the consumer makes this release, as The New York Times put it, “as much an experiment in consumer behavior and the socially acceptable cost of art as it is a way to distribute records.” When this was announced, one headline on Google News screamed that it would be “a watershed moment for music.”
If you ask me, it’s a watershed moment for the Internet in general. The idea it presents to companies is, if you can’t decide how to present your product, make it all things to all people, and if you don’t know what consumers will pay for it to be delivered to them online, let them tell you.
– Daniel Margolis, email@example.com