Free Agents Radiohead and Reznor – Things Falling Apart?

The last couple weeks have been real interesting with Radiohead announcing that they would be self-releasing their latest album, In Rainbows, and Trent Reznor telling people to steal his music and that he wants out of his contract. Finally the Radiohead album is out this morning and so is Reznor, he’s free of his contract with Interscope. So, has there been any fallout yet? You bet there has.

According to Billboard thousands have been downloading the new Radiohead album at an estimated voluntary price of £5 GBP. That’s right, voluntary price. Radiohead left it up to the fans to decide how much they would pay for a digital version of the album. According to Yorke, “The wonderful [thing] is that the consumer can decide how much a download is worth,” he added. “I’m not sure how much just a digital download is worth. I’m not sure 79p – the iTunes price – is the right price.”

This has prompted the following response from Guy Hands, from Terra Firma, the group that purchased EMI, “”a wake-up call which we should all welcome and respond to with creativity and energy.” He goes on to ask, “Why should [superstar acts] subsidize their label’s new talent roster – or for that matter their record company’s excessive expenditures and advances?”

Trent Reznor has said if could break free of his deal he would sell his CDs for as little as $4 USD. Now we wait and see what Trent is going to do. It is unsure when Trent will release a new album, especially since Year Zero is still fairly new, but Billboard says, “Billboard understands Reznor, in keeping with past practices, will not decide how to actually release, market and promote the next album until the music is finished.”

What does this mean for bands like NIN and Radiohead? It might mean a drop in sales, but it means a much higher profit margin, and less dependence on touring and merchandise sales to make a living. What a lot of fans don’t know is that while many bands get fronted thousands to millions to record an album, most only make 10-15% of 90% of the retail sales. That advance money gets paid back before they can make any money, and it gets paid back based on those percentages, not overall sales. So they get closer to 100% of the profits, but it also means that they incur the costs of recording, marketing, promoting and manufacturing and anything else the label would pay for.

What does this mean for the labels? If more big bands follow suit, then they won’t have those large album sales dollars to fund their infrastructure, and won’t be able to support signing new artist that currently lose them money. It could mean labels take even less chances with breaking new artists than they do now because they won’t have the money to invest.

What’s this mean for the rest of us? Who knows, but it’s definitely going to be a very exciting time to be in the music industry as things get further shaken up.