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Radio Head

HBR Case Study Presentation

Heather Bye

on 23 February 2015

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Transcript of Radio Head

Radiohead: Music At Your Own Price
On October 10, 2007 Radiohead released their seventh album titled "In Rainbows"
The album could be downloaded on their website for a "donation"
Why would any band release an album for free?

Radiohead was formed in 1985 when five students met at Abingdon School in England
They found success in the song "Creep" from their debut album, Pablo Honey
Radiohead released five more albums, toured, and developed a dedicated fan base
Established a reputation for experimenting with unconventional album release tactics
Industry Changes:
After six records, Radiohead fulfilled their recording contract with EMI
In 2005, Radiohead started work on their seventh album
Industry was transitioning to digit downloads and retail stores saw sales declining rapidly
New digital retailers - iTunes
How could Radiohead strategically use these changes to their advantage?
Fan Loyalty
Radiohead knew the following:
They had a huge dedicated fan base
For every record with EMI, they earned $2.25
Signing a new record deal and selling digitally (iTunes) reduced their profit to $1.50 per record
Producing a record without a label could give them ~$5 per record sold as a digit download
Their music was not for sale on iTunes, yet....
Music was being pirated and leaked

Radiohead wanted listeners to get the record as a whole, with no leaks, for a fair price. They did not want to sign another record deal for many reasons.
In Rainbows - Release Details
September 30, 2007 - Radiohead announced their seventh album would be available for download on October 10th
The download would be available in its entirety only, formatted with160 kpb audio quality (iTunes is only 128), and no digital rights management
Radiohead produced the record with longtime manager, Nigel Godrich, and previous publishing partner Warner/Chappell
Consumers who wished to pay for the download (setting their own price) paid a 90 cent service fee
A deluxe box set was also sold on the website for $80
So you are all wondering.....
How much did they make?
and the winner is..... The Fans!
Radiohead didn't release digitally for "donations" to make money from their fans
Business and Marketing strategies used:
Increase fan loyalty
Industry statement: Not in the business for money
Prepare for digital download shift
Bring fans to their website
"Leak" it as an album
Free Press
In Rainbows was downloaded 1.2 million times
The album was released as a physical CD in December 2007 and on iTunes a short time after that
The album still sold millions after the free download
Rumor has it.....
"Radiohead made more money before In Rainbows was physically released than they made in total on the previous album Hail To the Thief"
"....... approximately 1.2 million people downloaded the album from the site and that the average price paid per album was $8. We heard that figure too, but also heard that a later, more accurate average was $5, which would lower the figure to $6 million. Even if 50% of those people didn't pay, they still earned an estimated $3 million."
"Still, the three million in total sales — 100,000 of which came from the $80 box sets — is a hugely-successful number considering the album was both given away for free."
"In Rainbows was the first Radiohead album available on iTunes, where it went in at #1 in January, selling 30,000 in its first week."
"In October 2008, the band's publisher Warner Chappell Music Publishing revealed that the album had sold three million copies (including digital and physical format sales) since the album's physical release in January."
A conservative approach on the data above; Radiohead made the following on In Rainbows:

3 Million - Donated
1 Million - Box Sets Sold on their personal website
13 Million - iTunes/Retail sales

NET...17 Million???
Do you think Radiohead was successful?
Full transcript