Radiohead and the Rise of Free Music

The Internet has changed many aspects of our lives, including how we enjoy music. Music consumers now download billions of dollars worth of music every year and iTunes has become the third largest music retailer in the United States. The Internet has given consumers more choices than ever, but it has also given musicians more choices as well. They are no longer slaves to the will of the big record companies.

Radiohead is a great example of a band that has rejected the traditional record label to remain independent. Like Paul McCartney, Madona, and others, Radiohead has preferred to retain control of their music. At the same time, they have open up their music making it more accessible for their fans. In a rare move for a major band, Radiohead has made their album downloadable for whatever price their fans want to pay. Fans can pay anywhere from $212 to nothing at all. Regardless of what they pay, they can download all ten tracks of Radiohead's "In Rainbows."

Surprisingly, the band has made some money with this scheme. They have not released official sales figures, but independent studies seem to indicate that they are making a little bit more per album than they would with a traditional CD. Although 60% of downloaders have paid nothing for the music, those who have paid have paid an average of about $6. That means that the band is averaging about $2.26 per record. That may not sound like a lot, but that is a little bit more than they would make with a traditional CD. With a major record, they would stand to make about 15% of the net profits. Since they get to keep 100% of their record sales and have no distribution costs, $2.26 is working out nicely.