[lbo-talk] Wall Street Journal thinks Radiohead will rip off fans

[Sean Andrews]

[suddenly the WSJ is really concerned that people who buy music might
be getting ripped off.  This evidently only becomes a question when
you are paying the artists directly for the music rather than when you
are subsidizing the corporate overhead.  One would think that the WSJ
would respect this rare engagement with pure market forces, but
surprisingly, they are suddenly very candid with how little it takes
to actually produce a CD, and when they slice it down, they find that
the portion usually reserved for the band is usually a fairly paltry
amount, even when there is digital distribution, after the record
company takes their cut.  This, the wise sages at the WSJ, is what the
artists are actually entitled to and if fans pay more than this, then
they are overpaying. And so, in the end, they recommend price setting
to prevent the exploitation of consumers.  Can you say corporate
shills? -s]


http://online.wsj.com/article/SB119136863867147050.html?mod=googlenews_wsj

What Price a Download?
Given the Option to Name
Their Own Price for Album,
Radiohead Fans Overspend
October 3, 2007; Page C14

Will Radiohead leave fans high and dry? It may sound preposterous to
accuse the British rockers of gouging their followers. The band is
letting them decide how much to pay for a downloaded version of new
album "In Rainbows." But early indications suggest that Radiohead's
loyal followers are paying too much for the band's seventh disc.

According to a poll conducted by United Kingdom music magazine NME,
the average fan appears to be willing to pay $10 for a digital copy.
Now, that may not sound like a blow out. It's the going price for most
records on Apple's iTunes. And that price, in turn, looks to be about
right for a digitally downloaded album.

Consider the economics of the average CD. It retails for about $16 and
costs about $6.40 to manufacture, distribute and sell in a store,
research outfit Almighty Institute of Music Retail says. These costs
are essentially zero when music is sold online. That's why iTunes can
charge roughly $10 for a downloaded album.

Radiohead's fitter, happier approach slices out even more cost. The
band pulled the ripcord on EMI, so it doesn't have to share profits or
help pay the label's overhead. As a well-known band it's also able to
take the knives out on marketing and promotion costs, cutting these by
as much as two-thirds. Subtract these expenses and Radiohead may be
able to distribute an album for as little as $3.40 a copy.

Now, fans may be delighted to pay $10 because they think the album is
so good and Radiohead deserves the extra cash. But Radiohead prides
itself on its anticorporate and anti-materialistic ethos. To avoid
letting down fans, it might be more productive to adopt a no-surprises
policy and fix a simple, fair charge for its record.