Will Radiohead’s digital strategy save the music industry?

Radiohead made a surprise announcement this week that its new album “The King of Limbs” will be available for digital download on its website from Saturday 19 February.

A message posted on the Oxford band’s website detailed how fans can purchase the eighth studio album, again produced and self-released independently of any major record label and with no corresponding iTunes launch. The band has called The King of Limbs the “world’s first newspaper album” (perhaps paying homage to a noticeable victim of the Internet Age), and the release is characteristically experimental in strategy and pricing.

No tracklisting or information of what’s on the album has been released as yet.

The album will be available in two formats, digital only and a physical edition now available for presale to be shipped on 9 May that will come packaged with plenty of collector’s bits and pieces. Radiohead has steered away from its controversial honesty box, pay-what-you-like experiment with their previous album “In Rainbows” which was only released digitally on its website and reluctantly a few months later on iTunes and CD (through a set of once-off deals).

The digital download costs £6 for 320kbps constant bitrate MP3 or £9 for full CD quality uncompressed WAV. The physical “newspaper album” edition costs £30 for two clear 10″ vinyl records in a purpose-built record sleeve, a CD, “many large sheets of newspaper artwork, 625 tiny pieces of artwork and a full-colour piece of oxo-degradable plastic to hold it all together”, along with the above MP3 files, or £33 for the same package with the WAV files. One purchaser of each edition, chosen at random, will also get a signed two-track 12-inch vinyl record.

Radiohead have never been shy of technology or experimenting digitally, and the importance of In Rainbows and The King of Limbs lies in the groundbreaking ways in which the albums are sold. The band has, for the first time, copyright ownership of its songs, and get to keep all the raised revenue themselves.

The band has made sensible assumptions about the release, which should prove to be a success for them:

• Digital music can be sold cheaply when you have no label overheads
• People may pay more for higher bitrate and better quality
• Physical buyers are likely to be the superfans and collectors, who will happily pay a premium for more tactile ways to experience the work.

The “In Rainbows” experiment turned out to be an overall success for Radiohead, but the band’s guitarist Ed O’Brien explained in a retrospective interview that online-only could not reach enough people, and they realised after In Rainbows that there was still a need for physical album copies.

“At one stage, it was put that it would be a digital release only, no physical release at all, a real statement…” he said. “But we realised that … everybody likes to get their music in a certain way and they don’t like to go off-route with it. You have to make your music available to lots of people in different ways, make it available to people how they want to consume it.”

Radiohead’s frontman Thom Yorke explained to Time magazine before the In Rainbows album came out in 2007 that, “Yes, it probably would give us some perverse pleasure to say ‘Fuck you’ to this decaying business model,” meaning the traditional music industry, which looked on in shock as one of the world’s biggest rock bands opted out of the record label system and offered fans the chance to pay whatever they chose to download new music. Global revenues in recorded music in 2007 were US$19.4bn.

Four years down the line, the music industry’s problems have only gotten worse, and Radiohead is keeping its distance. The FT reports that, in 2009, global recorded music revenues dropped to $17bn and the end of May 2010 was the worst week for album sales in the US since records began, in 1994.

Lead singer Yorke warned apocalyptically in July 2010 of it being “simply a matter of time – months rather than years – before the music business establishment completely folds”. His advice to young bands was, “Don’t tie yourself to the sinking ship, because believe me, it’s sinking.”

The Financial Times reports that the major record labels (Universal Music Group, Sony BMG, Warner Music Group and EMI), who know how to drive hits, spend about 30 per cent of their total revenue discovering, developing and promoting talent. Now that revenues from recorded music are on the slide, the need for chart hits to keep the turnover flowing means acts signed to major labels suffer a harsh failure rate: it is estimated that as many as nine in 10 do not turn a profit.

Labels are about short term profit, not long term artistic development.

It is still early days, but fans don’t buy albums the way they used to, and it is too easy to get hold of free music downloads lying all over the internet and other networks. It will be a long hard slog, but if bands want to make it through the digital revolution, they are going to have to find new ways to make money out of it. Radiohead’s pioneering digital strategy may just provide the necessary business model to do just that.