Radiohead's Game-Changing 2007 Experiment
In 2007, Radiohead's experiment with the distribution strategy of their latest album changed how the music industry approached album released forever
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Every week, I write anecdotes and learnings from a book I recently picked up- Tarzan Economics by Will Page, which guides industries via eight principles to pivot through disruption.
You can check out one of the previous stories on how Starbucks is effectively America’s largest radio station, right here.
However, today I’ll be talking about Radiohead and the story of how their 2007 album- ‘In Rainbows’ their 7th studio album at the time- disrupted how the music publishing business works and paved the way for the rise of digital streaming in the years to come
One of the most successful British rock bands to come out of the 20th century, Radiohead has:
💽 Sold more than 30 million albums
🏆 Won 6 Grammy awards across multiple categories,
👨🏻🎓 Been inducted into the Rock and Roll Hall of Fame,
🙌🏻 Built a legacy for experimentation unlike any other Rock Band
Before I talk about their watershed moment in 2007, let’s roll it back a bit and trace how they started out in the town of Oxford, UK 👇🏻
Founded in 1985, the band members- Thom Yorke, brothers Jonny Greenwood and Colin Greenwood, Ed O'Brien, and Philip Selway met at their local school in Oxfordshire.
This group along with the 2 members of its management team- Chris Hufford and Bryce Edge have remained loyal to the band for more than 30 years and in 1991, signed onto the London based EMI Records, a fruitful partnership that saw them release 6 studio albums and clock album sales north of 30 million copies.
However, that all changed in 2007 when the band found itself in what music parlance terms ‘Limbo Land’.
What does it mean? 🤔
Basically, the band had fulfilled its contractual obligation with EMI Records and was free to break ties with the record label and go do it all alone as independent artists.
The Catch?
EMI Records would retain ownership of their first 6 albums and Radiohead would lose control over all of their previous work recorded.
While Radiohead was contemplating this dilemma, it’s important for us to note the times they were living in.
It was 2007, online music sharing website- Napster had just launched a few years back, CD Sales- which made up 90% of record label revenue were falling off a cliff, piracy was ever-rising and iTunes had recently launched its unpopular model of enabling users to download songs for 99 cents.
The situation was so bad, Page writes in his book that an executive at a record label once joked with his team:
“The Music Industry has AIDS, and hopefully we’ll die last”
Bored of sticking to the ‘Conveyer Belt’ process of recording and releasing an album, Radiohead decided to switch things up.
They quit their agreement with EMI Records, beefed up their management team to include experts in accounting, legal, and publishing divisions, and went head-first into tackling the new digital era of music- a move that would be heralded for years to come.
But what did they do exactly? Let’s get into it 👇🏻
On 1 October 2007, Radiohead announced to the world that their highly anticipated new album, ‘In Rainbows’ would be made available, effectively for free, through a voluntary pay-what-you-want model.
This would be the first step of a multiphase release strategy that would be unveiled over the next 3 months but at that time, nothing else mattered.
An album being released by a Grammy-winning platinum rock band for free? 🤯
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Naturally, a global meltdown in the music industry followed.
Radiohead was avoiding the traditional staggered promotional cycle (where albums would be released in different markets at different times), ensuring that fans across the internet would have access to the music at the same time, thereby preventing leaks on piracy sites, which had plagued many previous big-name releases.
But what was the logic behind this? Why would a band give away its work potentially worth millions of dollars, for free?
In hindsight, it was a masterstroke in marketing 🙇♂️
How exactly?
The important thing to note here- is the chronology of events following the announcement on 1st October 2007 🗓
Fans could visit the band’s own website and pre-order the album with the option of paying a voluntary price.
Speaking on the pricing strategy, manager Bryce said:
What was critical to the tip-jar process was the 'thinking time between the announcement and the launch. There were something like 7 days for fans - real fans - to make up their mind as to how much they were willing to donate.
The fans that came in early were donating large amounts - hundreds of pounds - so much so that we decided to put a cap on the tip jar and place a ceiling of £99 as the maximum amount fans could contribute.
On the morning of 10th October 2007, Radiohead made available on their website a ZIP file containing the album's ten tracks encoded in MP3 format for their fans to download.
This was the 1st stage, in what would turn out to be a 5️⃣ stage process
The format matters, as it wasn't locked by Digital Rights Management (DRM), which the iTunes store wrapped around their files to make them non-transferable - making the songs of ‘In Rainbows’ transferable MP3 files.
What was next?
A £40 limited box set edition containing the new album on CD and heavyweight double vinyl, along with a 2nd enhanced CD with digital photographs and artwork.
Bryce explained how the economics of the made to order album was figured out:
Having our own merchandise company, WASTE was critical to the whole project. It gave us options. We produced 100,000 box sets and sold them all directly.
What was remarkable was getting them to distribution warehouses around the world in the months prior to its release, to ensure that when we flicked the switch everyone would receive Disc Box on the same day- yet we still managed to keep all this logistical work a secret from the media and fans alike!
These two ‘do-it-alone’ options of the tip jar and made-to-order disc box also avoided the music industry's old payment system, which can take months to move money from consumer to creator.
By adopting modern transactional models of processing payments directly, the band saw all their money within 72 hours - meaning they had cashed in their chips 💰 long before the 3rd stage of this relay race commenced.
So what was stage 3️⃣ ?
The traditional CD release 📀 of the album hit retail stores at the beginning of 2008 and debuted in the UK and US charts at #1- becoming only the 10th independently distributed album to ever top the charts in America 🇺🇸
3 days later, stage 4️⃣ was launched
Radiohead’s album was released on iTunes 🎵
Apple wouldn't allow artists to sell an album as a 'hard bundle', but since the full album of ‘In Rainbows’ had already been available as a digital download, there was less for the band to lose by putting it on iTunes.
In its debut week on iTunes, In Rainbows scaled Apple's album charts in a similar fashion to the CD sales earlier that month.
Half a year later, the rest of the band's catalog would finally join it on the digital shelf.
So what was the end result of it all?
A year after the launch of In Rainbows, it was reported that the album had sold 3 million copies, over half of which were in CD format, in its first year more than either of their previous two albums.
Even the vinyl edition was the bestselling vinyl album of 2008 💽
Radiohead had forever changed how music would be distributed going forward and paved the way for the rise of digital streaming platforms, boosted by the rising adoption of the internet and smartphones 📲
So what was the last phase? Piracy 🏴☠️
This was something that Radiohead did not anticipate. Having given away the album for free, little did they know that there would be a staggering 2.3 Million illegal downloads, with BitTorrent network recording 400,000 of them on the release day of 10th October itself.
Brian Message- a part of the ‘Inner Circle of Radiohead’s management team reflected on the impact of the album on the band:
We were worried about the press reaction as we hadn't given then the record up front. Our fears about them dissing the record were misplaced they loved it.
We were just f**king lucky.
The real return was seeing the band play out to 20,000 in San Francisco before In Rainbows and then 60,000 afterwards.'
Recapping the 5-Stage process of their album release-
1️⃣ Release entire album for free on their website
2️⃣ Launch a £40 limited edition Vinyl set which becomes the best selling one of 2008
3️⃣ Make the album available on the traditional CD Model, instantly topping charts
4️⃣ Drop it on iTunes and top the download charts
5️⃣ Top the piracy numbers in music
How about this for disrupting an industry right?
Check out this fan video of them performing their hit single ‘Karma Police’ in 2008 at the San Fransisco gig 👇🏻
Hopefully, this is interesting enough for you to dig into the band further, have a good one and we’ll talk tomorrow 👋🏻
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Thanks again for distilling down the key points of a chapter called 'Make or Buy' and appreciation to the management team who helped draft the work. That chapter title captures a question we all have to ask ourselves today: when do we go it alone and when do we cede control to an intermediary. What means so much to me about the Radiohead story is that it didn't stop there - look what the band have been doing on TikTok, Public Library. The Smile (side project) and Re-Releases ...the band never stop giving us lessons in make or buy that we can draw from in our day-to-day lives. True innovators, pure and simple.