Latitude

This post is part of 3-part series on emergent device-content experiences:

1. Follow Me Wherever I Go: The Next Level in Shifted Media [problems & solutions] [opportunities]

2. See Me, Hear Me, Touch Me: Growing Expectations for Immersive Content Experiences [problems & solutions] [opportunities]
3. Devices in Disguise: Ubiquitous Connectivity Births Multitasking Gadgetry [problems & solutions] [opportunities]

In yesterday’s post, we discussed the user desires and emergent solutions around “media-shifting.” Today, we’re extending it into the Opportunity Space.

As devices get easier to use with more varied functionality, the desire to shift content will move from an occasional wish to an everyday expectation.

Companies riding the wave should consider the following:

1. Leverage audio to expand connected spaces.

   Consumers will increasingly want to continue their media interactions even when they can’t sit in front of a screen.

   • Ford leads the way in keeping consumers auto-connected by offering open API app integration to its voice-activated Sync, letting users seamlessly engage with music (Pandora), news (Stitcher), and other media services when they get in the car.
   • Tunebug’s Shake makes physical surfaces carry sound, turning otherwise non-media friendly activities (e.g., biking, skateboarding, etc.) safe by converting helmets into surround-sound speakers.
   • Text-audio conversion technologies proliferate:
     • Bluetrek headset
     • Dragon Dictate and Search app

2. Create smart (and safe) interruptions.

   As users expect content to move with them, they will increasingly want it to happen “smartly.” This means devices that are “conscious” of where they are and what they are doing–automatically reshaping not only content make-up, but also its format and delivery, to fit.

   • Zoomsafer’s Blackberry app detects when the vehicle is moving more than 15mph and automatically responds to calls

3. Offer multiple modes of the same content.

   Content providers should consider offering a range of format types but with simplified and single purchase/access points – with everything from visually-rich formats (for TV time), to audio-enabled (when in the car).

   • The Digital Entertainment Content Ecosystem (DECE) is a cross-industry initiative which enables consumers to purchase digital video content from a choice of online retailers and play it on a variety of devices/platforms.

4. Turn the mobile device into a central (and social) hub.

   Place-shifting isn’t just about “me” anymore; it’s increasingly about broadcasting content to friends and family. Integrate sharing functionality wherever possible.

   • MoSoNex allows mobile users to broadcast pictures and live video to a private network of TV and phone viewers worldwide.

Latitude is a research-driven consultancy for technology and media companies. We work with clients to discover and develop opportunities for next-generation content, software, and communications technologies through a combination of web-based applications and innovative research methods. Email ischulte@latd.com to learn more about working with Latitude.

Header image courtesy of edan’s flickr, (cc) some rights reserved.

Last week, we introduced a series that will explicate 3 high-level takeaways (and future projections about them) from CES.

1. Follow Me Wherever I Go: The Next Level in Shifted Media [problems & solutions] [opportunities]

2. See Me, Hear Me, Touch Me: Growing Expectations for Immersive Content Experiences [problems & solutions] [opportunities]
3. Devices in Disguise: Ubiquitous Connectivity Births Multitasking Gadgetry [problems & solutions] [opportunities]

We’re using a Problem-Solution framework here to discuss the larger themes at hand; the follow-up posts for each theme will extend this into the realm of Opportunity.

Theme #1: Follow Me – The Next Level in Shifted Media

While place- and screen-shifting are nothing new—Sling led the way a few years ago, and a variety of over-the-top TV services evolved recently, including Boxee’s addition of an actual box—this year, it gets easier to move more content; expanded services and functionality are cropping up in a number of mainstream devices and brands.

It won’t be long before users expect seamlessly shifted content mid-stream (and without having to press a button).

Three Key Drivers for Shifted Media Experiences

1. Greater variety in tools and offerings allow users to tap into the cloud to easily manage both professionally produced and personally created content.
2. It is no longer just about individual convenience and access, as sharing becomes a key component of the experience.
3. Audio begins to play an increasingly important role in keeping people connected both inside and outside of the home.

The Problem(s):

What needs or desires does place-shifting address?

Wishing you could show that YouTube video to the rest of the family on the living room TV.  Shifting that movie you started to your PC so your spouse can watch live TV in the living room.  Wanting to finish that compelling news story on the commute into work.  In short, hoping for a seamless experience with content no matter where you are, or where you are going halfway through.

The Solution(s):

What products and services are currently hitting the market to address this problem?

Solutions at this year’s CES came from both hardware and software makers, giving consumers a wide array of choices to move both mainstream and personal content across devices easily.

Enhancements to existing favorites:

• Sling Media offers HD placeshifting and announced support for Adobe Flash, making it easy to get the SlingPlayer on devices ranging from Android to Sony Playstation
• Boxee gets user friendly with a $200 D-link box
• Pogoplug adds new features, more USB ports, and instant sharing to favorite social media networks

Mainstream brands in the foray:

• Kodak’s Pulse Digital Frame – WiFi enabled with its own email address, it allows for easy distribution of personal photos to multiple frames
• GefenTV Wireless for HD 60HZ Extender – wirelessly transmit 1080p video/audio up to 30 feet to a home theater receiver or video display
• Intel’s WiDi – wireless display technology

Open software solutions:

• Instantly drag that Facebook photo on your PC to a digital frame in the bedroom with PacketVideo’s Twonkymedia
• Sugar Sync and Dazzboard act like MobileMe for more devices

… and in Mobile TV:

• Tivit from Valups enables PCs and smartphones to receive mobile DTV via WiFi (photo above)

In our next post, we’ll look beyond existing solutions to extrapolate new opportunities which arise from the desire (everyday becoming more “expectation” than far-fetched “what if…”) to shift content seamlessly across devices.

Latitude is a research-driven consultancy for technology and media companies. We work with clients to discover and develop opportunities for next-generation content, software, and communications technologies through a combination of web-based applications and innovative research methods. Email ischulte@latd.com to learn more about working with Latitude.

Header image courtesy of krynsky’s flickr, (cc) some rights reserved.

At the International Consumer Electronics Show (CES) last week, the hype was all around 3D, e-readers, connected TVs, and Google’s much-anticipated Nexus One.

Taking it one step further, in the coming week, we’ll be posting an article on each of the three broad trends we deduced from this various gadgetry–and applying a Problem-Solution approach to illuminate meaningful opportunities that have emerged from CES tech.

Each post will focus on one of the themes below:

1. Follow Me Wherever I Go: The Next Level in Shifted Media [problems & solutions] [opportunities]
2. See Me, Hear Me, Touch Me: Delivering Immersive Content Experiences [problems & solutions] [opportunities]
3. Devices in Disguise: Ubiquitous Connectivity Births Multitasking Gadgetry [problems & solutions] [opportunities]
4. Other Things to Watch: Futuristic Grab-Bag (or, noteworthy mini-trends we couldn’t quite place)

What are some broader themes that you picked up on from the tech revealed at CES?

Latitude is a research-driven consultancy for technology and media companies. We work with clients to discover and develop opportunities for next-generation content, software, and communications technologies through a combination of web-based applications and innovative research methods. Email ischulte@latd.com to learn more about working with Latitude.

Header image courtesy of basykes’s flickr, (cc) some rights reserved.

Contributing editor: Ian Schulte.

The Digital Entertainment Content Ecosystem

The Digital Entertainment Content Ecosystem (DECE) LLC is a cross-industry initiative developing the next generation digital media experience based on open, licensable specifications and designed to create a viable, global digital marketplace.

This new digital media specification and logo program will enable consumers to purchase digital video content from a choice of online retailers and play it on a variety of devices and platforms from different manufacturers.

Press Release: “Digital Entertainment Content Ecosystem (DECE) Announces Key Milestones”

Dozens of companies, from consumer electronics manufacturers to content distributors, have banded together to form the DECE. Essentially, they propose a “rights locker,” or virtual library, which will ensure that users’ content is accessible from and interoperable across all their devices.

The DECE includes:

• Network hardware manufacturers (Cisco)
• Computers / television /mobile device manufacturers (Sony, Samsung, HP)
• Content producers  (Fox, Warner Bros.)
• A/V Encoding Companies (Dolby, DTS, DivX)
• Big box retailers (Best Buy)
• Cable companies / Content distributors (Comcast, Netflix)

Complete list of participating companies in DECE’s press release.

The hope is to increase sales and to minimize motivation for piracy by improving the user experience, via comprehensive device-content interoperability.

Consumers would have to register the devices on which they want to play content, similar to Apple’s approach with iTunes, but there would be fewer restrictions. “The same buy once, play everywhere attribute: There is no product in the marketplace today that offers it,” says DECE’s President, Mitch Singer.

Businessweek, “Digital Content Wherever You Want It”

Access is King

We think this venture holds a great deal of promise. In an earlier post on pay-worthy digital content models, we highlighted the importance of interoperability in improving the overall user experience:

Based on recent studies with music access, Latitude found that more than half of both free (streaming, sharing, etc.) and paid music listeners deemed access from multiple devices to be a pay-worthy feature.

Header image courtesy of cleevillasor’s flickr, (cc) some rights reserved.

The Concept: “Crowdfunding Sites You Love”

Recently, we discovered Kachingle (“a way for readers to choose and equitably share their $5 monthly contribution with the web sites they appreciate the most”), and were intrigued by the simple elegance of its idea.

How It Works

Users who feel that a handful (at the least) of the content they interact with online has monetary value to them personally opt to contribute $5 to Kachingle monthly. They can then “sprinkle” their $5 around the Web to their favorite content providers by clicking on the respective site’s Kachingle medallion (if adopted). At the close of the month, each user’s $5 is divied up proportionately amongst sites they’ve selected.

“Anything that can be digitized will be napsterized. Kachingle is a business model for the inevitable future of ‘free.’”

While “better than Kindle, or anything else”–and certainly better than the nothing that many content providers receive directly from their reader bases–it seems a pretty money business model for Kachingle, too. And we can’t blame them.

80% to content/site providers

10% to Paypal (providers receive payments via Paypal)

10% to Kachingle

Why We Like Kachingle

First, we simply like the notion that people are willing to pay for something of value to them. (We’ve written extensively on Radiohead’s In Rainbows album “experiment,” which implemented a pick-your-own-price model for fans–free included–and went on to rake in the digital profits nevertheless).

We like that if Kachingle, or another comprehensive, voluntary-pay model was widely adopted, it might raise the standards for content quality (or connect them more directly to the people actually engaging with the content); it’d tie content quality, user engagement, and user loyalty more concretely to revenue.

It’d incent (or should incent) content providers who are well-Kachingle’d to clear away some ad clutter (which might then incent more Kachingling), for a better user experience–in this instance, the “free” users would be cross-subsidized by those who willingly opt into premium engagement, rather than premium service add-ons.

Is access to your favorite blogs/sites a collective $5 value to you monthly? We’d love to hear your thoughts.

Content providers can learn more about Kachingle and the Pilot Medallion Program here.

Header image courtesy of vshioshvili’s flickr, (cc) some rights reserved; oversized quote courtesy of Kachingle CEO, Fred Dewey.

It’s Good to be Single

Genius. That iTunes “click to buy” recommendation engine sidebar was just genius. And other new music discovery engines like Pandora–the yet-unfound auditory wonders within, implicit in its very name–which recommends single songs by different artists contiguously, refining preferences in real-time with features for “liking,” bookmarking, and (of course) click-to-purchasing.

The Beatlesian éclat of iTunes (controlling 1/4 of all music sold in 2008), alongside streaming social & recommendation applications, have undoubtedly engendered the rise of the single track purchase.

Music fans in the US, who account for the majority of digital sales worldwide, purchased more than a billion individual tracks, and only 65 million albums online.

(We suppose some of these individual tracks could add up to albums, but this isn’t usually the way. Though we would be curious to know how researchers count “complete this album” purchases in iTunes.)

Artistry & Creation

Radiohead, for one, is happy to produce morsels of music–to concentrate on smaller, high quality units–over endurance pieces. (And why not, since the current digital distribution model not only renders it possible, but seems to favor this model?)

None of us wants to go into that creative hoo-ha of a long-play record again… it’s just become a real drag. It worked with ‘In Rainbows’ because we had a real fixed idea about where we were going. But we’ve all said that we can’t possibly dive into that again. It’ll kill us.

Thom Yorke of Radiohead, “Radiohead Blazes a Marketing Trail”

(For more on Radiohead’s take, see our series on future music access models.)

Yorke has ever been a proponent of, “if the shoe fits us, we’ll wear it” philosophy, careful not to project the band’s (oft-revered) decisions about marketing and business models onto the general landscape of music production.

As such, single tracks are considered as chapters in a novel to full-length album proponents (fans and artists alike)–after all, it’s hard to imagine Dream Theater’s holistically conceived Scenes from a Memory divvied up–devised and distributed piecemeal.

The Single Niche: Fan-Based Promotion & Pricing

In our current [digital] attention economy, media of all kinds, intentionally free or not, is free in hoards. According to Reznor: “Every piece of music you can think of is available free right now a click away. This is a fact.”

And the lack of careful consideration, of actually listening, that an over-supplied attention economy supports is Radiohead’s primary complaint. More optimistically–and strategically, limiting the amount of media available (increasing attention) may encourage better promotion of fewer tracks by fans:

“The mp3 may have atomized music into millions of little pieces, but each piece, it seems, found a publicist.”

“The average music fan now has the built-in capacity to double as promoter and distributor in an ever-expanding arena that’s making and eliminating rules every minute,” posits Eric Harvey in “The Social History of the MP3.”

The majority of new music monetization models, ignorant of “The Single Niche,” still concede a certain degree of “free-ness” when it comes to musical content, and are focusing rightfully on ticket and merchandise sales, premium content (special digital tracks, limited edition physical CDs, boxed sets), and even iPhone apps in some cases.

But some sales schemes are being tailored specifically to the single:

[In Amie Street's dynamic pricing model], songs rise in price from free up to 98 cents based on their popularity [...], which acts as a filter for underexposed music and draws on Web community features to highlight artists growing in popularity. To date, dynamic pricing has primarily been a factor only in the independent music arena.

GigaOM, “With Amie Street, Sony Music Opens Door to Dynamic Pricing Possibilities“

Amie Street is one such MP3 provider with community-determined (“dynamic”) pricing. Last month, Sony Music agreed to offer its catalog through their store, if still on a tiered-pricing model; the open avenue nevertheless suggests major record label movement in this direction.

Header image courtesy of atomicjeep’s flickr, (cc) some rights reserved.

John Gruber recently wrote on his blog:

People bought (and continue to buy) real paper newspapers and magazines because it feels like you’re getting something worth the price. A real physical object. Yes, the true value was, is, and will be the content, but the evidence so far is that media consumers don’t see it that way. When you pay a dollar for a newspaper it feels like you’re paying for the actual stack of paper, and it feels like a fair price. That just isn’t the case with web pages.

It does seem that the popular perception of what’s worth paying with regard to digital information objects is localized in the “thingness” of a real physical object; remove the physical framework, to which cognitive conceptions about economic value are tied, and these issues become confounded.

[Digital] Things Take Time

The zeitgeist of “free” in response to digital information offerings has been treated as necessarily an enduring, and strengthening, phenomenon; after all, “information wants to be free.”

The evolution of cognitive notions takes time, and technology moves at an incomparable speed. Nostalgia and personal habits are factors subject to change over time as new “norms” for technology and information access pervade our daily lives–if they can deem one type of learned experience so worthwhile (and, thus, worth paying for)–why not some digital experiences with information also, in time?

The book experience is more complex and beautiful than the Kindle can offer. I love going to the library or store and wandering through the aisles. As I wander the fiction section of Brookline Booksmith maybe I’ll run into a friend or make a new one. I’ll walk through the stacks of the Copley Library and maybe I’ll flip through an oversized set of prints of Velasquez paintings I had no idea existed.

Michael Critz, “Can I Borrow That?”

Interestingly, it’s not so much the passing of physical objects that individuals lament; it’s the experiences they create.

Digital experiences are broaching “social” in new ways–and the Internet (the proverbial rabbit hole) has always won when it comes to stumbling upon new and delightfully unexpected information.

(Not to suggest that digital could or should replace the physical in general–but, as far as the experience of information goes, facets of the digital may inherently strike the evolving mind as something worth paying for in the near future.)

Playing up the Physical in the Digital

In the meantime, it seems that digital information experiences could emphasize aspects that individuals value in their interactions with physical information objects.

For example, the Kindle is both portable and tactile–factors that inform where and how content is digested in the physical world. But, unlike books and magazines, it (along with most forms of digital media now) isn’t very shareable–digital advancements have done wonders for personalizing information objects and services, but is still catching up when it comes to socializing them:

My biggest beef with Kindle is the idea of selling me a $10 book but locking it down with DRM. I can’t let a good friend borrow Jack Kerouac. I can’t sell back old textbooks. I can’t trade paperbacks at paperbackswap.com.

You bought it. You own it. And you can’t share it.

Michael Critz, “Can I Borrow That?”

Show Me Something I Haven’t Seen Before

In time, it seems that features which present themselves to the modern digital mind as truly novel, rather than subterfuges to legitimize a suddenly “un-free” regime shift, have proven worth paying for. Cognitively, this kind of value can be found in the sheer “newness” of it all. (Innovations that strike users as “new” or truly novel seem to rely largely on technological advances in how information is accessed and presented.)

These have and might include features like interoperability across personal devices and offline caching (as extensions of physical portability), and various mash-ups of real-timeness, personalized recommendations (ex. next-gen feed-reader, Fever), “unlimited” libraries, and multimedia/interface enhancements (ex. augmented reality app, Wikitude).

Header photo courtesy of doctabu’s flickr, (cc) some rights reserved.

This post is part 3 of a 3-post series:

Part 1 – “Reznor vs. Radiohead: Sing-Alongs From That Place Between Business Models”

Part 2 – “Riding the Free Waves: the Most Audacious Experiment in Years (or, a Naive Approach)”

Premium Content & Services: An Artist’s Suggestions

When it comes to monetizing music, Radiohead (accusably, “one of the most future-proof brands around”) seems to think guerrilla warfare the best way (for them) to go.

Instead, Trent Reznor of Nine Inch Nails is searching for novel, more standardized, models for generating revenue–which place the power (and revenue) in the hands of the artists. (For an overview of the current discussion and industry trends, see our first post).

Alongside access to digital content, the music industry has begun to accept the unchangeable nature of the “Free” bird, and is placing more emphasis around premium content and services.

In a Digg Dialogg interview, Trent Reznor hinted at collaboration with other artists on a project to challenge the existing and too-slowly developing models put forth by major record labels (realistically, he didn’t seem too concerned that they’d overtake him). Here are some crucial features to build in, as Reznor sees things:

“Let’s say that the major labels got to a point where they were willing to come up with a subscription model that would allow you to download anything you want, anytime you want, and maybe some broadband component that pumps it streaming to whatever you want as well– and it’s X amount per month, and it’s a reasonable fee, and they’re willing to figure out a way to split those revenues–

That could render what I’m doing obsolete… because it would be the thing you’d want to get. And we’d have to inevitably go in along with it, because we don’t want a Nine Inch Nails subscription model and then a rest-of-the-world subscription model.

Trent Reznor, Digg Dialogg

Mobile & Music Streaming

We’re particularly interested in the notion of streaming cached personal libraries or playlists (with more user control than recommendations-based Pandora or Last.fm); interviewing users who are highly engaged with music in the digital realm, Latitude found that accessibility and interoperability across personal devices were consistently prioritized features. The ability to access exponentially more tracks than one could ever actually store on his iPhone locally, with complete control, undoubtedly appeals to the masses.

A number of services are beginning to offer iPhone applications that address this need, but don’t allow users to access music from their portable devices when they’re not connected to the Internet– most notably, Rhapsody (which works in tandem with a $14.99/mo Rhapsody-To-Go subscription).

Even better than Rhapsody is Swiss-hailing competitor Spotify’s premium iPhone service:

Unlike many other iPhone music apps, Spotify’s iPhone service offers users the ability to select tracks and listen to them in an offline playlist. The ability to cache files is a huge asset to those who commute to work without a wireless connection.

ReadWriteWeb’s, “Spotify iPhone App Approved Thanks to the FCC”

Grooveshark, which allows users to “Play any song in the world, for free!” will, supposedly, also be releasing an iPhone app with the ability to cache files for offline play as a premium service offering. (Grooveshark’s current iPhone app doesn’t allow for offline play).

Accessing Media That I Own: Thanks, But Not Necessary

Spotify and Grooveshark have hit some bumps, but advancements in apps will continue to be made “assuming Apple doesn’t get all fussy and block it.”

In 2008, there were rumors of Apple adding an “iTunes Unlimited” feature for MobileMe users. No go, yet. But it’s no wonder Apple isn’t too keen on approving apps that improve music accessibility, whether working around, or leaving out the iTunes component entirely. You can, however, get ZumoDrive (cloud storage) for your iPhone, though.

It’d be nice to access one’s entire music library from a device with limited local storage space, but given evolving notions of ownership–one may not need, or care to, in the future. If I have continuous access to any song, from any of my devices, what’s the value of actually owning the file, whatever that means?

Reznor’s Vision: Word-of-Mouth and Premium Accessibility?

Continuous accessibility to an unlimited library constitutes the value add for services like Rhapsody.

But being able to share is an increasingly important feature of ownership and marketing (one that hasn’t always transferred well from physical to digital information goods). Although high on accessibility features for the premium subscriber, comprehensive services, such as Rhapsody, don’t build in much sharing functionality (because I don’t “own” the files), and other applications haven’t seemed to address sharing to or across multiple users’ mobile devices.

In the past, Reznor had strongly encouraged giving away DRM-free files–viewing word-of-mouth, visibility via fan-to-fan recommendations, and database-building (free content in exchange for contact information) as artist takeaways. (Not to mention, the secondary effects of increased ticket and merchandise sales, as well as physical album sales bundled with special tracks.)

With rising expectations for the interoperability of personal media and sharing in the digital age, throwing “added accessibility” onto the list of potential, exclusively premium offerings, invites the catch-22 of crippling other users’ accessibility (and sharing opportunities).

The cost in word-of-mouth which feeds other revenue streams is difficult to determine. What Reznor describes in his Digg Dialogg sounds an awful lot like a number of emerging premium services (except you could, supposedly, download unlimited songs on Reznor’s subscription-based model). It’ll be interesting to see how an artist–and a proponent of “free” music, for the purposes of sharing–finds a viable compromise.

Header image courtesy of joyzee_x’s flickr, (cc) some rights reserved.

“Free” is a Crowd

Over the past several months, I’ve watched a lot of my favorite information sites become overcrowded with advertisements, to the extent that it interferes with my experience of the content there.

The necessity of developing new business models around digital content is written in the encroaching minefield of flashy visual ads and all-too-familiar Google AdWords for which many online readers have developed a blindspot, except insofar as the stealthy avoidance of them is concerned.

The Cross-Subsidy Approach to Digital Access

To avoid affronting core communities at large with new charges, providers of digital services and content have caught onto the necessity of cross-subsidizing:

In the digital realm, the “freemium” model offers the elusive free lunch. Many millions of Skype users, for instance, making voice and video calls over the Internet, pay nothing at all, subsidized by a smaller group of customers who pay for additional functionality. The free service is a loss leader (and cheap marketing) for premium paid services.”

Wall Street Journal, “To Rake It In, Give It Away”

For digital content providers, new models for monetization have centered around premium content production in some form, such as GigaOM Pro, which offers higher quality “insider analyst research and commentary.”

Take It Away, Folks

In the spirit of DVDs, iTunes video downloads, and now more and more web and mobile applications, it’s a wonder that digital content providers don’t consider subtracting advertisements to improve the experiences of select users who are willing to pay for the “upgraded” environment.

From the standpoint of online user psychology, we accept that content is free (erroneously). But we also accept the presence of advertisements that make our site experiences less enjoyable. It seems therein lies the problem and one potential solution (given that this is the age of choice and customization, “solutions” needn’t be mutually exclusive).

What We’ve Found

Across recent studies, Latitude found that people–especially those who interact more heavily with digital content–are more likely to notice and to appreciate design, as well as multimedia integrations that improve their online experiences.

Individuals who interact often with digital content have also shown a tendency to be more aware of the advertising in their online environments (regardless of whether their impressions were positive or negative) and only a marked preference for ads that provide them with useful information (rather than entertainment-based ads or ads that break up or supplement content, with no delineated purpose of their own).

Essentially, the promise of “higher quality” premium content from a particular provider (especially when one has been happy with the free offerings thus far) is a vague, if worthwhile, one. But one knows exactly what an “ad-free” content environment means, concretely, as well as its personal value to himself, in this ad-overrun status quo.

Header image courtesy of omaromar’s flickr, (cc) some rights reserved.

This post is part 2 of a 3-post series:

Part 1 – “Reznor vs. Radiohead: Sing-Alongs From That Place Between Business Models”

Part 3 – “Reznor’s Future Music Model: Streaming & Shareable?”

Radiohead’s Stunt Marketing

In explaining the rationale behind “the most audacious experiment in years,” according to The New York Times, Yorke remarked: “every record for the last four—including my solo record—has been leaked. So the idea was like, we’ll leak it, then.”

For its October 2007 release of In Rainbows, Radiohead implemented a pay-what-you-want digital download model (which ended 2 months later, piggybacked by a limited edition discbox set in December and the physical album release in January 2008).

The purchase statistics surrounding the “experiment” have been well-sought after, as one might imagine, but many of the reports come to a lot of grand conjectures from band partisans and he-tallied-she-tallied talk. In the end, it seems few would claim that the overall outcome was an unfavorable one; the album, once released in retail format, reached #1 on both UK and US charts, selling over hundreds of thousands of physical copies in its first few weeks, and more than 3 million copies (both physical and digital formats) in total:

Factoring in free downloads, ComScore said the average price per download was $2.26. But it did not specify a total number of downloads [...]. Under a typical recording contract, a band receives royalties of about 15 percent of an album’s wholesale price after expenses are recovered. Without middlemen, and with zero material costs for a download, $2.26 per album would work out to Radiohead’s advantage — not to mention the worldwide publicity.

The New York Times, “Pay What You Want For This Article”

Reznor’s Reaction & Replication

Trent Reznor outspokenly expressed his feelings that In Rainbows was “low quality” and “insincere.” In actuality, he seemed to take more umbrage at what the album’s release meant for artists rather than fans– essentially, a relinquishment of value self-determination: “Some have argued that giving music away free devalues music. I disagree. Asking people what they think music is worth devalues music.”

To Reznor, free is a price, not a value– and some fan-prescribed prices are, at least to his mind, cheaper than free.

But one has to wonder if some of his philosophically-buttressed vehemence doesn’t stem from a similar replication of the In Rainbows experiment– gone sour. Reznor promoted Saul Williams’ November 2007 album release The Inevitable Rise and Liberation of NiggyTardust! on the NIN Web site, giving fans the option to download lower quality mp3s for free, or pay $5 to support the artist and receive higher quality files. In the end, only 18% of fans opted to pay the $5. (Supposedly, the band still made more money than they would’ve via major record label production).

Side by Side: The Cost of Comparison

Reznor was sorrily disappointed in so few fans’ willingness to support the artist when given the choice, but perhaps also surprised that so few opted for the higher quality mp3 files that came with the $5 purchase. He gets what Wired recently termed the tri-faceted “rubric of accessibility,” when it comes to desirability in the digital age: “ease of use, continuous availability, and low price.”

In a sage post on the NIN forum, he listed “give your music away as high-quality DRM-free MP3s” as a promotional must-do for little-known artists. Being downloadable, shareable, and a mere $5, what went wrong? Or, perhaps it would be more judicious to ask: what could have gone better?

The Mp3 Effect (or a predilection for Good Enough tech), as Wired recently termed it. Mp3s were originally snubbed because they sounded low-quality (and they were) compared to their cumbersome CD counterparts; ironically, now we accept even more compressed digital formats in light of increasingly size-efficient players and storage devices. Why?

A Stanford University professor conducting a trending study on student perception of digital music formats reports:

Every year, more and more students preferred the sound of mp3s, particularly for rock music. They’ve grown accustomed to [...] the percussion sizzle–aka distortion–found in compressed music. To them, that’s what music is supposed to sound like.

Radiohead offered one (according to Reznor, “low quality”) format of In Rainbows for pay-what-you-want digital download: a 160kbit/s mp3 version.

Whichever way you slice it, mp3s leave something to be desired quality-wise– so with Reznor’s / Saul Williams’ free format already offering higher quality sound than Radiohead’s In Rainbows, it’s little wonder, perhaps, that the majority of today’s increasingly low price / low-fi fanbase didn’t feel very incented to shell out $5 for the yet higher quality version of their album.

Singing a Different Tune: Potential Confounding Factors

It’s worth acknowledging that the two “case studies” aren’t entirely analogous. Radiohead is the first to admit that its business “models” aren’t models at all– they’re not intended to be transferable or even replicated by the band itself: “This was a solution to a series of issues. I doubt it would work the same way ever again.”

Still, Saul Williams, a relative unknown, can be seen as a smashing success story here; it’s no small feat that 18% of fans opted to pay $5 for the band’s album, promoted primarily through the NIN Web site (and with a higher gross profit per sell than if it had been distributed by a major record label). Not to mention–what this kind of promotion for artists-by artists may have meant in terms of “impressions,” as well as concert ticket, tour merchandise, book (in the case of Saul Williams), and album sales.

One also wonders if the psychological responsibility that accompanies personal value determination (as with Radiohead’s pay-what-you-want model) compelled fans toward payment; after all, with no differentiation in mp3 quality (i.e. no reward for payment), Radiohead averaged $2.26 per album sale (including free downloads).

There’s something strangely incenting about being asked, as guitarist Jonny Greenwood put it: “Why don’t you pay us what you think it’s worth?’”

Photo courtesy of psc631798′s Flickr.