Let me preface by saying I’m an old man. I have never ripped and burned music CDs. I don’t have any music on my iPod (only TV shows and movies). And if you’ve read Why Angry Bill? you know that I don’t listen to music on the radio. So, if this blog is old news to you, then apologies.
Was on Google news today and saw discussion on the band Radiohead’s attempt to give away a free album with fans deciding how much they wanted to pay (if at all). The article said that only 38% of downloaders decided to pay anything and marked it as a failure. I was scratching my head at this. A failure? A disappointment? Are you bleepin crazy? I don’t know what the ratio is now, I’m out of the loop on such discussions, but pre-acquistion, I know JBoss’s percentage of paying users was something like 5%, and they got 38%? IMO, that’s a huge success! If JBoss had had that ratio of paying users we would have gone public in 2004 instead of getting bought-out in 2006. The article then went on to say that the band must average $1.50 per download to break even (they’re currently averaging $6.50 per download, pretty good margin!).
Most of the articles on the subject questioned whether the Radiohead model would work with smaller bands since Radiohead already had a strong brand and a fanbase of millions. I think the business model could parallel the evolution of an open source business model. Really, all it is is establishing a trademark and cross-selling your ‘free’ offering to what value-add you are selling.
In the beginning of an open source business, your main value-add is usually consulting and training. This is business that brings in easy revenue, but that you can’t scale effectively because of the amount of people that is required to drive this. For the music world, maybe a band could cross-sell on-site gigs. Yeah, maybe this is unrealistic to expect a fan to want to book a particular band, so something more creative is needed. Maybe the music download would require the fan to solely enter in their age and zipcode. Then the band could know where they are popular. For instance, if they were very popular in the Greater Boston area, they could call up nightclubs in the area and say “Hey, 100 people downloaded our album in Boston. There’s a good chance we’d be able to fill the place.” As the band gained a small following, this information could be used to drive up their fee.
Another way JBoss bootstrapped themselves was through documentation sales. At the height of this these sales totally funded the salary of Scott Stark, and subsidized the salaries of me, Dain, and Sacha. For a band, it could be as simple as selling a professional PDF of their song lyrics. Would you be willing to pay $1 for a printable PDF of your favorite band’s song lyrics? Then there is of course always band merchandise of t-shirts, mugs, towels, posters, etc. All this stuff is so easy and cheap to set up to sell online. We did it at JBoss.
The last step in the evolution of an pure open source business is selling subscriptions. This is where I’m at a loss of how a music band could push such an offering. There is always the possibility of going un-pure. Radiohead seems to be doing it by cross-selling their $80 dollar deluxe box set. JBoss did much of the same with JBoss ON. I know other open source companies are taking similar tacts.
All and all, it might be hard to break even on the Radiohead “honesty box” model for small startup bands, but there’s a lot of creative different ways I think bands could make money off of free IP. I really think open source business models could be applied to other forms of IP. It will be interesting to see how this evolves in the music industry and kudos to Radiohead for thinking out of the box.