Making Millions In The Free-Music IndustryTrent Reznor Shows Why 'Freeconomics' Works
By Darryl Mason
While touring Australia last year, Nine Inch Nail's Trent Reznor publicly aired his anger at the insane prices record companies were charging for his music, including albums first released a decade ago :
"Steal It. Steal away. Steal and steal and steal some more and give it to all your friends and keep on stealin'. Because one way or another these motherfuckers will get it through their head that they're ripping people off and that's not right.'"
A few months later, all of Nine Inch Nails albums, and a feast of live recordings, were uploaded to torrent sites, in high quality formats. You could download just about everythingReznor had ever recorded, for free, in one big file, or just grab the album you hadn't yet heard, or were missing. It quickly became known all over The Pirate Bay thatReznor himself had posted the torrents of all his albums. His record company refused to play ball and drop the prices so more people could hear his music, soReznor gave them all away. At a guesstimate, 40 or more million people have grabbed or shared those Reznor (unofficially) approved torrents in a few months.
Free music for the free economy age.
Reznor could see roughly how many millions were 'stealing' his music, and he saw how he could make money, and dramatically increase his fan base, with even more free music. So last fall he spent around 10 weeks recording and mixing two hours of new material, and last weekend he released the four volume 'Ghosts'.
Here's Reznor :
"I've been considering and wanting to make this kind of record for years, but by its very nature it wouldn't have made sense until this point.
Now that we're no longer constrained by a record label, we've decided to personally upload Ghosts I, the first of the four volumes, to various torrent sites, because we believeBitTorrent is a revolutionary digital distribution method, and we believe in finding ways to utilize new technologies instead of fighting them.
We encourage you to share the music of Ghosts I with your friends, post it on your website, play it on your podcast, use it for video projects, etc.
Ghosts I is the first part of the 36 track collection Ghosts I-IV. Undoubtedly you'll be able to find the complete collection on the same torrent network you found this file, but if you're interested in the release, we encourage you to check it out at ghosts.nin.com, where the complete Ghosts I-IV is available directly from us in a variety ofDRM-free digital formats, including FLAC lossless, for only $5. You can also order it on CD, or as a deluxe package with multitrack audio files, high definition audio on Blu-ray disc, and a large hard-bound book.
You could get it for free,
you could pay $5, you could pay $10 for a double CD, $75 for CDs and the book and extras, or you could pay $300 for the whole limited edition kit. The New York Times took a look at the
"unique pricing structure" for Ghosts.
Reznor didn't take out ads to publicize his new release, because he knew his fans would do it for him. Once a few thousand pushed the above Nine Inch Nails letter
to the front page of Digg, the
mainstream media picked up the story.
Within hours of the free, online release of
the new Nine Inch Nails album, Ghosts, tens of thousands of people around the world were torrenting the four volumes of music, and so many were hitting the
ghosts.nin.com site to buy the album, and the extras, it crashed. It was the record store equivalent of thousands trying to force their way inside waving handfuls of money to buy a new album. An instrumental album, no vocals.
Right now, the two hours of new Nine Inch Nails music is blasting out of hundreds of thousands of music players, cell phones and stereos, 72 hours after its release. The once intrinsically essential radio airplay that has generated decades of dirty music industry corruption and crime is irrelevant forReznor . He doesn't need radio. A million or two more people in dozens of countries will be listening to Ghosts tonight. Within a week, three or four millions will have the new album in their possession, without having paid a cent for it.
But tens of thousands will have also bought one or more of the special hard copy editions of the album, tempted by the inclusion of books, art prints and other non-digital material.
How many of the millions who got it for free will pay $5 next time for a NIN download, or $70 for a limited edition box set? How many will buy their first ticket to a NIN gig because they got Ghosts for free and liked it, thought Reznor was a legend for being so generous, and also end up buying a NIN DVD or one of the earlier NIN albums?
The established music industry old school would tell you "not many" in answer to those questions. They may be right, but they're still wrong, because they don't understand how the free music industry will work, is in fact already working.Reznor doesn't need to sell seven or eight million albums to make a million now. He only needs to sell, say, 50,000 $5 downloads, 30,000 of the $75 box sets and a few thousand of the $300 limited edition packs.
The fact that the
ghosts.nin.com was unable to cope with the customers who swamped the site on Sunday, Monday and Tuesday, shows that the demand to buy Ghosts in some form was far beyond whatReznor expected it to be.
For Reznor this is, in all, a very good deal indeed. No longer constrained by a contract with a record company to distribute his music, Reznor can do whatever he likes with his creations. His fans distribute the music for him, by posting torrents on 'pirate' file sharing sites, and sending digital copies to their friends. Just to make sure Ghosts was available for free to the most people,Reznor himself posted the album on The Pirate Bay, and left
a message to the downloaders.While media companies are fighting to have The Pirate Bay shut down, or blocked by internet providers, Reznor is using it to reach tens of millions of people. Not just his established fans, but millions of new fans. Some of whom will payReznor for his music, some of whom will buy his back catalogue, or a t-shirt, or perhaps most importantly will buy a ticket to see his show the next time Nine Inch Nails come to town.
Reznor doesn't need to sell six or seven millions to get rich off Ghosts. As he pays no physical distributor, outside of bandwith and a mailing service (for hard copies), and there is no record company creaming off 40% or 60% of the sales he makes, Reznor really only needs to sell 100,000 copies of Ghosts, in some form, in the next two years to make a few million and deem the digital release to be very successful indeed. Not including, of course, what he will make on the road when a few million new fans turn up atNIN shows.
Radiohead have gone quiet about how much they made from their free release of In Rainbows late last year. Millions downloaded the record for free, a few hundred thousand paid a few dollars, but they sold more than 90,000 hard copies in the form of an expensive box set, and along the way collected e-mails and location information for millions of old and newRadiohead fans. The fan database alone resulting from giving away In Rainbows is worth millions of dollars, and Radiohead's online store is still doing brisk business. When they play their next tour, they already know where their fans are, and can contact them directly to sell tickets to a live show.
Amy Winehouse can sell 1o million copies of her most recent album, but she will see less money back from her record label, in the next few years, thanRadiohead and Nine Inch Nails made (or will make) in all but a few months.
While argument, controversy and (record company) fury continues to ferment over musicians giving their music away in an industry-busting new business model (one of the most high-profile example of
'freeconomics' online today), most of the discussion has missed the most remarkable and exciting fact to surface. Bands and musicians no longer need large local or international audiences to survive, or to even get rich. Free music obviously reaches many more ears, and hearts, than the old free-on-radio-but-expensive-to-buy system. A small independent band in direct contact with 10,000 fans who will pay, happily, for what they create, and pay happily knowing the band they like will continue to make music and survive. The band can keep doing what they love, and make a living.
It's a simple calculation. Out of the tens of millions who eventually hear NIN's Chosts, Reznor really only needs 50,000 die-hard fans who are willing to pay $100 a year for NIN special downloads, CDs, DVDs, books, movies, t-shirts and whatever new forms of digimedia he comes up with. Off that base of 50,000 paying fans, Reznor can generate millions in sales, without going on the road. But he will tour, of course, and most of the shows will sell out, with minimal publicity costs.
10 million can still enjoy NIN music for free, but those willing to pay, if not out of a desire to have hard copy NIN material then at least to pay a courtesy for Reznor's work, will more than cover the costs of creating and getting the music to the rest, for free.
Forget those who say the
'freeconomics' model can't, won't, will never work. It's already working, and it's making money. More importantly, it is putting the creator in direct contact (if they choose) with those who want to hear, see or read what they create.
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Reznor has gone even further than Radiohead did with their free release.
The download quality of the In Rainbows download was hammered in comment boards by the digital music version of vinyl record addicts.
Reznor chose to unleash Ghosts in a sprawl of digital formats, satisfying just about everybody, and has let his four volume epic of "music to daydream by" go out under the Creative Commons license, so anyone who wants to use his new music as a soundtrack for a movie or short film orYouTube vid can do so, as long as they're not selling the collaboration. So no nasty letters from music industry lawyers.
It's a brilliant move. The reaction from online movie makers and digital artists has been close to messianic. and Reznor knows that his band name, and music, will be seen and heard on thousands of videos released on YouTube, LiveLeak and Google Video in the next few years. These vids in turn will be seen by tens of millions of people who otherwise might never have heard Reznor's music, or at least his new material, or weren't interested to download Ghosts.
If a handful of those NIN-soundtracked vids go viral, hundreds of millions will hear Ghosts' music.
And by making all of his loops, tracks and sound effects available for download as well, Reznor will become a collaborator on thousands of pieces of new music in the coming years, mostly by non-professional musicians, but still reaching tens of millions more.
All of this, this mind-boggling exposure to new listeners, comes at minimal cost to Reznor. He was going to release his recordings on CD anyway, where he might have sold a few hundred thousand copies in record stores in the next few years, or far less, considering Ghosts is a soundtrack album, with no vocals. Now his audience is legion.
But perhaps most valuable of all, Reznor has earned the thanks, appreciation, respect and goodwill of massive swathes of online audiences, particularly the digital generation who expect their music for free, and are ecstatic when a major music artist lets them have what they want without breaking the law.
Established musicians, particularly older ones, may cringe at Reznor for encouraging the digital generation to expect more and more free music, or free music as an industry standard, but free is quickly becoming the primary marketplace for all music, and increasingly movies as well.
It's not up the digital generation to change their attitude on free music, it's up to the established entertainment corporations, and musicians who are doing what they love for money, to find a way to turn free into money.Reznor's done it, Radiohead did it, independent bands who've never sent a demo to a record company are doing it all over the net everyday.
Reznor has set a standard for what comes next, but the free music business model is solid. It even gets the thumbs up from
the Wall Street Journal. Ten million free downloads and torrents can be paid for by 50,000 who want the physical extras to the music release - the t-shirt, the glossy booklet, the coffee table book of art inspired by the music, the original digital files of everything used to create the album - and all the new faces at the next live show.
The days when you heard one or two songs of a new album on the radio and were then forced to pay $20 to $30 for the whole album are dead, and good riddance to that age. The only way forward for major labels is to give away most of the music, and offer something special for those willing to pay.
The free music industry is here, and it's only the beginning.
UPDATE : The
ghosts.nin.com sold out its entire stock of the $300 limited edition Reznor-signed box sets in two days. So in less than 48 hours Reznor grossed around $600,000 from just one format of his instrumental album.
The only major drama Reznor has encountered so far with this release has been trying to deal with the massive volume of customers trying to buy hard copies of Ghosts through the NIN online store. Too many customers at the same time repeatedly crashed the servers. Reznor underestimated how many tens of thousands of his fans wanted to pay for what he is giving away. So it was, in fact, a good problem.