U2 released its thirteenth album Songs of Innocence for free on Apple’s iTunes service today.
U2’s decision echoes the free digital download strategy used previously by Nine Inch Nails (The Slip) and Radiohead (In Rainbows). My 2008 conference paper and presentation slides found that each band adopted the strategy during a period of heightened conflict with their labels, and leveraged their audiences to negotiate better contracts.
U2’s espoused reason for the strategy is to raise global awareness of specific charities. Other reasons may emerge . . . (One of them being a surge in back catalogue sales.)
Reformed Broker Josh Brown makes an interesting observation about how money shapes artistic freedom and specifically the freedom to release a creation into the world, on your own terms. Browns’ examples include the late New York Times publisher Arthur O. Sulzberger; Renaissance and Medici patronage of artists; and the ‘sellout’ debate about ‘indie’ rock bands.
‘Dabblers’ and non-artists can have a Romantic image of the relationship between artistic creation, money, and freedom. Early career academics talk of an attractive ‘life of the mind’. Journalists talk of a Fourth Estate role in society and the investigative craft. Musicians talk of innovative strategies for new releases. Yet each of these beliefs about freedom also involves financial choices about money. The academic ‘life of the mind’ is often based on institutional incentives, patronage networks, and administrative support. The Fourth Estate and investigative journalism both need funding mechanisms to sustain a ‘quality media’ reputation. The much-touted ‘free’ albums by Radiohead and Nine Inch Nails arose when both artists had fought with their major labels and were label shopping for new contracts. Wilco’s experience in I Am Trying To Break Your Heart is another example of being ‘dropped’ by one major label and using an unreleased album as leverage to create a bidding war with other major labels. U2, Depeche Mode, and New Order now have detailed, archival reissues of their early, influential albums in part because they have strong management, legal and creative teams, and have ‘decision rights’ control of their intellectual property.
Brown is correct that money-awareness is not a Mammon-like ‘sellout’ of artistic integrity. The recent controversy over Amanda Palmer‘s use of ‘crowdsourced’ musicians and whether or not she should pay them is a small-scale incident compared with the business complexities of major labels’ accounting practices, the creation and recognition of ancillary revenue streams, the control of song catalogues, and intellectual property strategy. The latter area will be an important battleground for academics, journalists, musicians, and other so-called cultural creatives. You might start with Intellectual Property Strategy and Essentials of Intellectual Property; consider the Schumpeterian dynamics in Driving Innovation; and understand the corporate and institutional perspectives of Intangible Assets and Harvesting Intangible Assets.
I recently blogged about a presentation the 2008 Communications Policy Research Forum in Sydney on disruptive innovation in the music industry.
You can now download an Adobe PDF version of the PowerPoint slides here.
The refereed paper has been published in the Proceedings of the Communications Policy Research Forum 2008 (pp. 155-175 or PDF file pp. 179-199). You can also download a local copy of the paper here.
The paper’s case study examines why Radiohead and Nine Inch Nails released their new albums as digital downloads. I suggest a major reason why, and one that was overlooked by Web 2.0 pundits, is that each artist was in the ‘label shopping phase’ of a new contract and defected after negotiation problems with their major labels. This fits a pattern in mergers and acquisitions: the major labels lost artists due to integration problems in a merger or acquisition. Terra Firma Capital Partners has since partially confirmed this hypothesis: the private equity firm endures more post-acquisition integration problems with EMI and is fighting against government regulation of Great Britain’s financial services sector.
The paper’s data appendices contrast the artists’ strategies with signficant events and innovations in music industry contracts, conglomerate mergers and deal structures. Somehow I missed U2‘s March 2008 deal with Live Nation: I found out about it in an October 2008 announcement. Guns n’ Roses also finally released Chinese Democracy (MySpace audio stream): a new album that has taken 15 years, a rumoured US$14 million budget and 14 recording studios in New York, Los Angeles, Las Vegas and London. I may write a paper on it . . .
I recently spoke at the 2008 Communications Policy Research Forum in Sydney on disruptive innovation in the music industry. My presentation looked at the reasons for why Radiohead and Nine Inch Nails pursued online release strategies for their respective albums In Rainbows (2007) and The Slip (2008), and evolved from some initial thoughts here. The reasons suggested in media coverage – Web 2.0 experiments, disruptive innovation and freeconomics – were ‘true yet partial’ explanations. They overlooked two significant facts: (1) both artists were in the ‘label shopping’ phase near the end of their contracts; and (2) both artists were frustrated with their respective labels EMI and UMG, who each triggered artist defections due to post-merger integration problems. The presentation also discusses the role of Disruptive Innovation Markets, the Disruptive Information Revelation principle, and lessons for journalists, new media theorists, policymakers and valuation analysts. Thanks to the Network Insight Institute team (Mark Armstrong, Cristina Abad and Mark Armstrong) and the two anonymous reviewers for their help.