The Radiohead Equation

Hosted by

This is Celia Hirschman with On the Beat for KCRW.

The CMJ music marathon was held last week in New York City. The event is called the Marathon because of its nonstop entertainment. College radio programmers as well as music trade folks attended business panels during the day, attending shows at dozens of clubs throughout Manhattan, and Brooklyn at night. Hundreds of bands perform in this five-day ritual. Every year, one seems to capture most of the attention. This year, it was the indie band from Jacksonville, Florida, Black Kids. The band was everywhere, playing four shows during the festival and hyped on many of the blogs.

While music ruled the night, the nagging question during the day was, how will Radiohead's decision to sell downloads to consumers affect the record business?

Many major labels executives are publicly passing the move off as a PR stunt by the band. But privately, Radiohead's decision has caused a lot of worry, and for good reason.

Radiohead has a rabid fan base interested in the band's every move. 1.2 million people already downloaded the album from the band's website.

The real concern is not how much money Radiohead took off the table from their previous label. It's actually a much bigger problem. Radiohead's move challenged the record business itself. That's because the record business has been built on the premise of highly controlled access. A velvet rope between bands and their audience. Even when MySpace offered access, labels shrugged. They knew that consumers would tire of access to millions of mediocre bands. But personal access to highly prized bands, that's a whole different equation. When you download the Radiohead album, you're asked for your name, email address, phone number and credit card, and you're asked to agree to have Radiohead contact you again, about tickets, tour dates, records, and other related news.

Suddenly, 1.2 million people and counting now have a direct financial relationship with the band. This is why record business is scared.

When superstar bands can talk directly to consumers and build a new economy without record labels, and do it repeatedly, it's a threat to the major label system.

Radiohead is not the only band that has earned a passionate and active fan base. Bands like U2, Dave Matthews Band, the Rolling Stones, Bjork, Prince, Nine Inch Nails, David Bowie, Bruce Springsteen, Coldplay... the list is actually quite long. These bands generate the turnover that keeps Sony/BMG, EMI, Warner Music and Universal operating at their current pace. It also keeps the labels investing in new bands. Take the superstars out of the equation, and the record business looks monumentally different.

Of course, most of these bands are still tied to contracts that keep their records firmly at the labels, at least for the time being. But as the clock turns, it's hard to imagine why these multi-million-selling bands would turn over their income and future to a record label for any sizeable length of time.

Overall, Radiohead made a brilliant move. For pennies, the band just got the most valuable prize of all -- direct contact with their biggest fans around the world, who will financed the band's career over and over again. That's something that major labels could never offer them.

Pretty smart.

This is Celia Hirschman with On the Beat for KCRW.