Does giving away your book, ala DRM-free music, make business sense?

When avant-garde rock band Radiohead posted their latest album online, they invited fans to pay whatever price they thought was appropriate — or even pay nothing at all. More recently, bluesy Brit Joss Stone went on record as saying she thought “piracy” of her music was just dandy. She implies that the freely shared music is growing box office sales of her live shows. These and other examples from the recording industry suggest a business model where your chief intellectual product can be given away — or shared at a huge discount — to the overall benefit of your bottom line. One could even go so far as suggest that digital rights management (DRM) protection does more economic harm than good.

Okay, but does this model hold water if you’re a niche business writer, speaker and consultant?

Kevin HillstromMy blogging friend Kevin Hillstrom reports that it seems to, if viewed holistically. And especially since his book is called Multichannel Secrets, you’d better believe Kevin views things holistically!

Joss Stone more or less admitted in her interview that, taken as a single tactic (my word, not hers), giving away music helps create buzz. It doesn’t help pay the bills. But this buzz is supporting her live shows. She is, in essence, a multi-channel business, and one channel is benefiting from the loss-leader status of the other.

Similarly, Kevin — who is the president of MineThatData — mentions in his blog that his pre-release book giveaway was not a profitable move. He reports at one point that he gave away twice as many books as he sold. But he emphasizes that as a “‘micro-channel’ strategy to running my business,” the giveaway concept makes good economic sense.

If you’re a self-publisher, you’ve probably already considered the strategy of giving out free advance copies. But Kevin can still help you, with his well-framed case for emulating Radiohead. Rock on, Kevin!

Yes, you’ll like the music: The Smart Party system can read you like a playlist

It’s tough to be a host. Will your guests like the snacks? Is there enough room to mingle, and proper ambiance to encourage conversation? And what about the music?

This is no idle concern. In the days of special events that support your brand, your role as marketing technologist suddenly makes you responsible for enhancing the proceedings with the proper tunes. And musical tastes vary widely!

Luckily, UCLA computer scientists have been on the task, and they’ve developed the Smart Party system. It polls the musical preferences of your guests by reading the playlists in their WiFi-enabled music devices.

As excerpted below, a recent NewScientist item (subscription required), reports that this novel approach to “reading your audience” works by getting inside your guests’ purses and pockets:

The [system] takes a poll of titles to work out the most popular genre and can also copy and play tracks from each device. It can then play music from the most popular overall music genre or tracks supplied by each party-goer in turn.

Pretty cool stuff, although the article goes on to mention the obvious: digital rights management (DRM) may make this system a violation of copyrights.

But I’m not as impressed with this innovation as with the direction that today’s innovators are taking. Before in this blog, I’ve posited that more than anything, portable marketing is about place. You’ll succeed as a marketer by enhancing experiences in a physical location at a particular time.

News of the Smart Party system suggests that a lot of others are focusing their imaginations on making a place-based experience more personal, and ultimately more memorable.

Radiohead and Fake Science meet differing fates in the DRM-free tar pit

This week two emails hit my Inbox within hours of each other. The first was from the site selling Radiohead’s latest CD via download. It was confirming my order, with a specific price tag that was more of a surprise to them than me, since it was I who chose it a few minutes earlier, during the ordering process.

News on the street, and from Radiohead management, is that tens of thousands of others played the same “Name your price for this CD” game, at a level equating to a little more than $8 US. (11/9/07 Update: The real figure appears to be only half of that $8 estimate.) Not too shabby — especially since there was no DRM (anti-pirating protection) on the downloads, and the band was basically doing the digital equivalent of busking: Opening their guitar cases to collect whatever money listeners want to throw their way. (They also sell a fixed-price, $80 “Disk Box” for Radiohead completists.)

The second email was from a small, audacious music store site that announced it was closing shop. is a source I’ve enjoyed for fun, mostly ambient electronica.

At $5 an album, their DJ artists — with names like Dr Toast — provide perfect musical soundtracks to knowledge working and long drives. Here is what the email from the gang at Fake Science had to say:

It is with a heavy heart that we must inform you that on November 1st, 2007 we will be closing the Fake Science Music Store. Fake Science was originally started as a labor of love by four friends who had an idea to help share music with people like you and has since grown into the online music resource it is today. However, we evaluated the amount of investment that it would take to keep the store running, as well as making necessary upgrades to keep the Fake Science standards high. We came to the realization that none of us could realistically keep the commitment due to the weight other important things in our lives, such as families, day jobs, and even other side projects.

This sounds like the explanation I’ve heard many times from musician friends, when they announce that their garage band is breaking up after graduation. The explanation is always sincere — and quite valid, considering the economics of music.

But doesn’t the long tail mean that everyone with talent has a shot at recording stardom, or at least economic viability?

Aside from “families, day jobs,” etc., what caused Fake Science to sink into the DRM-free equivalent of the prehistoric tar pits, while Radiohead’s experiment has — by all accounts and speculation — flourished? I believe economist and author Tyler Cowen nails it. He provides five reasons in his Marginal Revolution post:

  1. Radiohead is an indie cult band with extreme loyalties from its partisans and the possibility of attracting more such partisans by seeming “cool.”
  2. Radiohead peaks high on the charts (#3 for their last release, if I recall…) but I believe they sell the product pretty quickly and don’t have a long run at the top. Again, they’d like to widen their fan base.
  3. Radiohead’s gambit has reaped enormous publicity, but this won’t be the case next time.
  4. Many donors will give to a highly visible “cause of the month” (remember the outpouring of support for the tsunami victims?) but they won’t necessarily give on a regular basis.
  5. Radiohead probably has an especially high ratio of touring to CD and iTunes income; see #1. This scheme is a natural for them but not for Kelly Clarkson.

Do read the comments of this blog entry for some interesting clarifications and opposing views. Nonetheless, I think Cowen’s points are all valid.

What’s more, I’d like to add a #6 to the list. Another reason why struggling artists won’t be reaping the benefits of this Radiohead “donor” experiment is what I’ll call The Prius Factor. A recent New York Times article points out that part of the tremendous success of the Toyota Prius hybrid is that it was built to be nothing but a hybid. This is in stark contrast to the major hybrid offerings by Ford, Honda and GM’s Saturn, where they started as traditional internal combustion vehicles. You have to look for a small badge on the trunk or side panel to know that any of these other cars is an environmentally friendly gas/electric hybrid.

That suggests, according to the article, that the Prius has become an “issue bracelet.” It’s a theory supported by research reported in the same Times piece:

… More than half of the Prius buyers surveyed this spring by CNW Marketing Research of Bandon, Ore., said the main reason they purchased their car was that “it makes a statement about me.”

In the weeks to come, people will be hearing songs from Radiohead’s (quite good) In Rainbows. Those who are fans will undoubtedly be asking the person playing this CD: “So what did you pay?” Like the overtly hybrid Prius, it’s an easy conversation-starter. Surely, Radiohead’s CD will be the catalyst for many a new friendship or hook-up.

This is bad news for the relatively unknown Dr Toast, and other Fake Science musicians. But there is hope that this business model could quickly morph to benefit all artists, given the accelerated Darwinian ecosystem of the internet. (And according to a fun NOFX song, dinosaurs will die).

Oh, and there is one final thing Tyler Cowen nails in his assessment: Kid A truly is Radiohead’s best album so far. Which just goes to show that even respected economists can’t resist sounding cool with a little musical name-dropping.