Piracy, it seems, is about more than price.
That's one of the surprising discoveries to come out of an experiment by the British band Radiohead last week. On Thursday, the group made its latest album, In Rainbows, available for direct downloading from the Web at an unusual price: whatever fans feel like paying. Downloaders who want to pay nothing can enter "zero" in the site's price field and download the album for free.
But for hard-core music pirates, even free hasn’t been enough of a draw. According to music industry analysts, hundreds of thousands of Web users who frequent copyright-infringing file-sharing sites, including The Pirate Bay and TorrentSpy, have chosen to download In Rainbows illegally, distributing their contraband around the Internet just as they might with any other pirated album.
On the first day that Radiohead's latest became available, around 240,000 users downloaded the album from copyright-infringing peer-to-peer BitTorrent sources, according to Big Champagne, a Los-Angeles-based company that tracks illegal downloading on the Internet. Over the following days, the file was downloaded about 100,000 more times each day—adding up to more than 500,000 total illegal downloads.
That's less than the 1.2 million legitimate online sales of the album reported by the British Web site Gigwise.com. But Eric Garland, Big Champagne's chief executive, says illegal file-sharing is likely to overtake legal downloads in the coming weeks, given that many of those 1.2 million legitimate sales were pre-orders taken during the 10 days between when the band announced the album and its actual release last Thursday.
With popular album releases, illegal download volumes normally outstrip sales, says Garland. But more surprising is that fans chose to steal music they could legally download for any price they choose.
Garland argues that this kind of digital theft is more a matter of habit than of economics. "People don't know Radiohead's site. They do know their favorite BitTorrent site and they use it every day," he says. "It's quite simply easier for folks to get the illegal version than the legal version."
In Garland's experience, the store price of a new album plays little role in determining how often it will be pirated. Similarly irrelevant are the protective locks that recording companies put on files to try to stop pirates from copying and sharing them, so called digital rights management systems.
"Albums that are popular in retail are popular among pirates," Garland says. "In the big picture, if people want something, some will pay, and others will find a way to take it for free."
Despite the hundreds of thousands of illegal downloads, Radiohead's innovative online release could still be a smart fiscal strategy. By cutting out record companies, the band retains the full revenue stream of album sales, and monies from touring and merchandise sales.
The buzz generated by the band's pay-what-you-want publicity stunt may also boost sales. Radiohead's previous album sold only 300,000 copies in the first week—about one-sixth the number of copies of In Rainbows now in circulation.
An internal memo circulated at EMI, Radiohead's former record label, and obtained by Forbes.com, demonstrates the album's tectonic effects on the music industry.
"The recorded music industry … has for too long been dependent on how many CDs can be sold," writes Guy Hands, EMI's chairman. "The industry, rather than embracing digitalization and the opportunities it brings for promotion of product and distribution through multiple channels, has stuck its head in the sand. Radiohead's actions are a wake-up call which we should all welcome and respond to with creativity and energy."
But for Doug Lichtman, an intellectual property professor at the UCLA School of Law, the volume of piracy following In Rainbows' release erodes the success of Radiohead's innovation. "If the community rejects even forward-thinking experiments like this one, real harm is done to the next generation of experimentation and change," he says.
Lichtman speculates that users may have interpreted Radiohead's offer as a giveaway and so felt more comfortable downloading the album from other free sources. Fans may also have been turned off by the band's requirement that users register by providing their name and e-mail and postal addresses.
The ultimate lesson may simply be that it's hard to compete with free, Lichtman says. "Registration is a small barrier," he says. "Sadly, even that little bit of cost might be too much."
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