January 6, 2009  ·  Lessig

Beautifully put by Fred Benenson:

NIN’s CC-Licensed Best-Selling MP3 Album

Fred Benenson, January 5th, 2009

NIN Best Selling MP3 Album

NIN’s Creative Commons licensed Ghosts I-IV has been making lots of headlines these days.

First, there’s the critical acclaim and two Grammy nominations, which testify to the work’s strength as a musical piece. But what has got us really excited is how well the album has done with music fans. Aside from generating over $1.6 million in revenue for NIN in its first week, and hitting #1 on Billboard’s Electronic charts, Last.fm has the album ranked as the 4th-most-listened to album of the year, with over 5,222,525 scrobbles.

Even more exciting, however, is that Ghosts I-IV is ranked the best selling MP3 album of 2008 on Amazon’s MP3 store.

Take a moment and think about that.

NIN fans could have gone to any file sharing network to download the entire CC-BY-NC-SA album legally. Many did, and thousands will continue to do so. So why would fans bother buying files that were identical to the ones on the file sharing networks? One explanation is the convenience and ease of use of NIN and Amazon’s MP3 stores. But another is that fans understood that purchasing MP3s would directly support the music and career of a musician they liked.

The next time someone tries to convince you that releasing music under CC will cannibalize digital sales, remember that Ghosts I-IV broke that rule, and point them here.

  • http://xmlhacker.com/ M. David Peterson

    So very sweet! :-)

  • http://digitalproductions.co.uk Crosbie Fitch

    It is crucial to understand that artists are skilled in producing art – not copies.

    Printers are the ones who produce copies.

    So, pay the artist for their art.

    The market for copies has ended, because everyone can make their own.

    If you can make your own copies why pay anyone else for them? Printers may well be unhappy to lose their monopoly, and artists would be misguided to believe they can sell copies where printers cannot, but the artist remains the only one who can produce the art, and their audience those who want to pay them.

    For further discussion of this see: digitalproductions.co.uk.

  • http://xmlhacker.com/ M. David Peterson

    @Crosbie: With all due respect, I couldn’t disagree more. As pointed out in Fred’s post is the fact that the album generated 1.6 million in sales in the first week, /most/ of that attributed to the sales of /copies/ — CD’s, DVD’s, and Vinyl copies to be exact. The fact that more people purchased the MP3 version of the Ghosts I-IV album than any other on Amazon.com in 2008 speaks /volumes/ in and of itself as far as the true meaning of “Free”. But the MP3 sales are only part of the story. The rest of the story goes like this:

    As Trent proved with the release of Ghosts I-IV, people want to touch and feel and experience an album just as badly as they want to listen to it, and are willing to pay for that experience. The labels have a clear path to survival via hard good sales. They simply have to think outside of the boxed-set, providing access to merchandise that people perceive has greater value than that in which they gain from an MP3 file. This isn’t rocket science. It’s simple economics: Supply and Demand, the “Demand” side of the equation being the part the labels were blindsided by, blaming file sharing as what seemed the obvious source of the problem for declining sales.

    But file sharing was not and is not the source of the labels problems. No one has ever proven file sharing does anything but /increase/ sales of albums. Radiohead took Kid A to the top of the sales charts in 2000, but not because of their marketing efforts and instead because of Napster: Three weeks before its US release the album was leaked onto Napster. But instead of killing the albums sales as many feared, they went from never having broken the Billboard Top 20 to #1. Why?

    Exposure!

    So then if greater exposure means increased sales, why have album sales continued their rapid decline in the past decade?

    Wal-Mart. Cheap packaging and shoddy products brought on by a lack of understanding as to the most basic principals of economics: If you want to sell something to someone you have to create something compelling for them to buy.

    The labels killed themselves. File sharing was just their scapegoat.

  • Sam I Am

    “The labels killed themselves. File sharing was just their scapegoat.”

    Much of what you offer here is correct, Mr. Peterson, but that statement is a gross oversimplification.

    It’s easy to forget that up until the advent of Napster in 200o, the American entertainment industries were the pride of American culture and the envy of industry all over the world. You didn’t hear about how they were “ripping us off” or how ‘the product is just awful (and I want a free copy of every bit of it.)” In fact, record labels and the rockstars they promoted were our heros. As recently as only a few years ago working for a label was a highly desired position and a source of genuine status among peers.

    Instead of complaining, to the contrary, we consumed music and movies and books with zeal and paid for every copy or enjoyment as was intended by the creators or their agents, and very rarely if ever did we hear complaint about cost. Oh sure, some will complain about anything. Others gripe when movie tickets go up or we express our disappointment that a band can’t gather a dozen top ten hits everytime on their albums, reaching to B sides instead. But that’s natural, even Van Gogh and Picasso and Monet have their first tier work and then all the rest. Gathering a representative sampling of a recording artists work as an album is the natural extension of that. Personally, I mourn the loss of the emotional arc of an album as a viable artistic format for the artist. On occasion, we even discovered tracks we loved far more than the ones that were intended to anchor the album. This carping is a recent phenomenon.

    The point is, only when digital copying became prevalent did the real complaining begin. Why? Because it could–now it was “free” because technology tipped the hand in favor of the pirate, not the artist or the label. We’ll see how that all pans out.

    But its no secret that the artists like Reznor or Radiohead have been able to capitalize on the fame bankrolled for them by the very industries they now eschew. Precious few unknowns will ever gather this kind of fame and sales again if the fan base is left to weed them all out on their own and then pay at their discretion or not. And it’s no small irony that hard copy product is the future again, when pirates the world over have long brayed that THEY are the future of music. In addition to writing and arranging the songs themselves, artists today are saddled with the task of garnering a million so-called “fans’ on Facebook or MySpace with no money to tour and no clue how to monetize any of it to a decent recording, a tangible product, a website, a marketing campaign, a reasonable living.

    I don’t always accept the veracity of the industry figures and I certainly don’t buy into the old canard that an infringed file is inherently a lost sale. It’s also true that online piracy really does enhance exposure for the beginner, although how they pay their bills with exposure is yet to be seen.

    There are dozens of paid options for fans to use that embrace our digital future and retain the time honored (and honorable) system of one possession/one purchase. To suggest that a 16 billion dollar recording industry has been halved in the 8 years since Napster (and later P2P) because of bad product (that everyone oddly seems to demand a free copy of) is just disingenuous, and there’s already enough of that on all sides of this debate.

  • http://digitalproductions.co.uk Crosbie Fitch

    @M. David Peterson:

    I don’t think you’ve said anything in disagreement with me.

    Those who value the art should pay the artist.
    Those who value the copy should pay the printer.

    There will remain a residual market for souvenir/collectible copies, e.g. vinyl.

    What the Internet is dissolving is the idea that the art (and the commission to the artist) is bound with the copy.

    Release the art from the impotent shackles of copyright and you change from black to white a free market in the production and distribution of copies – distinct from the production and publication of the art.

    Why should the artist receive a royalty from someone else’s hard labour in producing a copy?

    Let the artist be paid for their art, not the production of copies.

    The difficulty facing audiences today is figuring out how they can pay the artist for their art, given they don’t need to pay them (or anyone else) for copies.

    For example, if you’ve downloaded the MP3 copy for free, but want to pay the artist for their art, why also pay Amazon for a copy you don’t need? Why should Amazon get a cut of the money the audience wants to pay solely to the artist?

  • http://xmlhacker.com/ M. David Peterson

    @Sam I Am:

    >> “The labels killed themselves. File sharing was just their scapegoat.”

    > Much of what you offer here is correct, Mr. Peterson, but that statement is a gross oversimplification.

    Well sure… There’s obviously a lot more to it, but — as I’m sure yours is too — my time is limited and peoples attention spans (including my own!) too short to try and expound into all of the reasons behind the statement.

    You do, however, bring out some interesting points, but please excuse me while I attend to my “must be done as soon as possible” task list items before responding in full.

    Enjoy your day!

  • Alex

    Any discussion of this album’s success that is based on the metrics given by the band for sales ought to be taken with a fair grain of skepticism- the ‘triumph’ of Radiohead’s success with In Rainbows last year was roundly criticized because it was based on all sorts of assumptions that were made from numbers that came out of the total black box of Radiohead’s website/management. If we want these sorts of projects to have a real and objective voice in the dialogue about digital media I think the artists involved ought to realize the importance transparency in this respect.

  • bill

    Need to turn the second N in NIN backwards, professor, a la:

    NIИ

  • http://spaz.mindstab.net Mike Levens

    @Sam I Am:

    In addition to writing and arranging the songs themselves, artists today are saddled with the task of garnering a million so-called “fans’ on Facebook or MySpace with no money to tour and no clue how to monetize any of it to a decent recording, a tangible product, a website, a marketing campaign, a reasonable living.

    Yeah, it’s harder in some ways. It’s possible for artists to carve out a market for themselves, and maybe the best example is Jonathan Coulton. But part of the reason that the task artists face seems so daunting, is that there’s just so many more of them.

    Crosbie is correct in that the market for copies is at an end. People whose business model centered on the duplication of bits, no longer produce anything of value. But what’s often overlooked is that the proliferation of technology is making musicians out of many thousands of people who wouldn’t be otherwise, and that these people are learning the trade collaboratively. So the cost of equipment and the scarcity of production expertise are vanishing, and in addition, the old distribution channels are no longer able to restrict and meter out artists’ access to fans. Barriers to entry are collapsing, so the number of artists is exploding. And the customer base is not.

    So will the kind of fame enjoyed by, say, U2, ever exist again? I don’t know.

    But now that a radio-ready album can be made for a few grand’s worth of equipment plus the artist’s time, maybe there are just fewer livings to be made in it than there used to be.

  • http://spaz.mindstab.net Mike Levens

    …And come to think of it, when U2 gets out of the way, maybe there’ll be room instead for a hundred or a thousand more modest careers.

    (If band allegiance prevents you from getting my point, please substitute in whatever artist you think rides on the most excessive music biz promotion and production resources. I’m sure you can think of one.)

  • Pharamond II

    Alex wrote:
    “Any discussion of this album’s success that is based on the metrics given by the band for sales ought to be taken with a fair grain of skepticism- the ‘triumph’ of Radiohead’s success with In Rainbows last year was roundly criticized because it was based on all sorts of assumptions that were made from numbers that came out of the total black box of Radiohead’s website/management. If we want these sorts of projects to have a real and objective voice in the dialogue about digital media I think the artists involved ought to realize the importance transparency in this respect.”

    Reznor himself agreed with the idea of transparency in sales numbers so those numbers could be used for accurate research towards a viable financial music distribution model. He mentioned in either an interview, or on his nin.com blog (I don’t remember which) that he thought the guesstimation of Radiohead’s sales numbers was not going to be as much help for those trying to find a workable model, which is why he said he was going to give out an accurate number of sales of Ghosts as soon as they got the numbers. He gave out the $1.6 mill number himself, it wasn’t someone’s guess.

    And because of the above reasoning, he also gave out the number of sales for Saul Williams album (which he produced and helped to distribute digitally). Originally you were allowed to have the choice of getting 320kb mp3s for free or paying $5 for higher quality files of that album. All choices came with a pdf of artwork, lyrics, and credits.

    And for those saying that Amazon should get any money, Reznor said it cost him a whole $37 bucks to sell the digital files through Amazon. I don’t think he, or even a lesser-known band, is really losing out there.

  • http://www.perceptric.com Chris Gilbey

    This article is really about the CC license, which the comments so far seem to have missed.

    The fact is that the established ‘music industry’ as opposed to a lot of the artists who work within the industry, are absolutely terrified of what this kind of license portends, so the impact of an album released under CC is pretty important stuff.

    The problems for the industry are many and they are an easy target for some. And a lot of what ails the industry is that they are facing a Darwinian problem. The environment changed radically with the combined introduction of digitally encoded files (the CD) and digital distribution (The Internet). Faced with a new environment organisms that adapt, survive. The music industry is still fighting against adapting to change – in spite of embracing digital distribution to phones and ringtones etc. Those technologies make it easy to adapt an analogue business model. The internet with P2P makes it very difficult to use those pre-existing models.

    The only way for the music industry to survive is to make all content free on the Internet, paid in the mobile space and paid in the physical goods space. There is one rather complex, but nevertheless viable, way for the music industry to profit from P2P and that is to develop a model based on carbon credits.

    Tom Koltai, who is a colleague of mine, is both an economist and a technologist (he founded the first ISP in Australia and has a PhD in economics). He is currently doing modeling of the real costs of physical units and the carbon footprint that is incurred in producing physical discs. The opportunities for profit for content owners from this concept is absolutely staggering according to the early data that he has developed. There is a lot of work to still be done in this area before the findings can be publicly released, but we believe that by adopting this approach the existing publishers and studios will generate huge profits, people will be entertained, artists and actors etc will be rewarded, and the planet will benefit.

    Now all that may seem a bit pie in the sky to some people, but then when my grandparents were alive they would have said: People will one day fly around the world in airplanes – ridiculous”.

    By the way, I was in the music business for 30+ years, was involved in the early career of AC/DC, produced records (including The Church’s first album), managed bands (including The Saints) – my last gig in the music business was at BMG in Australia, where I created the first mainstream streaming audio web site using what was then Progressive Networks (now Real Audio). Of course having done those things doesn’t really mean diddly squat, except that I was a very early adopter…..

    The bottom line for all this is to say that Creative Commons is here to stay and it may very well be the thing that saves the industry from exctinction.

  • http://www.artiajans.net/ Artı

    I don’t always accept the veracity of the industry figures and I certainly don’t buy into the old canard that an infringed file is inherently a lost sale. It’s also true that online piracy really does enhance exposure for the beginner, although how they pay their bills with exposure is yet to be seen.

  • http://soundthefreetrumpet.typepad.com/ Catching The Waves

    There’s room for many different types of distribution in the online music world: it can be free, pay-per-listen, pay-to-download or pay-over-the counter. The difference with CC-licensed music is that there is no incentive for anyone to break the law. NIN passed the moral imperative to the listening public and the response has been heart-warming. Free music can generate revenue in many different ways. I’m now a fan of Nine Inch Nails because I downloaded and loved Ghosts. Would I have paid for it before? Probably not (though I wouldn’t have pirated it), but now I want to buy their back catalogue. That’s good marketing.

    My apologies if you’ve read this before:

    I have an amateurish and sporadically updated blog, Catching The Waves, in which I enthuse about netlabel releases that have tickled my fancy. I became interested in netlabel music because it allowed me to hear styles of music that I was curious about but couldn’t afford to buy. It allowed me to explore genres that were new to me: chiptune, ambient, minimal, IDM, dub, electronica, breakbeat, experimental and so on. Now that I’ve heard some of those genres I am far more likely to buy songs/albums in those genres. The other day I bought a song from Jonathan Coulton, an artist I would not have heard of but for his online presence and habit of giving away free music. Similarly, I downloaded an album by Brad Sucks (Brad Turcotte) and liked it so much that I intend to buy his new album. Those are two artists who are going to get my money who would not have done so otherwise.

    I don’t make any money from my blog. In fact, it costs me money, but it’s my way of saying thank you to people who have given away their music: the more publicity they receive, the better. I always link to the netlabel and the artist’s own website, and I encourage visitors to my blog to make a donation or pay for some of the artists’ other fare, whether that be albums, merchandise or concert tickets. Many netlabel musicians give away their music for no other reason than because they want to, though many use it as a marketing tool, building up a fan base that hopefully will “tip” them for their current music and/or pay for future releases. It’s up to them. Either way, these people have made albums that might not otherwise have seen the light of day. The quality may vary greatly but no one is forced to listen.

    It’s not just one-way traffic. Netlabels spread the music; a website like Eventful allows music fans to “demand” that their favourite bands visit them. If a nascent band learn that 100 people in Nowheresville want to see them then they can stage a concert there, with a very good chance of a great reception and merchandise and record sales.

    I’m not proposing an either/or music world. All I’m saying is that the netlabel/own-website scene can complement the existing music industry paradigm, allowing people to hear music without hindrance from financial constraints or perceived wisdom. Perhaps a site like Magnatune is a good compromise, allowing people to stream artists’ music as much as they want to and, if they like it enough, to pay for a DRM-free mp3? There’s also Jamendo, which offers over 8,000 albums of Creative Commons music, and allows listeners to donate to artists who might otherwise struggle to see any payment for their music.

    Piracy is a bad thing. I am fully in favour of paying for music. If I want U2′s latest record then I’ll hand over the cash for it: I don’t want to rip off musicians or companies. But the internet, whether in the form of netlabels or artists’ own websites, allied with cheap software, now allows anyone to attempt to make a living as a musician. Most music, like most art, isn’t very good. But the “long tail” theory of the internet allows people to find the music that chimes with their taste. Compose an opera for xylophone and noseflute and no record company will give you the time of day – but the internet allows the xylophone and noseflute lovers of the world to search for their favourite genre and discover your opera, which you’ve recorded and released under your own steam. Who on earth is to say what’s good music and what isn’t? The record companies?

    Admittedly, everything is up in the air; it’s difficult to predict what will happen to the music industry in the next few years. If I thought that netlabels were harming music and musicians then I would close my blog. But I don’t think that netlabels and “free” music will hurt the Madonnas of this world. The large record companies will continue to dominate the charts and make money from sales, merchandising and tours. But those artists who sell “only” 1,000 albums, and can’t continue because their record company has dropped them, might now be able to carry on because, thanks to the methods I’ve mentioned, they too can make money from sales, merchandising and tours. It depends what you want from your music-making. There might be fewer multi-millionaire musicians in the future but there may be more people who are able to make a living as full-time musicians. And there will be more choice for the listener. That’s a good thing, surely?

  • http://enoughcowbell.com James

    I have to agree with Sam I Am – “I certainly don’t buy into the old canard that an infringed file is inherently a lost sale.” I ran some numbers on Radiohead here – http://enoughcowbell.com/2008/12/17/solving-the-mystery-of-in-rainbows-average-download-price-part-1-of-2/ – for a blog post I did after it was revealed that Radiohead made more money through downloads alone than both Kid A and Amnesiac. I think you can conservatively guess that there have been at least 10M illegal downloads of In Rainbows over the last year (there was 2.3M in the first week). If .01% of those that downloaded illegally ever spend $10 on Radiohead they will make $1M. However, I believe the benefits of releasing the music for free primarily benefits the well established artists (Radiohead and NIN) and the very new bands seeking exposure.

  • http://www.tinafountain.com/ Atlanta Realtor

    Another factor could be the security in knowing what you’re getting. I am willing to pay for music downloads because I have a feeling (be it right or wrong) that the files are not tainted and are of the best quality.

  • http://www.mychances.net James

    NIN/Reznor has developed an enormous fanbase that is willing to support him in virtually everything he does. In part, this is because almost everything he does is good. (So I’m slightly biased, but millions would agree with me.) To my knowledge, the parallel free music / paid music model has only been shown to work for established artists such as NIN and Radiohead. Reznor worked with Saul Williams to create a similarly distributed product, and Reznor felt that the sales were disappointing. More specifically, he was upset that only 1 in 5 people who downloaded Williams’s album were willing to shell out for it (see some of the backstory). I’m still enthusiastic about this approach, and hope that it catches on even among up-and-coming artists.

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