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Dumbest Move Ever : Music Industry Blew Billions By Going To War On The Internet

Trent Reznor’s experiment of releasing his new Nine Inch Nails album, Ghosts, for free to file-sharing networks at the same time providing the option of purchasing high quality downloads, CDs and signed collector’s edition packs can enter the history books of the Freeconomy as a huge success.

In just one week of the digital release of the four volume, instrumental Ghosts, Reznor has confirmed he has grossed more than $1.6 million.

Reznor gave away his album, all of it, to the hugely popular file-sharing sites, like Bittorent and The Pirate Bay, actively encouraging ‘piracy’ of his own music, and he still made a fortune.

And Reznor doesn’t have to wait for a record company to spend two years calculating what he is owed before he getting his money. It was in the NIN accounts often within minutes of someone buying one of the Ghosts downloads or packs. So many tried to give Reznor money at his website that it crashed the servers. The demand to buy what could be heard for free was more enormous than Reznor and his management had even thought to prepare for.

While the fact that Reznor personally ‘leaked’ his album to the much-derided P2P sites wasn’t mentioned much in the media coverage, Reznor made sure that every person who went to download a free torrent of the entire Ghosts album saw a letter that constituted an advertisement for the special editions and collectors’ packs available for sale on his own site.

The message was simple, “Look, you can have this version for free, you can listen to it all before you even think about buying it, but if you like it, and I know you’ll like it, you want to get over to my site soon and buy something before all the special stuff is gone.”

Reznor’s freeconomic business strategy worked brilliantly, despite the problems in trying to deal with more customers than they were prepared to handle. Reznor sold some 2500 special edition Ghosts packs, for $300 each, within 24 hours of the non-advertised album being released. More than $700,000 poured into NIN in the first day of this experiment.

Reznor calculates he’s earned more than $1.6 million, in the first 12 days of Ghosts’ release :

On Wednesday, he reported 781,917 transactions, including free and paid downloads and orders of physical product. A $300 box set sold out of 2,500 copies within a day. Nine of the 36 songs were made available as a free download. The complete set also was available as a $5 download, a $10 double-CD and a $75 set with bonus visual content.

File sharing sites like The Pirate Bay were seeing 8000-10,000 free downloads per hour, for the entire first week, so millions more scored a copy for free, with Reznor’s blessing.

But Reznor can very likely count on even a minute percentage of all those who scored Ghosts for free spending money on something Reznor creates and releases, or a T-shirt, a DVD or a concert ticket, in the next few years. Some who heard it and copied it free will also buy the CD of Ghosts if they see it in a local record store. Particularly if the CD has something special that you can’t get for free online - a poster, a badge, a sticker. They will buy what they were given for free because they want the full package Reznor created, or simply because they want to direct some money his way for giving away the album for free to start with.

Reznor earned an incalculable amount of goodwill for giving Ghosts away to the file sharers. He listened to the complaints that followed Radiohead’s ‘free’ release of In Rainbows last year, where you had to offer up credit card details and a handling surcharge before deciding whether or not you want to pay for the download, the quality of which was much derided.

In Rainbows was copied by millions on the sharing sites, but unlike with NIN’s Ghosts, the pirate torrents for Radiohead didn’t include a letter from the band and an invite to come and see what was for sale at the official site.

If 10 million hear Reznor’s Ghosts for free, a realistic figure he’s now closing in on, Reznor only needs 0.1% of those ‘pirates’ to spend $50 on something NIN in the next few years, and another few hundred thousand dollars in sales has been generated for the band thanks to the Free Economy.

A moody, atmospheric four volume instrumental album, with little mainstream radio would be interested in airing, reaches millions of people in only a few days and generates more than $1 million in sales in the first week, and makes a few million more the following month.

And if The Pirate Bay, and other P2P file-sharing sites, didn’t exist, if tens of millions around the world weren’t copying albums and posting torrents and downloading albums, mostly illegally, if those sites were not already so insanely popular, then Reznor would not have been able to pull this off.

Reznor saw a way to use music piracy to his advantage, to get the file-sharers to promote and boost and distribute and broadcast his new album to millions, for free. No outsider record company. No ads. No promos. Minimal distribution costs.

Just to salt up the wound Reznor has opened in the music industry, Blender Magazine has just named the record corporations illogical and wasteful War On The Internet as The Biggest Music Industry Screw Up In History :

The major labels took top dishonors for driving file-sharing service Napster out of business in 2001, instead of figuring out a way to make money from its tens of millions of users. The downloaders merely scattered to hundreds of other sites, and the industry has been in a tailspin ever since.

“The labels’ campaign to stop their music from being acquired for free across the Internet has been like trying to cork a hurricane — upward of a billion files are swapped every month on peer-to-peer networks,” Blender said in the report…

Those poor fuckers who passed on signing The Beatles back in the early 1960s can finally relax. They lost the top spot to the morons who thought it was a good idea to sue their own customers.

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