One year ago, I wrote a blog post about Radiohead's album In Rainbows, which was released over the internet on Radiohead's web site prior to a physical record release. The noteworthy thing about that release was that the user determined the price they were willing to pay for the download, even for free. In my post, I championed this move as a progressive, consumer-friendly move by a very talented set of artists, but there was some question at the time as to whether it would prove viable to the band, and to the recording idustry as a whole, from a financial perspective. After being available for download under these terms for three months, the download was removed and the album was released physically in stores.

A year later, some data has become available on how In Rainbows did during its internet release. According to a release by Warner Chappell, Radiohead's publishing company, the band made more money during the 3-month "pay-what-you-want" internet release than they had off all the revenues from their prior album, 2003's 'Hail to the Thief'. In Rainbows then went on to sell 1.75 million physical copies in stores.

The same release points out that most of the people who downloaded the record chose to pay nothing.

That puts some serious weight behind my contention a year ago that by eliminating the role of the record company, and their publicity, marketing, production, and distribution costs (not to mention salaries) and use the internet as a direct distribution tool, a band can actually make more money off an internet release than a traditional release, even if the majority of consumers who download the album don't pay a dime for it. What money people did decide to pay went straight into the band's pockets, not some record label exec's, and it turned out to be more money than they'd ever made off an album prior to that time.

When the album did become available in a physical format in stores, it rocketed to #1 in both the United States and the U.K. This completely disproved any criticism of the internet release based on the idea that free or reduced-cost downloads would hurt album sales. If anything, it seems to have helped by drawing a flurry of media coverage to the album's release. Rather than detracting from physical sales, the download appears to have stimulated them.

What this all adds up to is a potentially lucrative new business model in the recording industry, one that rewards the artists rather than the businessmen who "promote" them, one made possible by the mass disrtibution network we know as the internet. Thom Yorke, the band's frontman, said in an interview in December, "In terms of digital income, we've made more money out of this record than out of all the other Radiohead albums put together, forever - in terms of anything on the 'net. And that's nuts. It's partly due to the fact that EMI wasn't giving us any money for digital sales. All the contracts signed in a certain era have none of that stuff."

I'm not saying that bands across the board can tell their management to take a hike. Most of the people I've ever known in bands couldn't manage a Burger King, much less a profitable recording and touring act. Bands will continue to need representation and management in order to focus their efforts where they really matter, in the creative realm. However, Radiohead have proven that our ideas regarding the distribution and sale of intellectual and artistic property are outdated, trailing the weight and baggage of a no-longer-relevant 20th century business model. We have a new model now, one for the 21st century, one which certainly benefits both artist and consumer. I called it "economic liberty" in October of 2007, and I think that description is still apt.

I'm sure at this point Yorke and co. feel pretty vindicated. So do I for having cheered them on for the idea at the time. A little vindication goes a long way...

Some stats (as of October 15, 2008):

• After being made available for free for 3 months the album was no.1 in the UK and in the US
• 1st Radiohead album on iTunes – no.1 album selling 30,000 units in the US in the first week
• The physical CD has sold 1.75 million to date and is still top 200 UK & US
• Total sales (physical and download) in excess of 3 million
• They sold 100k boxsets via W.A.S.T.E.
• Nearing 17 million plays on last.fm
• 1.2 million fans will see the tour
• The digital income from the experiment made a material difference to WCM’s UK digital revenue this year