There is an interesting article in The Campus Word which asks if Trent Reznor's recent efforts with the release of Ghosts are single-handedly fixing the music industry.

The record industry's business model has, for a while, been based on physical objects.  You are not buying a license to listen to music, you are buying a plastic disc for your CD player.  But as physical distribution models become increasingly antiquated, the record industry has had to deal with changes.  Obviously, people who have no interest in having a physical disc are not paying for it – but are they paying for files, are they paying for bytes, or are they paying for a license to listen to specific songs?

The industry has struggled to answer these questions, and has largely tried to shoehorn their existing business model into the information age.  Songs come with DRM on them which essentially allow the industry to treat a collection of files as though it was a physical object, which has limitations or where it can be moved, how it can (or cannot) be copied, and where it can be played.  To the industry, this seemed like an acceptable way of embracing changes in technology, but the popularity of music piracy indicates that this is not enough for many people.

People have now come to believe that, when they buy an album, they are buying an album that they can do with what they please.  If they want to listen to it on their portable music player, they believe they should be able to.  If they want to burn it to CD to play it in their car, they believe they should.  If they lose the CD and wish to reburn it, they see no reason that should be a problem.  Effectively, people want to buy a license to listen to the album however they please, but the music industry is refusing to sell that.

Trent Reznor truly is indicating that you can allow your consumers to acquire and listen to music in a way that feels natural for them, and still make money.  The success of his venture indicates that, to a great extent, he really is single-handedly fixing the music industry.  If the record industries can observe this trend and make modifications to their distribution models, they may be able to pull themselves out of the financial slump in which they currently find themselves.

Radiohead was one of the first bands to release an album for free over the internet, but they later wound up releasing a regular album and taking their download links down. They also view the effort as something of a failure, and Trent Reznor chalks this up to them being insincere. Reznor points out that the album was poor quality and not released under Creative Commons.

What we have here is a band that dabbled in these kinds of open source concepts, and wound up failing as a result. We also have a band that jumped into the philosophy whole-hog, releasing the album for free in high quality and under a copyleft license, which wound up being extremely successful.

We see this happen quite frequently in the open source world. Sometimes companies will start open projects but still exert a great deal of control over them, preventing outsiders from becoming committers or otherwise stifling the community. Projects that start this way often fail, and they are largely rejected by the community from which they are seeking support. It's no surprise that these album releases, given the open-source-style nature of them, follow a pattern that is often observed in the open source world. Embracing the concepts entirely winds up being better in the long run. Doing it insincerely results in failure.

REM has recently released a new album for free on the internet as well, but in a format even more crippled than the Radiohead release. This album is only available for streaming (not download) in low quality, for a limited time, and only on a specific proprietary web site. If the failure/success of these albums depends on some part on how sincerely they embrace the open philosophy, then we should expect the REM album to be a failure. Of course, only time will tell if that's actually the case.

Just following up on the post about how Trent Reznor's Open Source-style music made $750,000 in a few days…

Those figures were for the premium edition only.  Some new numbers have been released, and Nine Inch Nails has made $1.6 million off the freely available album.

It's also worth mentioning the Trent lambasted Radiohead for being insincere about their free internet offering, even though they were on top of the whole album-for-free bandwagon.

In the very same open source philosophy that led to Nine Inch Nails frontman Trent Reznor releasing his latest album, Ghosts, on bittorrent with a Creative Commons license, Trent has now teamed up with Web 2.0 favorite YouTube to host a film festival surrounding the new album.

Trent explains the film festival here:

The concept is for you to take whatever tracks you feel inspired by from Ghosts and create what you feel should accompany them visually. You will be able to see all of the submissions, and a team of us (including me) will be sorting through them and setting aside ones we feel are exceptional. Eventually (within a couple of months?) we will present a virtual "film festival" with me and some special guests presenting selections of your work.

This is yet another instance of Nine Inch Nails encouraging the open source mentality when it comes to Trent's music.

YouTube has, since its inception, been a place that people put videos that often used the music of others as background music.  YouTube has been fighting a constant battle against its own users, since the record labels responsible for putting out the music users embed in their videos have threatened to sue YouTube on a number of occasions.  YouTube contributors must agree that they own ALL of the content of their video, including any music used. 

The idea of a musician encouraging, rather than suing, people for putting videos on YouTube that use his music in the background truly shows how far things have come in just a few short years.  Openness is increasing.

Though somewhat unrelated, it's also pretty cool that the new Ghosts album is on top of the last.fm charts. 

I wanted to follow up a bit on yesterday's post, regarding the band Nine Inch Nails making tons of money despite releasing their latest album on torrent sites under a Creative Commons License.

This actually was not the first time Nine Inch Nails has experimented with progressive, open-source concepts in relation to it's music.  Trent Reznor (band founder) has dabbled in this sort of thing before.

The last Nine Inch Nails album, Year Zero was made available for free on the Nine Inch Nails web site, as an audio stream.  While not downloadable, anyone could listen to the album for free whenever they wanted, even skipping tracks if they desired.

Moreover, the tracks from that album were later released in a format as similar to Open Source as possible in the world of music.  All of the tracks were uploaded to the Nine Inch Nails site as multitrack audio files, which meant that anyone with multi-track audio editing programs could isolate tracks from the songs and remix at will.  Trent encouraged users to remix his songs and even hosts many of them on the site.  Fan remixes were later released as a free torrent album, much like the recent official album.

Despite the 'source' for these songs being freely available, the album still sold incredibly well.  The album and many of its songs remained on top of the Billboard charts for weeks.

Leading up to the release of Year Zero, Nine Inch Nails orchestrated an Alternate Reality Game, with clues to a story surrounding the album peppered throughout the internet.  One manifestation of this game was the creation of dozens of sites that were meant to exist within the fictional world detailed by the album.  One of these sites, meant to be a resistance movement against an oppressive government regime, was the Open Source Resistance.

There is no question that Nine Inch Nails frontman Trent Reznor embraces and promotes the Open Source Philosophy, and his actions continually show that he is willing to put his money where is mouth is, by releasing albums under copyleft licenses and uploading his songs in source format.  Nine Inch Nails proves that embracing the Open Source mindset does not mutually exclude commercial gain. 

This past week, the band Nine Inch Nails released a new studio album consisting of 36 tracks on the internet.  He uploaded a torrent of the album to The Pirate Bay as well as other torrent sites, all completely free.

And not just free as in 'free beer', but free as in 'free speech'.  All 36 tracks are liscensed under Creative Commons, the equivalent of open source for media.  All of the tracks can be remixed, modified, or embedded in other media (like videos) all for free, all legally.  

As is often the case with Open Source and CopyLeft license schemes, many wondered if Trent Reznor (Nine Inch Nails frontman) would be able to make any money with this venture. 

Reznor offered a number of ways to procure the album.  One was completely free, via torrent sites.  One was through his web site, free (though that only gave you some of the tracks).  One was through Amazon.com, which offered a DRM-free version of the album in high-quality mp3 for $5.  You also had the options of buying a physical 2-disc set of the album for $10, a "deluxe" version with a book for $75, and a "limited edition deluxe" version with two books for $300.

Only 2,500 copies of the $300 edition were made, and they sold out within a few days.  That's $750,000 right there, not including the album downloads, $10 album purchases, or $75 album purchases.

This seems to be a pretty clear indication of just how effectively you can make money while still giving a product away for free and encouraging people to share it, modify it, and redistribute it.

It's also worth mentioning that when you look at the Amazon.com music store's list of Bestselling albums, this album is currently on top.