October 31, 2008 / 10:53 PM / in 10 years

Record companies cozy up to free music on Web

LOS ANGELES (Reuters) - It could be seen as the music industry equivalent of fighting fire with fire.

For years, record labels battled Web pirates for copying songs then giving them away on the Internet, but increasingly industry executives and musicians such as the venerable Bob Dylan have been offering their own songs free on the Web. The result has been, perhaps surprisingly, higher sales.

This month, Columbia Records made Dylan’s “Tell Tale Signs” available for free streaming and boosted sales. It saw similar results with a Kings of Leon album in September.

Also this month, the publisher for Radiohead music unveiled sales of an album the band posted on the Web, in some cases for free, showing the CD outsold Radiohead’s previous work.

“It’s something that never would have happened in the major label universe even five years ago,” said Aram Sinnreich, founder of music industry tracking firm Radar Research.

As use of the Internet grew in the late 1990s, the music industry battled peer-to-peer sites like Napster that allowed anyone to share songs for free on the Web. Even though the industry successfully beat Napster’s song-swap service in court, music piracy continued to cripple the business.

In the United States, CD sales plunged to 449.2 million last year from 706.3 million in 2000, according to tracking firm Nielsen SoundScan.

Musicians have tried to make up for the loss in CD sales by touring more, raising ticket prices for live shows and quickly licensing songs for films, TV shows and advertising. Record companies have sold a wider range of products including old-style vinyl records and luxury versions of albums and CDs.


Still, making up for the billions of dollars in lost revenue from declining CD sales is a huge task.

So with the Dylan record, for example, Columbia, a division of Sony Corp, posted the album for free streams to whet the appetite for sales. It then rose to No. 6 on the U.S. Billboard 200 chart and No. 1 on the Top Internet Album Chart.

Columbia went to National Public Radio and put “Tell Tale Signs” on NPR’s Web site. It was the first time a label had done that with NPR, said the network’s Bob Boilen.

He said in past years NPR pleaded with record companies to stream music and concerts on its site, but to no avail. “There was a lot of dead silence at the other end of that phone. People had to think, is this smart or is this stupid?”

But he credits the exposure for “Tell Tale Signs” on NPR’s site with helping boost record sales.

Similarly, Columbia put the Kings of Leon new album "Only by the Night" up for free streams on Web site Last.fm (www.last.fm) the week before its release. It got more than 400,000 clicks, said Last.fm spokesman Christian Ward.

On October 11 the album hit No. 5 on the Billboard 200.

“This year the labels have really started to experiment a bit more and have started really going to where the fans are, instead of pulling the fans to where they want them to be,” Ward said.

A year ago, Grammy-winning band Radiohead broke with record label EMI and made “In Rainbows” available to download for any price listeners would pay — even if that price was $0.

Jane Dyball, an executive with Radiohead’s publishing company Warner/Chappell Music, this month revealed that “In Rainbows” sold 3 million copies.

Dyball said “In Rainbows” made the band more money than their previous release — “Hail to the Thief.”

Reporting by Alex Dobuzinskis: Editing by Bob Tourtellotte

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