Dear all

RADIOHEAD

As you know, Radiohead, a band with whom we have enjoyed a long and productive history, have decided to release their new album, In Rainbows, directly to consumers via their own web-site. They have also allowed fans to download the digital album at a price to be set by the consumer. While some recorded music executives and other firms have expressed shock and dismay at this development, it should have come as no surprise. In a digital world, it was inevitable that a band with the necessary financial resources and consumer recognition to be able to distribute their music directly to their fans would do so. Radiohead is one of the most iconic, original and successful bands in the world, and one of the few with a fan base large and devoted enough to support the costs of such an initiative.

However, whilst most bands, including many successful names, will not be able to - or want to - follow in their footsteps, there are some important lessons to be learnt which support our analysis of what needs to change in the recorded music business model and which many of you have touched on in your letters and emails to us since Terra Firma bought EMI.

In this note, I want to address what Radiohead

That's an awful lot of words to say "Oh bugger. Anyone got the slightest idea what to do?"

He's right about the labels becoming something like publishers. It makes no longer any sense to invest millions in new bands. And it makes even less sense for most artits to sign the usual record contracts. So record labels can become service companies who provide certain services (against flat fees,not royalties) for artitsts and/or collector of rights, buying up the rights to already successful recordings.