over the weekend the american industrial rock band band Nine Inch Nails released their new album titled ‘Ghosts I-IV‘ via their own website. With this release the Nine Inch Nails - lead by their outspoken frontman Trent Reznor - join a number of artists (Radiohead, Madonna, …) who, after being freed from long running contracts with mayor record labels, start experimenting with new ways of distributing their music.

Information about the success of Radiohead’s experiment is hard to come by as the band stays mute. Outsiders have suggested that only a limited percentage of the downloaders have actually paid for the download of ‘In rainbows’ but the resulting hype helped the album to enter the British album charts at number one when it was released via traditional channels (Madonna of course does not count as she entered into a 120 million 360 deal with an events marketing firm and still has to release an album after the end of her mayor label affiliation).

The approach chosen by the Nine Inch Nails is different: Rather than letting the downloaders decide on the price point they offer 5 distinctive price points: free (for one fourth of the album), $5, $10, $75 and $300. According to Ars Technica:

With Ghosts, Reznor had some obvious advantages. NiN is a better-known brand with a devoted following, and Reznor’s strategy of using multiple price points made his music easily accessible to fans. Those who wished to pay nothing could download a free version of Ghosts I. For $5, a digital version of all four albums was available, and for only $10, fans could get all the music on CD along with an immediate digital download. $75 and $300 deluxe versions were also made available and include things like a Blu-ray disc, a DVD of the multitrack audio files from the project, videos, deluxe packaging, and more. […]

In covering the story, the New York Times noted that “one option Mr. Reznor is not offering fans is a way to obtain the entire collection free,” but Ghosts I-IV is licensed under a Creative Commons Attribution Non-Commercial Share Alike license that does allow noncommercial redistribution.

This last observation is extremely interesting. Offering the work under a CC license not only allows anyone to remix the the album (interesting to see if this opportunity will be widely used) but also allows anybody to redistribute the entire album as long as this happens without the intention to make a profit. As a result both the freely available Ghosts I (as torrentfreak.com notes, uploaded by the Nine Ince Nails themselves) and the entire Ghosts I-IV suite are legally available from both closed and open bittorrent trackers (at the time of writing the pirate bay tracked more than 3000 seeders and 1000 downloaders of Ghosts I-IV).

Now it seems that regardless of this widespread free availability of the entire album Reznors gamble is paying off. As Creative Commons’ Mike Linksvayer points out the Nine Inch Nails already made $750.000 by selling all 2500 copies of the $300 ultra deluxe edition:

The $300 ‘ultra deluxe edition’ of Nine Inch Nails‘ Ghosts I-IV, limited to 2500 copies, sold out in a couple days (I believe released Sunday, no longer available this morning). There are some manufacturing costs, but they don’t appear to be using any precious materials. So if an artist typically makes $1.60 on a $15.99 CD sale, profit from sales of the limited edition already matches profit from a CD selling hundreds of thousands of copies.

Then there are non-limited sales of a $75 merely ‘deluxe edition’, $10 CD, and $5 download, and whatever other products NIN comes up with around Ghosts.

The most interesting aspect of this approach is that it takes into account that in the current situation of abundance (basically all music is available for free at our fingertips) paying for music is a more or less voluntary act: Offering wildly varying price points seems to play well with the enormous differences in individual spending power of music fans and as a result ridiculously overpriced collectors editions might indeed be a way to compensate for the income lost to a much bigger group of fans who prefer to spend their money on other things than digital music files.

Of course this business model is not really new: In the airline business a relative minority of rich individuals and corporate passengers in the front of the plane subsidizes the travel of the economy class passengers in the back and in his 1875 Critique of the Gotha Program Karl Marx identified this particular ‘business model’ as one of the key characteristics of a developed communist society (’From each according to his ability, to each according to his need‘).