Pay for What You Can Get for Free? Not Such a Crazy Idea…

All of you, I’m sure, are aware of Radiohead’s recent experiment in distributing its most recent album. Rather than release a CD, the band made its music available for download from its website, giving “customers” the choice of paying whatever amount they wanted for the album. The results of the experiment are of interest to both music industry executives (who can’t believe an artist would cut them out of the loop) and classical economists (who can’t believe a rational consumer would pay for something they can get for free) alike.

Early results on the experiment are coming in. A company that analyzed several hundred of the downloads reports that 38% of people who downloaded the album paid for it, on average choosing to give about $6 each – which is probably a much larger cut than Radiohead would have seen by distributing their album in the traditional way. And considering the 62% who did not pay would likely have downloaded it for free in any case, Radiohead is no further behind.

I’m not sure this represents a viable new model for music distribution generally, or that it would work for anyone but the biggest bands, but it’s great to see this type of creative use of technology to challenge existing industry and business models. And it may be transferable to other products and media: recently, Paste Magazine started to offer a name-your-own-price subscription, requiring only a minimum payment of $1.

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