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October 02, 2007

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Jackson

I paid $8.50. I think this is actually "above average" for what an album is worth. I paid that much because I really like Radiohead. For a band I was less sure of or less fond of, I would pay less. I am thinking the average price will be about $6.

Now, I wouldn't include the $0 downloads in the average price calculation. I think those downloads should be considered a cost of doing business and not in the revenue calculations. Getting registration information for those downloads should provide value to Radiohead b/c before they knew nothing about who (and how many) were downloading the music for free. Also, I may have bought the album and then had my hard drive crash. I wouldn't feel obligated to pay again, so I might just download it at $0.

If you include the $0 downloads in the revenue calculations then I would say the avg price would be $4.50.

So, my final answer is B when > $0 and A when >= $0.

Both answers mean that Radiohead will see more profit to their bank accounts from this album than from their others.

Derek G.

My answer is B.

Ryan Holiday

Has anyone asked whether the album is good or not? It seems to me that regardless of that validity of the experiment, THAT--it's quality--will be the most decisive factor I mean, doesn't that matter a little? We don't live in a vacuum. Distribution is a means to deliver a product and more than anything, the product dictates how successful that method will be.

Randall

My answer = A.

I paid 1 pound and 45 pence, which seems a fair price from me considering that I have previously paid out multiple times for duplicate Radiohead music on different media. I own vinyl, cassette, cd, iTunes and import versions of the same material, but I like my "Punk Floyd" - so I am a bit partial.

Jeff Atwood

B) between $5 and $10

Because that's the fair market value for a digitally downloaded album today.

Michael Moncur

I'll go with B for my answer, because I think most people will try to be "fair" and pay what an album usually costs.

Personally I tried to pay $0, because while I'm curious about this experiment I don't like Radiohead at all. But they wanted all kinds of personal information, so the download wasn't "free" after all. I'll stick to iTunes.

Paul Morriss

I would go for A because I reckon the people paying $0 will skew the figures. I think if you take all non-zero values, then the average would be B. My thoughts as I was confronted with that form were interesting. I was going to put 0, then I thought, "no, I'll read some reviews first, and pay what I think it's worth".

Magnatune.com have "pay what you want", but their bottom price is $5, not free.

Interrobanger

Most people, between $5 and 10. Nobody wants to be a free rider. Die-hard fans like myself, more than $10 -- and maybe some anti-RIAA, tech-savvy types, too. Sheer goodwill could earn them big bucks for this, at least the first time. Only first-time debit card owners and the truly despicable will try paying $0.

On a related note... of course, you can't pay $0. 45p in the UK is going to mean over a dollar here. It's the damned credit cards, of course. Where are our micropayments? Why not let people pay through Steve Case's Revolution Money? That card undercuts Visa and MasterCard on interchange fees. Click on my name and check out the website of a group I work for -- merchants have been trying to make consumers aware of the exorbitant fees the banks extract from them for processing cards, and maybe this is just the event to do it.

Meanwhile, Radiohead can cut out the record industry, but not the credit card industry. Damn. The revolution isn't over yet.

gards

B - paid $10 - which is what I would typically pay for an iTunes album.

juepucta

I would pay $5 (option A). It is several times the amount they would have gotten from my purchase of a $17 Capitol release. And this time i am not getting anything but files.

Mind you i will most likely end up buying a proper CD version of the album (not the ridiculously priced 40 pound UK ) eventually.

-G.

Niva

A !
I paid 25p, but it was really frustating when i found out i would have to pay 45p to visa.
The reason i liked the way they're selling the album is that it was suposed to cut out the middle man (record companies), but after all they had just got a new one (credit card companies).
So I end up giving more money to visa then to radiohead....

Jorge Procopio

Chris,
this is great news. The music business needs to understand that times have changed and that we are not going to accept being taken down their path anymore...I live in Brazil and 80% of all the music I like don´t even come out here. Some years ago I had to wait months before a "new" release got down here. Thank god and the Long Tail those times are behind us. Some artists such as Radiohead and NIN do such a great job at packaging and producing that I have no problem at buying their work for whatever prize they charge.
Looking foward on seeing you here in Brazil in November.
Jorge

Bo

Depends on the age. You should have been more specific and asked for not only our vote but our age range. The younger they are the less they will pay. And the Charlatans are somewhat right. Concert attendance is dropping. Concert ticket prices are going up. I wonder why? The future of music will be interesting for sure.

Soul on the Verge of Aim

Chris,

I think that you will find the arp come in at 5 or below. I blogged about this topic on my site and a few others, mentioning a study done by listen.com a couple years ago on the elasticity of demand for downloadable music. As the price drops, sales rocket. I think this ultra elasticity of demand will end up being a positive to Radiohead because the economics of digital downloads support virtually no marginal costs.

Radiohead is just collecting a nominal fee, like an ATM machine to support the cash cow... the tour, the t-shirts, the equity in attention.

for what its worth, I also see the long tail in Radiohead's move which is how beneficial this mode of distribution is to an artist. Just aisles and aisles of virtual shelf space, filled with music that never collects dust. Add some price versioning with the Disc Box and you have a pretty good set up to maximize value.

Soul on the Verge of Aim

Chris,

I think that you will find the arp come in at 5 or below. I blogged about this topic on my site and a few others, mentioning a study done by listen.com a couple years ago on the elasticity of demand for downloadable music. As the price drops, sales rocket. I think this ultra elasticity of demand will end up being a positive to Radiohead because the economics of digital downloads support virtually no marginal costs.

Radiohead is just collecting a nominal fee, like an ATM machine to support the cash cow... the tour, the t-shirts, the equity in attention.

for what its worth, I also see the long tail in Radiohead's move which is how beneficial this mode of distribution is to an artist. Just aisles and aisles of virtual shelf space, filled with music that never collects dust. Add some price versioning with the Disc Box and you have a pretty good set up to maximize value.

Soul on the Verge of Aim

Chris,

I think that you will find the arp come in at 5 or below. I blogged about this topic on my site and a few others, mentioning a study done by listen.com a couple years ago on the elasticity of demand for downloadable music. As the price drops, sales rocket. I think this ultra elasticity of demand will end up being a positive to Radiohead because the economics of digital downloads support virtually no marginal costs.

Radiohead is just collecting a nominal fee, like an ATM machine to support the cash cow... the tour, the t-shirts, the equity in attention.

for what its worth, I also see the long tail in Radiohead's move which is how beneficial this mode of distribution is to an artist. Just aisles and aisles of virtual shelf space, filled with music that never collects dust. Add some price versioning with the Disc Box and you have a pretty good set up to maximize value.

Ryan Miller

I'd say 50% pay less than $5, with a skew in that range toward the one pound free-riders. 35% between $5 and $10 and 15% at $10 or above. Maybe 1-2% buy the box set.

In the end, I bet the weighted average hovers at around $5 per album sold, which is about what artists get nowadays anyways after the industry takes its cut... I would love to be surprised with a higher number though.

By the way, when I blogged about this I posted an open offer to Radiohead to let me run the analytics on their experiment. I didn't spend $120K on a Wharton MBA for nothing you "know. This is where my education, career, and relentless listens to "Paranoid Android" and "2+2=5" magically join into one path:

http://mediatrending.com/2007/10/02/radioheads-new-album-has-infinite-price-points/

Thom? Jonny? Ed?? Colin? Phil??? whaddya say?

Pena Schmidt

I paid 5 GBP, just above 10 USD

Looks like a Long Wiggling Tail, now. We are happy, clearly.

It's nice to see many people/blogs I'm reading along converge on the matter. Please check Freakonomics for OK comments.

PC

I paid 1 pound. I would've paid more if they had samples to the album. But they didn't so it was a completely blind buy to me. I'm not the biggest Radiohead fan but I think they're great and have enjoyed their prior albums.

All in all, they made more money off of me then they would've otherwise. If I didn't hear about this, I would've downloaded the album (bittorrent) for free.

I'm a big concert fan, so that's the way bands that I truly enjoy really make money off of me. If I find this album to be truly awesome, perhaps I'll purchase it again.

A fair price to me is $1 per awesome track (iTunes-ish).

Michael H

More than $10 - This is a great band, and I would gladly pay top dollar knowing I am supporting them directly. Their core following is so strong that this will absolutely prove to be successful. I don't think the media giants are sweatin' real hard yet, but this will definitely help continue to put the heat on them. Don't you love it?

The Limes

About 4 or more years ago, I helped out my friend Sean Cripps and his band, The Limes, and put up a website with payment via the honor system: PayPal him what you think it's worth. The site has the 8 songs from their pre-release demo. It's nice to see Radiohead adopting the Lime's business model.

cheers,
Chris

www.WeAreTheLimes.com

 Mack MacDaniel

Long run? Insert drum roll:)...having not listened to the album, no idea. But I do have an idea about the equilibrium price per "good" song and how that might affect all downloaded "album" sales in the future (your basic yield metric)...

Probably 70 to 90 cents per "good" song NET to the group. If this album/ collection of songs has five quality songs- equilibrium will settle at around $4.00 for the "album". It doesn't matter how many songs are compiled, just the number of quality ones.

Results:
Good part: "Quality" and "Worth" are finally converging.
Bad part: We've potentially got a lot of extraneous humans running around.


Ryan Troy

I paid $30 because they are the most relevant band around and I thought I should offset the amount of copies I made for my friends when I go the early leak of Amnesiac. Funny enough I also bought the boxset, unaware a download was inclued, and at check out my bill looked like this:

Download -$30
Boxset -$40
Total $10

Bug or subtle reward. Not sure, but stoked regardless.

That said I think the average price will be B, because I think most fans share in a mutual respect and will pay more than nothing, but less than $10 because honestly, to most, music has lost its value due to an over abundance of selection. Important to note though that most would be willing to pay more(not free) for Radiohead simply because their music is just that much better than anything out there. Ok maybe I'm just a fanboy, but my 2cents.

Ryan Troy

I paid $30 because they are the most relevant band around and I thought I should offset the amount of copies I made for my friends when I go the early leak of Amnesiac. Funny enough I also bought the boxset, unaware a download was inclued, and at check out my bill looked like this:

Download -$30
Boxset -$40
Total $10

Bug or subtle reward. Not sure, but stoked regardless.

That said I think the average price will be B, because I think most fans share in a mutual respect and will pay more than nothing, but less than $10 because honestly, to most, music has lost its value due to an over abundance of selection. Important to note though that most would be willing to pay more(not free) for Radiohead simply because their music is just that much better than anything out there. Ok maybe I'm just a fanboy, but my 2cents.

Joe

I paid 5 pounds because Radiohead publishes a quality product. They have integrity. I like their music. They deserve it and a major record label industry that looks upon its customers as criminals does not.

I hope many more bands use the Radiohead (Wilco) model. I for one will support it.

Robin Goad

I did some further analysis on this using Hitwise Internet usage data here: http://weblogs.hitwise.com/robin-goad/2007/10/radiohead_freakonomics_and_fre_1.html

The main finding was that the people downloading the album from Radiohead's site are not the same sort of people who download from stuff for free from the file sharing sites. This could mean one of two things for Radiohead - either they've managed to tap into the market of people who are willing to pay for the content and the honour systmem will see them good; or they've just started giving their music away for free to the very people that are usually prepared to pay for it. Hopefully Radiohead will release some data from this experiment and we'll see which is true!

Robin Goad
Research Director, Hitwise

Aaron Strout

I paid 3 pounds (plus the .45p credit card charge.) At first blush, I like the album. Worst case scenario, it was worth the $7 to participate in the experiment.

To draw an analogy to the airline industry (soul on the verge of aim points this out in his/her post), smart musicians will get their product (the flight) out their for free or little cost and then make their money on the extras like tours, t-shirts, ad promos (think baggage fees, food, movies, etc. on planes). I think for more popular bands with a large built in audience, this can be a hugely successful model. Plus, the marketing is free!

David

I haven't gotten my copy yet, but I'm planning on paying at least $10. As far as whether it's good or not, I have trouble imagining what a bad Radiohead album would be. I trust them to put out something I would want to listen to. They're constantly exploring new musical territory, and $10 is a pretty cheap fare to share their journey.

I'm guessing the average price paid will be "B", between $5 and $10.

It's cool that they're cutting out the record companies, but what I really wish they'd do is cut out Ticketmaster and their cadre of scalpers. For the past 2 Radiohead shows in L.A. it's been virtually impossible to buy tickets when they go on sale.

MarieLu

I paid just £1 has I had not heard the music beforehand, anyway I feel they can still make money at that price level.

Alek

I paid 0.00, not because I don't value the producers or wish to encourage the distribution method, but because of the band's process. The band didn't inform digital download customers that the audio would arrive at 160kbps until after many of the orders were placed. 160kbps is also unnecessarily low, meaning that people who want something approximating the actual sound material will need to buy the CD anyway, and wait until 2008 to do so unless they purchase the wildly expensive discbox. The combined marketing machinations here, clearly intended to produce hype and generate CD sales, ultimately result in the opposite of what you want from this kind of experiment. I'm planning to buy the CD, since the downloaded version will sound bad on everything but my laptop's internal speakers. So I paid nothing for the download, which I view as essentially a promo. Had the band not manipulated customers in such a disappointingly familiar fashion I would have paid a fair price for the low-quality download, as I do on the occasions I use iTunes or emusic. But given the circumstances, I didn't want to encourage this willingness to accept low-quality audio, and I didn't want to help cement an already strong association between innovative distribution models and compromised information density. If that makes sense.

Robert Meyer

I'm going to have to go with A on this one. I personally had never listened to Radiohead before and when I heard about this, I placed my $0.00 order so that I could listen and see if I liked it. It is worth noting that I was willing to spend $2 or $3 just to download the albumn for previewing purposes, however, the website was shady in appearance at best. It was hard to tell if the website was legit (aside from the millions of blog posts in m RSS reader.)

While I told myself that I would come back and buy the album for real if I did like it, I doubt this would have ever materialized. (Ironically) luckily for Radiohead, I didn't like the album so they didn't lose anything more than the cost of bandwidth because of me. Lastly, I would argue that the money spent in bandwidth on cases like myself are probably within reasonable limits of advertising. If I had liked the album, I would not hesitate to buy other albums and see them in concert.

christopher

$5-8 million in the first weeks for a product with no physical media costs? not bad at all.

CubikMusik

$8 and well worth it.
Generally not a big fan of Radiohead but felt that I wanted to pay this more to (a) support the band and (b) to show support of the actual idea itself.
Cheers

Kevin Goldsmith

I paid $5, I would have paid $10, but I was disappointed that the MP3s weren't at higher bitrates and that their commerce system was so badly done. It would have been good of them to also have a questionaire on their site in their checkout "why did you pay what you did?" The numbers themselves are an interesting datapoint, but why people chose to pay (or not pay) is more interesting.

Colin Brumelle

I downloaded the album on bittorent first, liked it, and then gladly paid $10 for it.

As an aside, I'd love to see the average amount people have paid, displayed alongside the payment form (like Jane Sibery has done, who you mention in your post). I think showing a "community derived" price is a neat idea, although I'm not sure from the bands point of view if it would increase or decrease revenue generated.

Arby

"they have a product whose marginal cost of manufacturing and distribution is close to zero."

This is false. Every download has a bandwidth cost. If the album was 50 megabytes, it's about $0.05c US per download in bandwidth costs.

So while it's nice to give it away, only a band as prolific as Radiohead (or Prince, etc) can really absorb the COST of giving it away for free. Imagine if those 500,000 P2P downloads instead occurred on Radiohead's website. We're talking 500,000 x 50mb @ .50c/GB = $25,000 bill!

jp kaneshida

With all of the bluster about the way "new media" is changing the info landscape, the real challenges to the old guard seem to be - surprise surprise - in music. Witness Radiohead's latest distribution play. Go ahead - Google it - there's tons of stuff, from major mass media to pundits like Gerd Leonhard or Chris Anderson.

As someone who exists on the margins of this, pontificating till I was sick of it to so-called indie filmmakers, it's all quite amusing. Many of the principles remain the same between music and film and indeed with any artistic medium on the indie level.

But music has a different dimension than most others, and that's concerts. For musicians, this is where the money is. This is why the Stones, who by now are probably mainlining Geritol, are still touring and indeed in their recently completed world tour set a new gross record of over half a billion. That's a ton of Geritol.

So while all of the talk about the "innovation" of Radiohead's distrib strategy is bringing this discussion to more public light, they key thing to get is that recorded music (herein, "records" or, "a record") in the new age of new media is, in the purest marketing sense, collateral. Think of it this way: If a company takes out an ad for its latest widget, its sales expectation on the ad is based upon market research, and the price for the ad is a marketing cost. The difference is split between the two models, stone age and new media. What the mass media congloms of the stone age fail to understand is the stone age media's aside but a new media bedrock: the model of records = marketing cost in the age of new media; they are stuck in the stone age where, first and foremost, records were a revenue generator, instead of a cost center, ie: marketing cost.

In its most basic light, the stone age media's failure is in their out-moded, out-entrepreneured thinking, their perspective, the way they look at, perceive and understand the world. It's the Peter Principle all over again. (from the citation: This is "The Generalized Peter Principle." It was observed by Dr. William R. Corcoran in his work on Corrective Action Programs at nuclear power plants. He observed it applied to hardware, e.g., vacuum cleaners as aspirators, and administrative devices such as the "Safety Evaluations" used for managing change. There is much temptation to use what has worked before, even when it may exceed its effective scope. Dr. Peter observed this about humans. [emphasis mine])

And not to cast aspersions, but new media has its long list of wacko tries - witness the dot-com boom, but that's not un-expected. However, when a would-be king such as Yahoo goes and hires an old stone age patriarch like Terry Semel, (from the largest stone-age conglom on earth! No doubt the Yahoo-ers thought that was a great selling point, but in reality, their thinking as well was stone-age) it more than raised eyebrows with me. (Although I have no eyebrows to brag of) My expectation at that point was for Semel to not get it, and sure enough, in a re-tread of John Sculley at Apple, (Yes, even the mythic Steve Jobs had to re-tool his thinking. Remember his now legendary pitch to Sculley at the time? You want to sell sugar water or change the world?) Yahoo has "failed" spectacularly. I say this in light of the fact that Yahoo could have been the kings - they were positioned to be so, but then their lack of innovation killed their chances, and in a confluence of now history, Google out-entrepreneured them.

jeux video

What a way to start the week! Like most of you I imagine, I'm a *massive* Radiohead fan. In the world of music news this is apocalyptic news. We'll be spending the rest of the day on the phone and online working to to get the very latest info and inside story. But we'll also be counting down just like all the other fans. Awesome. Radiohead lead the pack again.

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Tidbits

The Long Tail by Chris Anderson

Notes and sources for the book

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