Last week Mike told me about the fact that Radiohead was going to be pre-releasing their new album "In Rainbows" from their website. The new angle is that you can choose how much to pay for the album download. The guys on Sound Opinions were super excited, saying this is the end of the record industry and a revolution in the making. Of course, the artists are hoping people pay for the record.
Standard economic theory would predict that there's not much of an incentive for anyone to pay. But my friends Ralph and Ruppert showed me research that showed that people often do pay for things in similar settings and supporting theories for such behavior.
So here's the quiz:
1. How much would you pay for a new album by your favorite band?
2. How much do you think I paid for the new album?
I'll confess the answer to the second question in a week or two.
2 comments:
Mel and I had a discussion about this as well. I'm confident that our thoughts are less "economic" that yours, but Mel was skeptical that people would pay money for the album. I, on the other hand, think think that Radiohead will make more money this way than the traditional Label/Distribution method.
This "experiment" ought to scare the pants off of the single mom/grandma suing RIAA. There is no doubt that the Internet is the future of music distribution. Artists are becoming popular through Myspace instead of the radio. People that truly like particular artists will pay for their work. Casual listeners that aren't really fans will continue to find music for free. The difference in Radiohead's approach now is that they will get all of the proceeds from their true fan-base instead of a small percentage of proceeds from the sale of CDs to a mixed audience.
Brilliant!!
So..how much did I pay for the album? I paid $6 (£3) for it. I think the true value of a lossy downloaded album (with no label as the middle-man) is in this range. As far as quality goes, lossy digital downloads are lower quality than CDs. Downloads that are distributed in higher quality (lossless) formats are worth $10, in my opinion. In Rainbows can be downloaded in MP3 format at 160 kbps.
I predict that Justin payed $10 for his copy.
--mike (listening to In Rainbows while posting this)
Radiohead's plan seems to be working:
Estimates: Radiohead Made $6-$10 Million on Initial Album Sales
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