Most Fans Paid $0 for Radiohead Album

AP/Breitbart ^ | 11/6/2007 | Alex Veiga

[mojito]

Radiohead let its fans decide how much to pay for a digital copy of the band's latest release, "In Rainbows," and more than half of those who downloaded the album chose to pay nothing, according to a study by a consumer research firm. Some 62 percent of the people who downloaded "In Rainbows" in a four- week period last month opted not to pay the British alt-rockers a cent. But the remaining 38 percent voluntarily paid an average of $6, according to the study by comScore Inc.

Radiohead broke with its past practice of releasing its music in CD format and through a major record label when it released its seventh studio album online itself. The biggest wrinkle was the band's decision to let fans pay as much or as little as they wanted to download a copy.

The results of the study were drawn from data gathered from a few hundred people who are part of comScore's database of 2 million computer users worldwide. The firm, which has permission to monitor the computer users' online behavior, did not provide a margin of error for the study's results.

Between Oct. 1 and Oct. 29, about 1.2 million people visited the Web site the band set up for fans to download the album, comScore said Monday. The research firm did not say how many people in its study actually bought the album.

Among U.S. residents, about 40 percent who downloaded the album paid to do so. Their average payment was $8.05, the firm said.

Some 36 percent of the fans outside the U.S. who downloaded the album opted to pay; on average, those fans paid $4.64, according to the study.

Radiohead's U.S.-based publicist said Tuesday the band had no comment on the study.

The online release sent shock waves through the recording industry, with some hailing it as a shrewd move at a time of declining CD sales industrywide and others writing it off as a publicity stunt that amounted to the band giving away its music.

The band, which also offered fans the option of buying a lavish box set for about $82, plans to release the album in CD format some time next year.

[Teacher317]

You have to admire them for risking their own revenues to conduct the interesting social experiment.

[CalvaryJohn]

So, this is your first foray into capitalism, then?

[RockinRight]

What I’d like to see is if they still profited more this way than through traditional record labels and the cut they’d get out of that.

[KarlInOhio]

But the remaining 38 percent voluntarily paid an average of $6, according to the study by comScore Inc.

That's an average of $2.28 for all downloaders. It's probably more than they would have gotten through a record label.

[T.Smith]

Complained those who paid nothing, “I can’t believe I got what I paid for.”

[Squawk 8888]

I wouldn’t be surprised if this proves viable, given that a lot of people willingly pay $10-20 for a CD even though downloads are available. As others have pointed out on this thread, the band will probably get no less than they would have received through a traditional record deal.

[mysterio]

Radiohead is an awesome group.

[AnotherUnixGeek]

But the remaining 38 percent voluntarily paid an average of $6, according to the study by comScore Inc.

The interesting question is whether they cleared more than they would have through a traditional distribution through a record label despite getting an average of $6 from only 38 percent of the listeners. Since they didn't have to split any money with a record company, and since many of the 62% who downloaded for free would never have paid for a Radiohead album in any event, I suspect the experiment may turn out to be a success.

Anyway, I'm a longtime fan - I paid the $80 for the deluxe box set as a Christmas present to myself.

[PeterPrinciple]

Didn’t Stephen King do this with a book but discontinued it because there weren’t enough honest people. I think he had similar results.

[VA_Gentleman]

Yes, Radiohead is an excellent band, but their latest albums isn’t one of their greatest. I still say “The Bends” is better than “Ok Computer” also.

I paid for the album when I downloaded it as I think musicians should be paid for their craft.

[mysterio]

Didn’t Stephen King do this with a book but discontinued it because there weren’t enough honest people. I think he had similar results.

Yeah, in 2000. I was one of the ones who paid. Not enough people paid, so he stopped the story.

[Tzimisce]

....gee, I’m stunned....

[Tzimisce]

If they really want to be cutting edge, they should let fans pay whatever they want too for concert tickets...

[Huntress]

I still say “The Bends” is better than “Ok Computer” also.

I agree. Radiohead is awesome.

[purpleraine]

Oh! THAT free market.

[CitizenUSA]

Squawk 8888 wrote: “I wouldn’t be surprised if this proves viable, given that a lot of people willingly pay $10-20 for a CD even though downloads are available. As others have pointed out on this thread, the band will probably get no less than they would have received through a traditional record deal.”

From what I’ve read, the artists don’t make much off album sales, so you may be right. An alternative approach would be to charge a modest fee for downloading the album. A band, especially a popular one, could easily undercut the recording companies and appeal directly to their fans.

[Sloth]

Brilliant business decision, IMO.

[Turbopilot]

Unfortunately, I think all this experiment told us is how many people are willing to donate money to multimillionaires whose work they happen to like. I'm not sure it's much different from mailing $5 to Tom Cruise because you caught Top Gun on TV last weekend where you didn't get the chance to compensate him for his performance.

This "experiment" didn't tell us anything about what people would be willing to pay for music because in this case they didn't have to pay. How many of the people who paid $0 would have paid $1, $5, or $10 if they did not have the option of $0? How many people who paid $4 would have bought it at $6 if that were the price, and how many would not have? Those are the questions I think are interesting from an economics perspective.

I would be much more interested in an experiment devised as follows: Announce that you will release a certain number of copies of your album, and no more. This number could be revealed in advance, but even better would be not to reveal the number (or even not to choose the number) in advance of the experiment. Set up the web site as an auction, where people who want the album must bid a certain amount and give a credit card that will be charged if their bid succeeds. After the fans have had a couple weeks to put in their bids, take your number of release copies (say, 1 million for this example) and give the copies to the 1 million highest bidders. People could bid $0; if you had fewer than 1 million people who bid above $0, the first people to bid $0 would get a copy for free until all 1 million were gone.

This method would tell you exactly how many purchasers you would have at any given price point and give you the optimal price for your album (assuming your next album was exactly as popular as this one, and you wanted to sell it in a conventional manner). The artist could maximize his income by not selecting the number of copies to be sold until after the auction, and simply releasing as many copies as he had bidders (of course, this would probably only work once, after which most people would bid $0.01).

[HamiltonJay]

Bands make most of their money touring... this $6 average per download is WAY WAY WAY more than the band would have made releasing it traditionally with a retail price of $15 or whatever CD’s go for now.