Tuesday, November 06, 2007

Study: Free beats fee for Radiohead's 'In Rainbows' | Tech news blog - CNET News.com

I have to admit this is probably not strictly speaking finance, but it is REALLY interesting, so....

First the background: Radiohead released their newest album free online. They merely asked people to donate.

Well, the album was released and the tallies are coming in. And not overly surprisingly, people did not give all that much. Some highlights:

Study: Free beats fee for Radiohead's 'In Rainbows' | Tech news blog - CNET News.com: "Those who predicted that Radiohead would see mass financial support after allowing fans to pay whatever they wanted for the band's latest album appear to have been a tad optimistic, according to a study released Monday."

The breakdown:
"... Of those who downloaded Radiohead's digital album, In Rainbows last month, about 62 percent walked away with the music without paying a cent....About 17 percent plunked down between a penny and $4, far below the $12 and $15 retail price of a CD. The next largest group (12 percent) was willing to pay between $8 and $12--the cost of most albums at Apple's iTunes is $9.99. They were followed by the 6 percent who paid between $4.01 and $8 and 4 percent coughed up between $12 and $20."
The economist in me is totally not surprised (see most open source products), but I do have to confess I was hoping that people would pay. Oh well.

And now I think I will take their advice and go to sleep.


Anonymous said...

Open Source products do very well but the method of making money is very different. If OSS was so poor at generating revenue we wouldn't have major technology companies like Novell, IBM, etc ploughing millions into their development and marketing.

Also with regards to the Radiohead stunt: They may have made less total money from this but there's far fewer middlemen involved so its highly likely the band came out better from it than they would have done going down the traditional route. There's also the possible new fan base they may have generated along with the future sales to that new fanbase.

Anonymous said...

It seems very likely they still made much, much more than through traditional channels, where I believe typical results are more like $0.50 per disk royalties.