This story on is particularly interesting today. It discusses Radiohead's newest CD, and business gambit, In Rainbows. For those who don't know the story: Radiohead has offered their newest work online free for download, or more accurately, has offered to let people download these songs at a price of their choosing.
Charles Cooper of Cnet news reports "It turns out that freeloaders by a 62 to 38 percent margin outnumbered the fans willing to pay for the British band's new album, according to ComScore."
Still there may be a ray of hope here, as he also notes that at least "close to 40 percent of the test group (pulled) out their credit cards to pay something."
So, is the glass half full, or half empty? And, if Radiohead had not offered this "pay what you like" format, what would the sales have been? My students assure me that this band was (is) still a major name act, but I'd like to see the hard data on their previous record sales, and compare it to the take on this one. Don't forget also that we're talking about very early returns here: to be completely accurate, we'd need to take several factors into account, such as changes in buying habits between this CD and their last (Hail to the Thief in 2003) , as well as the considerable increase in the use of the Internet for both fan based, and band/label originated marketing promotion and actual selling/purchasing.
There's also the fact that the band is generating considerable public relations value with this approach.
What's it worth? Only time will tell. Giving away a certain amount of the product is a smart move, for a musical act or in any business venture, as long as the people doing so are balancing the potential ROI of the free sample against lost revenue for not actually selling the product.
The band has also indicated that they will be offering a collector's edition of the CD that is reported to include many bonus features (see the band's site http://www.radiohead.com/, for more information on the Disk Box package.
In the end, numbers for this "hard copy" edition of the CD will need to be matched with download revenues generated before a true ROI can be calculated.
On another front, this somwhat daring and seemingly very calculated, business move has inspired others to look more creatively at their own business model.
Perhaps that will be the greatest contribution of this release in the long run.
...And wouldn't that be something.
JG
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