Well, it’s actually old news, really old news. But even though this, I still find the results relevant to today’s marketing for entertainment products such as music, but even more so due to recents events; the release of the new Radiohead album The King of Limbs.
I’m talking about Radiohead’s “you pay what you think it’s worth” pricing strategy for their new album. If you have followed the whole piracy debate – which you probably haven’t been able to miss anyway – you would know that the main issue is that a large sum of people don’t think that music, film and other cultural products should be priced by anyone else but the consumers; something Radiohead has acknowledged.
Now, Radiohead decided to cut the whole chain of distribution and released the In Rainbows CD on their own accord, without a label saving their asses if they failed.
The results? It looks as if Radiohead has abandoned the “you pay what you think it’s worth” pricing strategy for their new album. Want to guess why? Well, according to comScore who tracked the visits to their webpage, a lot of people downloaded the album – not that many payed for it. comScore says that only 2 out of 5 downloaders were willing to pay, and the average amount they payed was 6 USD for the whole album:
During the first 29 days of October, 1.2 million people worldwide visited the “In Rainbows” site, with a significant percentage of visitors ultimately downloading the album. The study showed that 38 percent of global downloaders of the album willingly paid to do so, with the remaining 62 percent choosing to pay nothing. The percent downloading for free in the U.S. (60 percent) is only marginally lower than in the rest of the world (64 percent).
Now, Radiohead’s strategy could be seen as a partial success. Without a label to have to pay for, they took all of the money themselves; even though this I’m wondering if they could laugh all the way to the bank or not. A small band could never have pulled of such a strategy, we have to remember that Radiohead has been backed up label power for a lot of years.
They seem to have abandoned this approach for their new album anyway. Now you have to pay 7 USD for the digital MP3 only version of the album.
Wait, maybe the release pricing strategy of In Rainbow was only an evil scheme – a huge survey – to test what a reasonable price for a digital album would be according to their fans? We have a conspiracy! No, not really, but they must have probably learned quite a lot about the behaviors and price sensitivity of their listeners, which may pay off in the long run.
