Thom Yorke reckons
that the music industry has a "decaying business model," and so he
and his band, Radiohead, have decided to opt out of it. Go to their website,
and you can download their new album for whatever you feel like paying.
My view on this is that it makes a lot of sense: by cutting out all the middlemen,
from EMI to iTunes, Radiohead builds a stronger connection to their fans, as
well as an enormous amount of goodwill. And a few other people seem to have
an opinion on this too.
Count me in with this lot:
Economist says that Radiohead’s move "reveals a recognition of the
fact that recorded music is no longer an excludable good; those who wish to
get recorded music for free will be able to do so, no matter how hard record
labels try to shield their product behind a wall of technology. Once one understands
that, it becomes clear that all music purchases are essentially conducted on
the honour system."
says that "it’s not like Radiohead’s living in a different world. But they’re
playing by a different rule book. One that says the money flows from the music."
Lefsetz also
says that Radiohead isn’t a technology company, and should have gone with
iTunes or Amazon or someone else who’s good at fulfillment and whose servers
won’t crash.
Mankiw says that this is a form of tipping, and "we economists don’t
understand tipping".
And here’s lots more commentary:
Rodrik’s wife says that Radiohead has gone bonkers, but still paid over
$10 for the album. Which leads Dani Rodrik to conclude that Radiohead has not
gone bonkers.
Wilson says that band is actually behind the technology curve: "We’ve
had the technology to allow bands to bypass traditional and online distribution
for years."
Dillow notes that "Canadian singer Issa
has a choose how much to pay system, and finds that 94%
pay at or above the suggested price for a downloaded track. Such systems demonstrate
that social norms really work. People behave honestly even when they needn’t
– they obey the social norm of reciprocity. "
Marco predicts that Radiohead "will make a hilarious amount of money".
Bayley of the Entertainment Retailers Association sounds a bit panicked,
saying that "the ERA does not support the distribution of music from just
one source because it limits access for consumers".
Anderson uses the opportunity to plug his next book: "Regardless of
what the average consumer decides to pay, this is another example of a business
model enabled by FREE. They only way Radiohead can enter into this with no idea
of what people will pay is because they have a product whose marginal cost of
manufacturing and distribution is close to zero."
Levitt wants to analyze Radiohead’s data.
Manne says Radiohead is getting more than just money: "Here’s
what else they get: An excellent mailing and e-mail list. To buy (or receive
gratis) the album from the website one must enter name, email (and no cheating,
since download codes are sent via email), address, cell phone number, etc. For
Radiohead, this is a valuable list, I imagine."
Cowen says that "no this model won’t much change the music industry".
Borjas takes the model to its logical conclusion: "The band’s history
suggests that many people (misguided as their tastes might be) would rather
listen to something else. Even at a nominal cost of zero, many of these people
will still not want to hear Radiohead’s music. The time spent listening to Radiohead
has an opportunity cost, and Radiohead will have to lower the price even further–below
zero–in order to attract them. In other words, the band will have to pay listeners
for the right to invade their airspace."
And Robert
Cyran says that "early indications suggest that Radiohead’s loyal followers
are paying too much for the band’s seventh disc."