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Economic News, Data and Analysis

Radiohead Experiment

I’ve heard the Radiohead experiment presented as a failure since 62 percent of downloaders paid nothing. (Background: Radiohead is a band that released an album online and let fans decide how much, if anything, they’d like to pay.)
To me, however, this seems like it could be a huge success. Of those that paid, the average price was $6. So if my math is right, this means that the average across all downloaders is $2.28. Now, I don’t know what the industry standard is for the per CD royalties that the band collects (vs what the record company keeps), but I wouldn’t be surprised if this is not too far off. Plus, this mechanism probably introduced thousands of people to the band and will help expand their fan base for future releases and concerts.
I’m not sure this model will work for all bands, but this is far from a failed experiment as many have suggested.

BBC NEWS | Entertainment | Most ‘paid nothing for Radiohead’

Most ‘paid nothing for Radiohead’
Nearly two-thirds of downloaders paid nothing for Radiohead’s latest album, a survey has suggested.
Fans were invited to put their own price on the 10 MP3 files that made up In Rainbows, from nothing to £100.
But internet monitoring company Comscore found that only 38% of downloaders willingly paid to do so.
The average price paid for the album was $6 (£2.90), the study – based on a survey of the online behaviour of over two million internet users – found.
American fans were the most generous, paying on average $8.05 (£3.85), compared to the $4.64 (£2.22) paid by those outside the US.
Risks
Of those who were willing to pay, the largest percentage (17%) paid less than $4 (£1.90). However 12% were willing to pay between $8-$12, (£3.80 – £5.71).

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