Reasonable returns from Radiohead experiment

Stephen Withers
Wednesday, 07 November 2007 01:52

Business IT - Technology

Radiohead scored a lot of free publicity for its new album In Rainbows by announcing it would be available for download on a 'pay what you like' basis. But what was the financial result?

According to consumer research firm comScore's analysis of the behaviour of 2 million online users, 62 percent of people downloading the album did so without paying.

Among those that did pay, the average price tendered was $US2.26. It's generally held that artists make around $US1 per physical album sold and less for downloads, so even after allowing for hosting and other costs Radiohead is almost certainly ahead by adopting this model.

Their listeners certainly are.

If you look at comScore's analysis of those that did pay something for the album, the story gets even more interesting.

45 percent of paying customers tendered $US4 or less, yet 32 percent coughed up between $US8.01 and $US12 - as comScore observes, that's roughly  what it would have cost to purchase the album from a conventional online operation such as Apple's iTunes Store. This could be interpreted as support for the idea that the price point of just under $US1 per track as established by iTunes is about right in customers' eyes, with low-paying customers either salving their consciences by slipping the band a couple of bucks or working on the assumption that they will only like a small number of tracks from the album.

10 percent of paid transactions were at a price comparable to buying a CD in a store ($US12-20), and those buyers were responsible for over one-quarter of the revenue.