Idea Lawyer Blog

The band Radiohead made waves recently by releasing their latest album over the Internet with a “pay what you like” pricing model: anyone visiting their website could download a full copy, with payment optional and completely voluntary.

According to The New York Times, the best estimates are that about 62% of downloaders early on were freeloaders: they paid nothing. Those who pay, pay somewhere around $6, so the average payment for the album works out to around $2.26 . . . far under $16 or more most people pay for the average new-release CD.

Will this prove a workable business model, long-term? The model cuts out the record companies and retailers who, between them, take around 85% of the retail price, leaving only 15% for the band. Without speculating about the model’s impact on the future of the music industry, I pose a few questions:

Most of us were raised to pay for what we get—something near the idea that “the workman is worthy of his hire.” On the other hand, that ethos has always been reinforced by the notion that everyone else is required to pay, too. How long, do you think, before people who actually pay for pay-what-you-like downloads start feeling like suckers? And when (if) they do, how long before that begins placing downward pressure on what they’re willing to play? And how long before that downward pressure ruins the business model? (Yes, digital distribution squeezes a lot of costs out of the system—but a million times nothing is still nothing.)

What do you think? Is “pay what you like” a sustainable business model, or some interesting hybrid of business model and social gesture with an inherently limited application?

If you have thoughts on the matter, please feel free to e-mail me at: bob (at) idealawyerblog dot com.