“A club with continuing benefits”

Radiohead caused a stir recently by self-releasing their new album “In Rainbows” online, and charging whatever the buyer was willing to pay. Links and clippings on What Radiohead Did:

• Seth Godin on The truth about Radiohead

1.2 million albums sold, $8 each, no middleman, one week: Radiohead Kicks the Middleman to the Curb.

The thing to keep in mind is this: the value of the permission. The fact that the group now has more than a million people they can go make music for is worth many times over what these people already paid. If they’re smart, they’ll continue to change the way they work. Paying for their mp3s should get you into a club, a club with continuing benefits.

• Radiohead’s Warm Glow in the New York Times

I didn’t pay anything to download Radiohead’s “In Rainbows” last Wednesday. When the checkout page on the band’s Web site allowed me to type in whatever price I wanted, I put 0.00, the lowest I could go. My economist friends say this makes me a rational being… One could argue that rationality isn’t everything.

• NPR’s For What It’s Worth, with Tyler Cowen

It’s about signaling. It’s about proving to yourself that you’re really a fan. It’s as if you would sleep on the pavement to line up for tickets in advance. It’s about conspicuous consumption. So it’s a way of identifying yourself with Radiohead, a cool band, more than ever before.

So if someone this time around is paying 40 dollars for the new Radiohead, if Radiohead were to try the same business model next time, the same person might feel they had already signaled and not pay anything at all or pay a very small amount.

And if consumers felt that every time they wanted music they were asked, how much are you donating?, how much are you donating?, this would get on their nerves. It would be a kind of overload. And what people then tend to do is just shut the whole thing out and they do what they want, and they don’t tend to give very much at all.

To some extent, Cowen is right, consumers will act differently the next time around—they will pay less. But I’d bet they will still pay, even after the novelty wears off.

Radiohead is taking advantage of the Wealth of Networks, which is, to appropriate Godin’s words, already “a club with continuing benefits.” It’s just that members declare themselves unofficially and receive their “warm glow” benefits as they please.

“If they’re smart, [Radiohead] will continue to change the way they work,” says Godin. Giving away your album is the first step. How about giving away some of the profit you made from those who did pay? Would people be more likely to pay for the album (or pay more) if part of the profit went back to a nonprofit or school of their choice? I could pay $0, or I could pay $10 for “In Rainbows”. If I was willing to pay $10 in the first place, I bet I’d be happy to pay $12 if 10% was going to end poverty here in Seattle. Local benefits, distributed philanthropy, and artists get paid for making it happen. A jigsaw falling into place.

[update: stats on What Radiohead Did]