Jun 24, 2013

Radiohead: Making Money by Giving It for Free

In 2007, a prominent British alternative-rock band, Radiohead, pre-released its album In Rainbows online, and asked their fans to "pick-their-own-price" (PYOP) for the digital download of it. Radiohead's unorthodox strategy has been considered as a game-changer for the music industry and a commercial success for the band. In this paper, we study the weekly music sales between 2004-2012 in the US to test the effect of the PYOP offer on Radiohead's album sales. We find that by giving out its music for "free" Radiohead increased its digital album sales, whereas the strategy had no impact on the band's CD album sales.
That is from a new paper by Bourreau, Dogan, Hong (June 2013).

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