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. The offer was available for three months, after which the band released and commercialized the album, both digitally and in CD. In this paper, we use weekly music sales data in the US between 2004-2012 to examine the effect of Radiohead’s unorthodox strategy on the band’s album sales. We find that Radiohead’s PYOP offer had no effect on the subsequent CD sales. Interestingly, it yielded higher digital album sales compared to a traditional release. Our findings suggest the PYOP strategy generated higher sales revenues overall, even if one assumes no revenues were obtained directly from the PYOP channel. However, this “success story” does not readily apply to similar strategies adopted by other bands. We show that Nine Inch Nail’s free provision of its new album, The Slip, resulted in lower revenues from the album’s digital sales.
That is from a paper by Marc Bourreau, Pinar Dogan & Sounman Hong.
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).
