Nov 7, 2007

Customer Pricing --- fad or trend?

Some detailed data is starting to emerge on The Grand Experiment of digital music delivery. I refer, of course, to the "pay what you want" system put in place for Radiohead's In Rainbows release of superb progressive rock.

Here's what we think we know:

- Approximately 2/3 of those that downloaded the offering paid nada -- zip.

- The remaining 1/3 paid an average of $6 each.

Success? Failure? It's being played up as the latter, but we're not so sure.

The math says that the average purchase price for ALL the downloads is $2 each. That doesn't seem like much, but consider this:

a) This isn't the physical deliver world we're talking about here. There are no costs for creating, packaging and shipping the jewel-cased CD's to retail stores around the globe. Or paying the freight to ship back the unsold copies, either.

b) How amy of those 'freeloaders' were not really interested in Radiohead to begin with, but instead just caught up in the hype and in the "gimme somehting for free" aspect? The guess here is that this subset is huge, and therefore should not be considered as 'lost paying customers.' In fact, many of them are now turned on to a roup of which they were not familair, and are now prospects to by the back catalog of the band.

The above data is strictly 'percentages' -- we dont yet know the total numbers of people involved.

Regardless, it is very interesting. Could it be the start of a widespread trend? Could be; today we noticed that one of our favorite magazines -- Paste -- is now on board with a similar program.

This bears watching...


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