How Is a Canadian Art-Pop Singer Like a Bagel Salesman?

Much like Paul Feldman, the bagel guy we wrote about in Freakonomics, Jane Siberry has decided to offer her wares to the public via an honor-system payment scheme. She gives her fans four choices:

1. free (gift from Jane)
2. self-determined (pay now)
3. self-determined (pay later so you are truly educated in your decision)
4. standard (today’s going rate is about .99)

Then, cleverly, she posts statistics on payment rates to date:

% Accepting gift from Jane: 17%
% Paid by determining price: 37%
% Paying Later: 46%

Avg Price Per Track: $1.14
% Paid Below Suggested: 8%
% Paid At Suggested: 79%
% Paid Above Suggested: 14%

Even more cleverly, Siberry posts the average payment rate for each song as you pull your payment option from the drop-down menu — another reminder that, Hey, you’re more than welcome to steal this music but here’s how other people have acted in the recent past. Methinks Ms. Siberry grasps the power of incentives quite well. This allows for at least a couple of interesting things to happen: people can decide what to pay after they hear the music, and see how much it’s worth to them (it looks like people generally pay the most per song under this option); and it takes the variable-pricing scheme that economists love and puts it in the hands of the consumer, not the seller.

I think record companies will need a lot more convincing before they’re willing to try this model on a large scale. Presumably, Jane Siberry fans who go to her website to get her music are a deeply self-selecting lot, far more devoted than the average downloader. But as desperate as the record companies are, I wouldn’t be surprised to see more of this in the future. (Perhaps someone’s already doing it — please let us know if you know; and thanks to Gordon Morrison for the Siberry tip.)


yaquina27

Harvey Danger released their most recent album as a free Torrent download (http://www.harveydanger.com/press/why.php). After you've downloaded the album, you can choose to buy the CD online or make a contribution via PayPal or snail mail. I downloaded the album and made a contribution at the same time because I like the band and support what their distribution method.

110phil

Jane Siberry's 1981 album, "Jane Siberry," is one of my favorite discs of all-time. I wish her site had been there 15 years ago -- the CD was hard to find and expensive. But worth it.

I'd be curious to see if this album does well on her site -- in general, do the better albums sell more than the worse ones? Do buyers volunteer to pay more for the better ones? Do buyers who don't know the artist, but happen to start with the better albums, wind up buying more? Is it worth giving away some of your best work for free in order to attract new customers, or should you give them your "averagest" work and hope they pay for the good stuff?

funkyj

On a related topic, Magnatune (http://www.magnatune.com/) allows you to buy DRM free music where you get to chose how much you pay ($5 to $18). While Magnatune does keep and present statistics on how much people, on average, choose to pay they don't present it as proactively as Jane Siberry's site.

ama342004

I was reading Freakonomics this weekend and, at the end of the bagel man chapter, wondered if his collections would go up if he, like Jane Siberry, posted his data. For instance, if a whole company could see that the executives were the biggest cheapskates that might be an incentive either for the working stiffs to pay less, or for the execs to steal less out of shame or to set a good example. Similarly, If one company new that their crosstown rivals were more honest, they might try to catch up. FInally, some may cheat on the assumption that they are the only ones who do so and therefore are not costing the bagel man too much. If they knew that he was only recouping, say, 87% of the bagels, they might be less inclined to do so, sort of like Siberry posting what others have paid for the same song.

WashingtonHeights

At the end of the chapter on cheating you mention that Feldman seems to side with Socrates and Adam Smith who argue that people are generally good even without reinforcement. I think that many of the 87 percent of the people who do not steal do not do so because of religous convictions, namely fear of the negative consequences of sinning. Thus Feldman's case is not exactly analagous to "the Ring of Gyres" case where there is absolutely nobody watching. But then again the people who stole from Feldman did not receive any tangible and physical enforcement, but I guess it all boils down to how religious convictions serve as an effective enforcer.

Jeremy Cherfas

I was going to mention Magnatune too; it featured in an Economist article a while ago.

Jeremy Cherfas

Maybe my comment didn't show because I included a link. Here it is naked http://economist.com/displaystory.cfm?story_id=4368092

mike_wire

@WashingtonHeights: I find your premise utterly offensive.

You presume that morality - in this case the decision "to steal or not to steal" - and the ability to know right from wrong and act accordingly are purely a consequence of "religious conviction." By your definition, "religious conviction" must mean a set of value-judgements acquired from religious texts (Bible/Torah/Koran), and learned from teachers (Sunday school et al) and experiences superimposed on people's fundamentally evil, base natures and motivations.

So if I don't go to church I'll steal everything that's not nailed down? My bad.

Organised religion (just as much as many other social and political movements throughout history) is guilty of countless acts of immorality, cruelty and inhumanity in the past and right now in this very moment. If religious conviction leads us to make fundamentally 'good' decisions, how do you explain the Inquisition? Bombing Iraq in the name of God? The crusades? ... "Thou shall NOT kill." ... Jihad against cartoonists? Christian, Hindu, Muslim, Jewish, Serbian Orthodox-Albanian Muslim, Sunni-Shiite and countless other religiously motivated acts/killings/cultures of violence?

I contend that the majority of people are fundamentally 'good' because it is in our nature to recognise the benefits of enlightened self interest (i.e. "Do unto others as you would have them do unto you"). This is however contingent on societal and social structures of some kind being reasonably intact (see Lord of the Flies) – war zones totalitarian regimes and other extremes certainly bring out the worst in us.

Just because I do not subscribe to the tenets of one organised religion or another does not make me a thief. I pay for my bagels.

Religion does not automatically equal morality. Doing right or doing wrong comes from inside you, not on orders from God.

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George S

Regarding this type of payment scheme, is there anything that prevents a seller from simply putting up imaginary statistics? (Is it illegal or considered false advertising)
I could list that only 10% of the people are taking the music free, 15% are paying the standard $.99 rate, and 75% are paying an average of $1.10 per song and then see what happens. This information might have nothing at all to do with what might really be happening, but it could make prospective customers lean toward paying at least the standard rate and probably higher.
You could eventually arrive at the optimum set of statistics that get the most customers to pay more than $.99 a song.
On the other hand, if you listed that 85% of the people were taking the music free, you would be definitely encouraging people to take it for nothing.

WashingtonHeights

mike-
i think you misread what i wrote. I wrote " that many of the 87 percent of the people who do not steal do not do so because of religous convictions". I am just stating a fact that describes the phenomena. In no way did I ever indicate that religion is the sole source of morality. So Im not quite sure why i offended you...
-WH

Crosbie Fitch

You ask "Perhaps someone's already doing it—please let us know if you know"

Check out http://www.QuidMusic.com for the 2nd generation site I produced last year.

I'm now working on the 3rd generation.

NB the first was http://www.digitalartauction.com (which I did progress as far as a prototype, but have disabled until it is reincarnated as a 3rd generation site).

kara

i'm surprised that no one has mentioned Team Love Records (run by Conor Oberst of Bright Eyes). this label has, from the very beginning, offered all of its albums for free on its website (no drm, hi-bit rate MP3s). www.team-love.com is the site, it's worth checking out for sure, and certainly a scary business model (scary enough that i believe they are the only label to have such a policy).

Adrian du Plessis

Canadian musician Allison Crowe, through her label, Rubenesque Records, www.allisoncrowe.com , has offered all of her recordings without DRM - albums and non-album tracks - as free downloads on her label website since Rubenesque launched in 2003. At the same time, CDs are offered for sale, and people can donate any amount they wish for downloads. With the advent of sites such as Jamendo, Allison Crowe's music is also available for free, and by donation - at fan-set prices - there and elsewhere online. She also successfully offers her music for sale, in various formats, on such traditional sites as iTunes, Amazon.com, CD Baby and more.

All these things combined are very effective, and fun! (I know from serving as Allison's manager.) The revolution IS now.

Meshach

I am not an economist. I'm a musician. I am currently in a friendly fight with Google Checkout to convince them to allow me to offer this very same service. Paypal is a horrible awful company, and has proven so in the past on many occasions, but Google seems to be doing much more to benefit the 'user' - me.

So, after setting up a Checkout account, and listing my CD for sale with a drop-down menu to select the price (from $1 - $15), Google wrote me this lovely email.

"Dear Meshach,

During a recent review, we found that your website
http://meshachjackson.com accepts donations. In accordance with Google Checkout policies at
http://checkout.google.com/support/sell/bin/answer.py?answer=75724, you may only use Google Checkout to process donations if your business has a legitimate tax exempt status, displays this status publicly, and has completed the steps required to accept donations via Google Checkout.

Please visit
http://checkout.google.com/support/sell/bin/answer.py?answer=72721 for more information about these steps.

The CD you are selling appears to be raising money for support.

To avoid having your account suspended, please do not use Google Checkout to process donations until you've completed the steps required to accept donations via Google Checkout.

Please feel free to reply to this email if you have any additional
questions.

Sincerely,

The Google Checkout Team"

I wrote back to appeal, as follows:

"Thanks for the email. I must say, I am a bit surprised by the nature of this correspondence, though. Calling my CD sale a "donation" is hardly accurate, and I'd like to appeal the decision if I may. As an independent musician, I have to remain on the cutting edge of all marketing and technological opportunities available. "Pay-What-You-Want" for a product is not necessarily new, but certainly an advantageous angle by which I can sell my music. The fact is, different markets, different consumers, will pay different prices. It therefore behooves me to offer this flexibility. A market as saturated as Nashville or Austin, for example, would pay much less than say, St. Louis. Therefore, I offer the option to pay what you want. This is very different from a donation in two distinct ways.

(1) You don't have the option of getting the record for free.
(2) You don't have the option of giving any money without getting the record in return.

This is a purchase, with a flexible price. There have been many articles written about Radiohead's new album "In Rainbows", which was released under this same premise. I've included a few links below.

* http://www.nytimes.com/2007/12/09/arts/music/09pare.html
* http://www.time.com/time/arts/article/0,8599,1666973,00.html
* http://andrewkeen.typepad.com/the_great_seduction/2007/12/pay-what-you-wa.html
* http://blogs.pcworld.com/staffblog/archives/005587.html

Thanks to Radiohead, this type of product marketing is becoming more noticed, as referenced below as a more Macro-Economics view of the concept.

* http://www.theseminal.com/2007/12/18/pay-what-you-want-will-change-the-music-industry/
* http://www.boingboing.net/2006/05/03/freaknomics-on-jane-.html

Also, please note that there are new companies already building their marketing strategy around this business plan. SongSlide is the first that comes to mind.

* http://consumerist.com/consumer/songslide/pay-what-you-want-for-independent-music-with-songslide-250605.php"

I'll keep you posted on how it turns out.

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Noob

I am interested to hear what google checkout replied to your mail, Meshach.
You are certainly right. Your pricing scheme is not a donation.

Wyatt

We just launched a pay-what-you-want music service called Aralie.com in public beta last week. Its based out of Guelph,Canada

ava

Hey check out the new Mas Que Nada single sung by the amazing reggae singer Ava Leigh which is also available on I Tunes.

yaquina27

Harvey Danger released their most recent album as a free Torrent download (http://www.harveydanger.com/press/why.php). After you've downloaded the album, you can choose to buy the CD online or make a contribution via PayPal or snail mail. I downloaded the album and made a contribution at the same time because I like the band and support what their distribution method.

110phil

Jane Siberry's 1981 album, "Jane Siberry," is one of my favorite discs of all-time. I wish her site had been there 15 years ago -- the CD was hard to find and expensive. But worth it.

I'd be curious to see if this album does well on her site -- in general, do the better albums sell more than the worse ones? Do buyers volunteer to pay more for the better ones? Do buyers who don't know the artist, but happen to start with the better albums, wind up buying more? Is it worth giving away some of your best work for free in order to attract new customers, or should you give them your "averagest" work and hope they pay for the good stuff?

funkyj

On a related topic, Magnatune (http://www.magnatune.com/) allows you to buy DRM free music where you get to chose how much you pay ($5 to $18). While Magnatune does keep and present statistics on how much people, on average, choose to pay they don't present it as proactively as Jane Siberry's site.