How Much Do You Think Paul Feldman Will Pay for the New Radiohead Album?

In Freakonomics, we wrote about Paul Feldman, an economist turned bagel delivery man who began charging his customers based on the honor system. From the experiment, he found that, all in all, people were pretty honest.

Now the band Radiohead is borrowing a page from Feldman’s playbook, but on a much grander scale. One of the most popular bands in the world, Radiohead has decided to go it alone for the release of their seventh album. As reported:

[S]inger Thom Yorke told TIME, “I like the people at our record company, but the time is at hand when you have to ask why anyone needs one. And, yes, it probably would give us some perverse pleasure to say ‘F___ you’ to this decaying business model.”

So how much will it cost you to download their newest album?

Whatever you want to pay. Following other artists we’ve blogged about in the past, like Jane Siberry and Devin Brewer, the band has embarked on a radical social experiment, and is letting fans choose their own price. In the 2.5 years that we’ve been writing this blog, only one or two times have we gotten so much email about a specific topic — which happened to come hot on the heels of our quorum about the future of the music industry. I’m guessing the outcome of this new model is going to be great for Radiohead.

I’m sure the guys in the band have much better things to do than to read blogs, but on the off chance that they are Freakonomics fans, I want to put out a message to them: I’d love to help you analyze your data. I have a few ideas that might be really useful to you.

Also, if any readers have an in with Radiohead, please convey my message. I’ll even give you a Freakonomics T-shirt for making the introduction — it’s not exactly a Radiohead shirt, but it’s the best I’ve got.


I can't wait to see how the results of this model will sell.

Who knows maybe we might see a decent lapse in canned-artist arena because of the consumers realization that record labels are useless.

Jeffrey A. Clark

don't know who Radiohead is, but you have a t-shirt? Haven't seen any in Lemon Grove Ca. How can I get on the list to get one???
Great column! Thoughtful humor for my early morning reading. Thanks


I would find the data interesting but I find Radiohead's music the complete opposite of interesting.


I'm a huge Radiohead fan, and will pay the standard $9.99 that itunes charges me. Actually, I'll put in the extra penny for their efforts and go $10.


After reading the article on Time, I spoke to a friend of mine who is a HUGE fan. She is willing to pay $15 for the downloads and I must say that I'm there with her. For true fans who really appreciate the amount of work and passion these guys put into their music, I would not want to disrespect them by paying nothing. I do think those who are not as familiar with their work would download it for free. But maybe if they like what they hear, they will go out to buy earlier albums and the box set that's coming out later in the year or head to a concert when they go on tour next year.


I will pay $5. It's the first time I'll have paid anything for an album in going on 6 years. Feel free to use my $5 in your analysis.


I first heard about this a few days ago and I think it's brilliant. Though you forgot to mention they will also offer a box with vinyls and other goodies for $80, if I remember correctly. Nevertheless, great idea. The title of the album, however, ("In Rainbows")...not so much.


I'm a big fan as well and will probably pay between $10 and $15. I do however prefer a hard copy, thats the one problem with this model. I'm always willing to pay the $11.99 "sale" price that Target usually has, if it's a band I like.


Don't we do this already. People buy the albums of their favourite bands (bands that deserve our money). The ones that aren't so good get procured by other means.


I predict that the experiment will be a flop. This is basically radiohead asking for a "tip" for their work instead of charging a fee. Most of the people we usually tip in everyday life are perceived to earn low incomes (taxi drivers, bell hops, wait staff, etc.) Tipping also thrives when people might feel shame for not tipping. Most tipping is done in person and lots of people feel guilted into leaving a tip for fear of people thinking they are cheap. When tipping is done online (an impersonal environment where no one would ever know if you are being cheap or not) and for a band who clearly is already quite wealthy, I think people will be less than generous. There will be a few die hard fans who pay a premium, but I predict on average people will pay less than the would be pricetag.

The only hope is to lure more people into buying through price discrimination. If everyone were perfectly honest then it would seem it would be possible to capture sales for the entire demand curve and the expirement would turn out well. The people who would have bought anyway would largely pay a premium and the people who otherwise wouldn't have bought may buy, albeit at a lower price. I think because people are largely self-interested the average sales price will turn out to be what people perceive to be the cost of producing the album. Much lower than market


M. Prins

Um. Sorry, but Radiohead's concept is actually quite different from Feldman's concept. Feldman's experiment was "Let's charge a fixed price and see how honest people are in paying it when no one's looking." Radiohead's experiment is "Let's not charge a fixed price and see how much people are willing to pay for it when no one's looking."

Feldman's idea is more borne out in today's normal online music marketplace, where you have two choices: Pay iTunes (or its competitor) $.99 for a song legitimately, or go to an MP3 aggregator and pay $.00 for a song illegitimately. With Radiohead's concept, someone choosing to pay £.01 for the album (as I did, mostly out of curiosity -- though they added £.45 in a credit card fee) is still a legitimate purchase within their business model. After all, they specifically say to pay what you want, and that's exactly what I did.

Not that it's not an interesting idea to study, and not that it's not a third cousin once-removed from what Feldman came up with, but implying that the results from Radiohead's giveaway will have anything to do with honesty is, well, not quite honest.



I paid $3.99.

A normal album costs around $12.99 - $17.99 at a record store, or $9.99 on iTunes or similar digital downloads. Since Radiohead is not going to pay their record company for distribution/other fees, doesn't have to pay apple for rights to use iTunes, and doesn't have to pay the cost for packaging/delivery - I felt the $3.99 to be a fair amount. This pays for the studio time needed to record the album, provides a healthy salary for the musicians involved, and allows me to purchase music at an affordable price.


When examined from an Econ 101 standpoint - this makes perfect sense.

We know the profit maximizing firm sets prices so that marginal revenue = marginal cost. Since, in a digital distribution model, marginal cost approaches zero - Radiohead's model is designed perfectly to capture the consumer surplus.

Real fans of the band, those who love Radiohead music, will probably pay at least as much, or more, than the retail price of a CD - just to demonstrate how much they like the band. Lesser fans, those who wouldn't have bought the CD at all, will pay little. But even some revenue from these lesser fans is better than the zero they would have got in other pricing schemes. People will pay for the amount of "utility" they anticipate getting from the songs.

Radiohead have already "won" big as a result of this. They are probably the most talked-about band in the world this morning, all without anyone ending up in handcuffs.



When you buy a CD at Bestbuy or Target, the band only receives about $2-3 per unit I believe (vaguely referencing an old Newsweek article). If you pay $5 for the entire album, thats almost double what they would have made by selling one unit, all because they're cutting out the record companies, shipping costs and major distributor costs.

Plus CD sales aren't where bands like this make their money. It's when they sell out arenas across the country (or world) with many tickets that go for over $100 (plus the merchandise at each show...I've been a casualty of a $30 t-shirt).

I'll be in the $7-10 range when I download it...


I love Radiohead. But I am only going to pay $0.02. That's right. In my opinion Radiohead isn't selling their music on iTunes just to be difficult.

To order the new album, I have to pay in British Pounds, pay an additional credit card fee, I can't use Paypal or my American Express, and I'll have to go through an extra step to import the music into my iTunes Library anyway.

Love it or hate it, I think Apple's iTune Music store is a step in the right direction away from piracy and the record companies. And this stupid move by Radiohead makes me want to put down my iPod and go pick up an Xbox 360 controller instead.


Seth Burn

I am not sure what we would define failure as. If they make two million dollars off of the album and increase their fan base by 30% would that be considered a success? What if they only make one million? We can't really compare this to what they would make releasing the album through conventional means due to the fact that increasing the fan base is one of the main goals of this form of distribution. Music is "free" anyway, so let's increase our fanbase for concert tickets. I wish them luck but anyone who says this is a success or a failure is just guessing.




Given what I've heard the average amount that the artist typically sees from an album sale ($0.70 or so), they can probably do very well with this.

In any case, given their low return with the traditional model, most successful artists think of album sales as promotion for tour dates and merchandising, where they make their real money. They could give away CDs and still make out overall.


Not a big fan of Radiohead...although I do remember liking "Pablo Honey" a lot...but for whatever reason (*cough* blame music industry *cough*), I never invested the $15 for it.

The news about this new albulm though...I will definately go out and download it for a minimal donation.

If it is good, I'm likely to go out and purchase "Pablo Honey" or perhaps other works...I seem to remember "Hello Computer" getting reviews on par w/ Floyd's "Dark Side"...

Another data analysis that I would like to see in a similar vein...
How did the economic model play out for Ozzfest this past year? Remember that Ozzfest tickets were free? To offset the lost revenue sponsors and merchandizing were the avenues of emphasis.

My perception in my little window of Ozzfests model was that the audience who suddenly had $65 more in their pocket (free ticket)...ended up spending that $65 at the concert, on things that there is a higher margin on.
I volunteer to work at as a beer vendor at Alpine Valley during the summers. I worked Ozzfest, Jimmy Buffet and Dave Matthews this past summer. Our tent had much greater sales of beer during Ozzfest than either of the other shows. Granted Ozzfest is an all day event so it clouds the analysis...but per hour per beer sales, Ozzfest won hands down.


gerard callan

im a big fan and will be paying 10$ for the download. though i think i will order the box set which apparently comes with a download as well.

as for contacting radiohead. i once wrote them (email) regarding a film project and the use of their songs in it and they responded promptly and generously. their sites are at times difficult to navigate but if you can find their contact info on their site and contact them offering analytical services i would think they will actually reply (at least from my experience they will). good luck... sorry i cant find an actual contact link at this time.