More on the Radiohead "Set Your Own Price" Experiment

There's a bit more information now - of varying quality - on Radiohead's experiment in letting people set their own price for the group's new album. Anyone in the information business - and that's content of any type - has to be keeping a close on on this story. It could offer some insights into how to make the Internet work as a commercial distribution mechanism.

According to a Forbes article, many people are still pirating the new Radiohead album, even though they could go to the site and get a legitimate copy for free if they wanted to:

On the first day that Radiohead's latest became available, around 240,000 users downloaded the album from copyright-infringing peer-to-peer BitTorrent sources, according to Big Champagne, a Los-Angeles-based company that tracks illegal downloading on the Internet. Over the following days, the file was downloaded about 100,000 more times each day—adding up to more than 500,000 total illegal downloads.

That's less than the 1.2 million legitimate online sales of the album reported by the British Web site Gigwise.com. But Eric Garland, Big Champagne's chief executive, says illegal file-sharing is likely to overtake legal downloads in the coming weeks, given that many of those 1.2 million legitimate sales were pre-orders taken during the 10 days between when the band announced the album and its actual release last Thursday.

Garland suggests that the real culprit is habit - they go to their favorite BitTorrent sites and download in the way they're used to doing.

However, even with lots of pirating, consider the economics. According to a London Times article (and we'll get to the main part of the article in a minute), an Internet survey of about 3,000 people who bought the Radiohead album suggested that most paid an average of £4. Although this won't be particularly accurate, it's the best numbers possible: a rough total of £4.8 million on the album, all going to the band. Given the economics of regular record deals and distribution, I think they made a whole lot more this way.

The real test will be whether they do the same on their next album. I also wonder whether a variation on the approach might have worked even better: pay money to get the album, or pay nothing and get some audio ads thrown in, like the free online music streaming sites. That would have increased the perceived value of the paid version and also increased revenue for the group.