Radiohead: Music At Your Own Price

Presented by Group 2
Anshul Garg IPMX14062
Harshit Kumar Srivastava IPMX14073
Mayank Bhatt IPMX14110
Rahul Gaur IPMX14086
Sudhanshu Gupta IPMX14100
Sushmita Balasubramani IPMX14104
InRainbows Pricing
Radiohead’s plan to allow fans to name their own price for the downloaded version of the self-produced In Rainbows is right because of the following
reasons:

● Digitization brought about a change in the production, distribution and consumption in the music industry landscape. This in turn had a profound
effect on the music industry which now had to battle illegal downloads. The changing landscape gave the artists a platform to experiment with music.
● The manner in which Radiohead announced the upcoming release of In Rainbows raised expectations of their fans in a never before seen manner. In
addition, Radiohead’s decision to not release any preview tracks or streams further piqued the curiosity of the fanbase.
● Leaving the pricing decision to the consumers made the consumers feel more valued and gave them the power to decide how they wanted to
listen. Not only this, this album was a result of a two-year effort in terms of carefully coming up with a curated list of tracks that were shaped by the
feedback from fans who attended the band’s 2006 tour.
● This was a clever marketing tactic from Radiohead to further increase their popularity and create buzz around something unprecedented in the
music industry.
● By disabling the purchase of single tracks, Radiohead refused its allowance to be sold on iTunes. This way it had complete ownership over the
album and also allowed digital download at a quality better than the standard 128-kbps for iTunes.
● Radiohead wanted to act as the game changer and this was one of their ways to present their music to their fans and the wider world.
● Radiohead also completely did away with signing contracts and thereby hoped to earn greater profits by independently controlling the distribution
of their albums. In the traditional method, Artist Royalty accounted for only 15% of the total retail price and the artist’s share diluted further when the
independent tracks were listed on retailers such as iTunes. With the ‘pay what you want’ model, Radiohead wanted to have the sole proprietorship in
deciding how much profits they want to make.
Can this Pricing scheme work for other artists?
● By doing away with its contract with EMI, Radiohead set a precedent for other bands to follow. This was the most daring move
by a popular band till date and gave artists complete freedom over what content they wanted to produce and make available to
the end consumer.
● While the question of whether the same pricing strategy will work for other artists is debatable, the worsening conditions in the
marketplace for recorded music gave birth to new ways of promoting music to the wider audience.
● With the digitization of music, illegal download of songs would also go up. To prevent this, other artists can also adopt this
pricing model or offer songs for free.
● But since consumers also choose the price, they expect the best deal (good quality of music). If they are not happy, then this
could create a ripple effect on this entire model and also affect a band’s popularity. So while choosing the Pay What you Want
model, bands need to be conscious of quality content.
● Radiohead had the first-mover advantage and also released a curated set of songs in its album-something that the artists
cannot just blindly emulate if they are not equally popular.. If other artists want to follow the similar path, then they have to
come up with innovative ways to expand the reach in addition to focussing on pricing strategy. Once the novelty factor wears
off, people will no longer be attracted to this model.
● If all the artists start listing their music on their websites, the end consumer may not be able to listen to all the websites and
thus the network effect will go away. Apart from the pricing scheme, the complementing factors will also have to be considered.
Implications for artists’ economic conditions and its impact on the relationship
between artists and record labels.

As per the case study,an artist’s is paid upfront fees by a production house
depending on his experience level. If we can say that the experience level of an
artist is somewhat similar to their economic conditions, then economically sound
artists receives amount to the tune of 1 million while a rookie is paid only 0.1 or 0.2
million. The same also applies to the sales based revenue of the album.

More-over before the internet era, artists who were not economically sound had to
be very much dependent on the large production houses to launch their album to
provide financial support.
Strategy in the long run
● Release strategies like Radiohead's employed would be effective in the long run, as they
may face substantial competition from other players in the space.
● They may face competition from the current player, through other digital platforms like
youtube etc.
● It will also allow the young and independent artists to enter the music industry if the quality of
their songs is high, which would be the differentiating factor.
● Overhead cost, Marketing cost, and the recording company's earnings would be eliminated,
and it would benefit the customer, who can enjoy high-quality music at a lower price.
● The quality of the song would increase as they would take regular feedback during the live
concert, increasing the traffic on its website.
Where does Radiohead fit in the changing music scene?

Plan allowed them to promote themselves to a wider audience- showcase their skills which will earn them more
•

recognition
•In retail- Taking the intermediaries out of the business
•Musicians became the originator and distributor of music albums
•Distribution based on songs rather than based on albums
•Consumer will get to view and choose their products
•All buying power in consumers hand
•Increase the credibility of the brand and showcase that they are in business for the love of music, not for profits
•Delocalization of professional recording studios and the decline of traditional record companies
•For artists who do not want to go on expensive tours, there is not much of an incentive to sell the rights to your music
to any record label when you have the power to sell directly to the consumers and connect to your fans through the
Internet.
•Music promotion now took place more through social networking sites.
•The amount of fans that can be reached on a limited budget now seems limitless.