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Making Money by Giving It for Free: Radiohead's Pre-release Strategy for In Rainbows

Author

Listed:
  • Bourreau, Marc

    (Telecom ParisTech and CREST-LEI, Paris)

  • Dogan, Pinar

    (Harvard University)

  • Hong, Sounman

    (Yonsei University)

Abstract

In 2007 a prominent British alternative-rock band, Radiohead, pre-released its album In Rainbows online, and asked their fans to "pick-their-own-price" (PYOP) for the digital download. The offer was available for three months, after which the band released and commercialized the album, both digitally and in CD. In this paper, we use weekly music sales data in the US between 2004-2012 to examine the effect of Radiohead's unorthodox strategy on the band's album sales. We find that Radiohead's PYOP offer had no effect on the subsequent CD sales. Interestingly, it yielded higher digital album sales compared to a traditional release. Our findings suggest the PYOP strategy generated higher sales revenues overall, even if one assumes no revenues were obtained directly from the PYOP channel. However, this "success story" does not readily apply to similar strategies adopted by other bands. We show that Nine Inch Nail's free provision of its new album, The Slip, resulted in lower revenues from the album's digital sales.

Suggested Citation

  • Bourreau, Marc & Dogan, Pinar & Hong, Sounman, 2014. "Making Money by Giving It for Free: Radiohead's Pre-release Strategy for In Rainbows," Working Paper Series rwp14-032, Harvard University, John F. Kennedy School of Government.
    • Handle: RePEc:ecl:harjfk:rwp14-032
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    2. Bazen, Stephen & Bouvard, Laurence & Zimmermann, Jean-Benoît, 2015. "Musicians and the Creative Commons: A survey of artists on Jamendo," Information Economics and Policy, Elsevier, vol. 32(C), pages 65-76.
    3. Gerpott, Torsten J. & Schneider, Christina, 2016. "Buying behaviors when similar products are available under pay-what-you-want and posted price conditions: Field-experimental evidence," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 65(C), pages 135-145.
    4. Gerpott Torsten J., 2016. "A review of the empirical literature on Pay-What-You-Want price setting," Management & Marketing, Sciendo, vol. 11(4), pages 566-596, December.
    5. Di Domenico, Giandomenico & Premazzi, Katia & Cugini, Antonella, 2022. "“I will pay you more, as long as you are transparent!”: An investigation of the pick-your-price participative pricing mechanism," Journal of Business Research, Elsevier, vol. 147(C), pages 403-419.

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    JEL classification:

    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media

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