Radiohead Roundup

Thom Yorke reckons that the music industry has a "decaying business model," and so he and his band, Radiohead, have decided to opt out of it. Go to their website, and you can download their new album for whatever you feel like paying.

My view on this is that it makes a lot of sense: by cutting out all the middlemen, from EMI to iTunes, Radiohead builds a stronger connection to their fans, as well as an enormous amount of goodwill. And a few other people seem to have an opinion on this too.

Count me in with this lot:

The Economist says that Radiohead's move "reveals a recognition of the fact that recorded music is no longer an excludable good; those who wish to get recorded music for free will be able to do so, no matter how hard record labels try to shield their product behind a wall of technology. Once one understands that, it becomes clear that all music purchases are essentially conducted on the honour system."

Bob Lefsetz says that "it's not like Radiohead's living in a different world. But they're playing by a different rule book. One that says the money flows from the music."

Lefsetz also says that Radiohead isn't a technology company, and should have gone with iTunes or Amazon or someone else who's good at fulfillment and whose servers won't crash.

Greg Mankiw says that this is a form of tipping, and "we economists don't understand tipping".

And here's lots more commentary:

Dani Rodrik's wife says that Radiohead has gone bonkers, but still paid over $10 for the album. Which leads Dani Rodrik to conclude that Radiohead has not gone bonkers.

Fred Wilson says that band is actually behind the technology curve: "We've had the technology to allow bands to bypass traditional and online distribution for years."

Chris Dillow notes that "Canadian singer Issa has a choose how much to pay system, and finds that 94% pay at or above the suggested price for a downloaded track. Such systems demonstrate that social norms really work. People behave honestly even when they needn't - they obey the social norm of reciprocity. "

Meg Marco predicts that Radiohead "will make a hilarious amount of money".

Kim Bayley of the Entertainment Retailers Association sounds a bit panicked, saying that "the ERA does not support the distribution of music from just one source because it limits access for consumers".

Chris Anderson uses the opportunity to plug his next book: "Regardless of what the average consumer decides to pay, this is another example of a business model enabled by FREE. They only way Radiohead can enter into this with no idea of what people will pay is because they have a product whose marginal cost of manufacturing and distribution is close to zero."

Steve Levitt wants to analyze Radiohead's data.

Geoffrey Manne says Radiohead is getting more than just money: "Here’s what else they get: An excellent mailing and e-mail list. To buy (or receive gratis) the album from the website one must enter name, email (and no cheating, since download codes are sent via email), address, cell phone number, etc. For Radiohead, this is a valuable list, I imagine."

Tyler Cowen says that "no this model won't much change the music industry".

George Borjas takes the model to its logical conclusion: "The band's history suggests that many people (misguided as their tastes might be) would rather listen to something else. Even at a nominal cost of zero, many of these people will still not want to hear Radiohead's music. The time spent listening to Radiohead has an opportunity cost, and Radiohead will have to lower the price even further--below zero--in order to attract them. In other words, the band will have to pay listeners for the right to invade their airspace."

And Robert Cyran says that "early indications suggest that Radiohead's loyal followers are paying too much for the band's seventh disc."