Pay what you want (and screw the music business)

Interesting piece on Radiohead by Jon Pareles in today's New York Times about the death of the music industry. So, as everybody knows, Radiohead decided to let the fans choose how much to pay for their new album "In Rainbows". Thus, when fans go to the Radiohead site, they get to determine the price of "In Rainbows." Fans can choose to pay nothing or $1 or $100. Everyone gets the same music, irrespective of what they choose to pay (or not pay).

So has it been an economic "success?

Yes. According to Pareles' myopic economic rationale, Radiohead have made money on the deal. Apparently, the average price paid for the album was $2.26 (in October 60% of downloaders paid nothing and the other 40% of mugs paid $6). And, given that bands normally only gets 15% of proceeds from a traditional studio album, Radiohead consider their "In Rainbows" strategy as a success:

Factoring in free downloads, ComScore said the average price per download was $2.26. But it did not specify a total number of downloads, saying only that a “significant percentage” of the 1.2 million people who visited the Radiohead Web site, inrainbows.com, in October downloaded the album. Under a typical recording contract, a band receives royalties of about 15 percent of an album’s wholesale price after expenses are recovered. Without middlemen, and with zero material costs for a download, $2.26 per album would work out to Radiohead’s advantage — not to mention the worldwide publicity

And no. After all, Radiohead is essentially screwing the music business. What they would call "disintermediation" is actually putting music business people out of work. Jon Pareles' "middlemen" are real people with real jobs and real families. However much Radiohead might hate the "exploitative" labels, it's hard to see the real benefit here for the music business. If Radiohead had a real social conscience, they would start their own label, employ their own "middlemen", and help build -- rather than destroy -- human infrastructure in a decimated industry.

When the history books get written on the death of the recorded music industry at the turn of the 21st century, Radiohead's "In Rainbow" will represent one more futile and counterproductive strategy in (re)building the economic value of musical content.