In my four years of blogging, there has not been as great a talking point as Radiohead's self-released, donations-only digital album, In Rainbows. The band's move has sparked an incredible amount of debate and discourse. And like all visionary business tactics, it has spawned copycats.

Radiohead has taught us many lessons. The truth is certainly in the eye of the beholder. But what has Radiohead taught me?

People do not want music to be free. "People want music to be free" is far too absolute a statement. Here's a better one: Some people -- but not all -- will opt for free music when offered a choice. When given a chance to pay something or nothing for In Rainbows, about 40% of visitors to the band's site chose to pay something (according to ComScore data that has been widely questioned).

Pali Research's Richard Greenfield wrote that "an increasing majority of worldwide consumers simply view recorded music as free." But did In Rainbows prove that? No. In Rainbows has proven that about three in five will take music without paying when given an option. When ATO releases In Rainbows in CD format, we'll see that hundreds of thousands of consumers will choose to pay for music. Of course there are many consumers who want cheaper music, and some who want music to be without cost, but Greenfield jumped the gun by not contemplating the second (CD-buying) wave of consumers and ignoring the hundreds of thousands who paid something even when they didn't have to pay a cent.

Acquisition behaviors are hard to break. When given the chance to pay something or pay nothing directly at the band's website, hundreds of thousands of people chose to grab the album from file-sharing networks. Quite a few journalists seemed astonished that so many "lazy" "cheapskates" would get In Rainbows through P2P when the band is going through all that trouble to just give it away at their own website. Should that be a surprise? Not at all. Where music is distributed is an important part of the equation. (Is consumers' established file-sharing behavior an indication that P2P should be monetized? That's another discussion for another day.)

Continue reading "What Radiohead's In Rainbows Has Taught Me" »