In case you haven’t heard, Radiohead is giving away their new CD and letting the consumer decide how much to pay for it. Click here to buy their new album – for any dollar amount of you want to pay – even $0.00.
If you listen to a group of entrepreneurs chatting, you’ll hear that employees are a common theme. How to compensate our best and our brightest is a tricky subject. Years ago, I ran into a business owner who told me that he lets his employees set their own salary. I filed that information away, thinking that it might come in handy some day. I have dabbled in the idea over the years but for the most part, follow traditional salary setting theory (market driven).
Radiohead is doing the opposite – they’re letting their bosses (the ultimate judge, the consumer) set their pay. It’s a very free market economic theory – if their work is deemed necessary and good enough, consumers will pay for it. If it is not, Radiohead will have a very sorry paycheck. That theory assumes a perfect world, where people aren’t greedy and where “art” can be properly priced and valued. It’s not a perfect world and the beauty of art is in the eye (or in this case, the ear) of the beholder.
Stephen King did this type of payment choice option in 2000 and the NY Times called it a “digital disaster.” Mr. King abandoned his ambitious plan just five months into it, stating: ‘If you pay, the story rolls. If you don’t, the story folds.’
Hopefully Radiohead has better success than Stephen King.
Click here to read the full story of Stephen King and the book, “The Plant.”
The Long Tail blog has a detailed analysis of the economics behind Radiohead’s move. Click here to read it. For more blogs and opinions on Radiohead’s latest pricing idea and implications for the music industry, click here for the NY Times, here for Marginal Revolution, and the roundup from Swinging Kangaroo.