Thu 6 Dec 2007
The Economist recently reported the results of Radiohead's bold experiment in giving their new album away for free on the internet. It turns out 60% of people paid nothing for the album – unsurprising if you believe that a rational, self-interested individual would not pay for something he could get for free (as many economists do, for example). And yet, 40% of people paid something for the album, quite a few of them more than they would have paid if they'd been able to download the album from iTunes or Amazon. Who are these people?
One window into that question might be opened by looking at the pricing data longitudinally. A few weeks after the album was released, I remember reading that the number of free-riders was only about 30%, though I can't remember the source. But still, it puts the question out there: how did the distribution of prices change over time?
My completely unsupported guess is that the vast majority of the high outliers came right away – motivated fans, ideological supporters of new music models, enemies of the big record companies. Even if we take the narrow view of pure rationalism, we can call these people 'rational zealots' – we must factor the belief and promotion of a valuable cause into the price they were willing to pay. I'd also guess that the percentage of non-payers increased dramatically as time went on, and that these days most people download the album for free. Who's got the data for us to check?! Any way you slice it, this is a cool experiment.