So Radiohead and Alan Greenspan Walk into a Bar…

Okay, so they don’t. But there are a bunch of pseudo economists debating everything from Radiohead’s only hit “Creep” to Radiohead indifference curves (Thats for you Bat Girl) here. I went into economics because that’s where I thought the real cerebral, heady types were ———- you know, the one’s that knew about Radiohead post Pablo Honey. I guess I was unequivocally wrong. I’m glad I didn’t get that job with the SF Fed.

I guess I find it pretty amusing (well aside from the whole economist/Radiohead set up) that people find this mode of distribution (online- dutch auction) to be such a “Black Swan” (great book by the way). It’s no secret that net margins suck in the music business for artists anyways so why wouldn’t a band like Radiohead bypass the system at their first opportunity (their EMI contract expired with “Hail to the Thief”)? As for their avant-garde pricing scheme? Two things to reflect on:

1.) Price versioning is not a new concept. If you want the physical product (Disc Box), you’ll pay (again hurry and buy before the dollar is worth less than zero!) 40 Euro. If not, congrats, name your price for a slice of digital history.

2.) Digital downloading is highly elastic. See this bit (thank you Shark Jumping!) regarding a study done 2 years ago:

“most service providers I know (including before our purchase by Real) have done their own price elasticity studies which show that digital download purchases are utterly price elastic when measured over a period of time across a large group of consumers – that means that demand for the product is closely related to the price – increasing the price will actually drive down revenue since fewer people purchase the product, while decreasing the price actually increases the overall revenue since many more people purchase the product, more than making up for the lower price per unit.”

I’ve probably spent too much time on this already but I found it to be highly entertaining. Needless to say, I set the bar pretty low.

Hail to the Thief

~ by A Soul on the Verge of Aim on October 4, 2007.

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