Pay-what-you-want and a 4% conversion rate

There are advantages to being famous. Not many bands can challenge the whole worldview of the music industry with one act. Radiohead is releasing their new album in a rather unusual way: as a digital download for which fans can choose their own price. They’ll certainly undercut piracy. They’ve gotten plenty of press attention. But they won’t be succeeding because they’re famous. This will work because the internet is still psychologically a gift economy. If we find your contribution valuable, we want to give in return.

Jonathan Coulton can make $3000-5000 a month with a website that explains

There are lots of ways to get music from me, whether you’re a cyborg from the future with an iPod in your skull, or a little old granny in Idaho with nothing but an antique “CD Player.” Lots of it is freely available depending on how technical you are – you can get all of it for free if you really try. But please remember I do make a living this way, so you like what you hear I’d certainly appreciate you throwing a little payment or donation my way. If you can’t afford it, for goodness sake please send copies of everything to all of your friends.

John Scalzi wrote a novel to prove he could and then decided to post it online. The Agent to the Stars introduction says: “People could read it, and if they liked it, they could send me a dollar, or whatever sum they liked (even if that sum was zero). If they didn’t like it, well, clearly, they wouldn’t have to send me anything.” He made about $4000 over six years, and today the introduction says, “I’m no longer soliciting a dollar if you enjoy the novel; the story has long since proved its worth in that respect.”

So you don’t have to be famous to survive on voluntary contributions. You just have to be a little bit famous. You have to have fans who not only will give you money for your creations but also will spread the word. The free sample that proves someone should buy is the entire work. Not so different from a book sitting out on a bookstore shelf.

Interestingly, according to Charlie Stross, in the old shareware scene they expected about a 4% registration rate out of the people who downloaded software. According to his sales increase after Accelerando was posted online, about 3-4% of the people who downloaded it then went and bought a copy (Time Traveller Show, 4/22/07: Stross, Scalzi and Buckell on International Pixel-Stained Technopeasant Day). In this case the audience demographics are probably similar (others might vary considerably); opportunities change, people’s willingness to give back doesn’t.

ETA: Wired’s take on Jonathan Coulson and giving music away, 10/12/2007

ETA part 2: NYTimes on how creating and releasing the album affected the band, 12/9/2007

ETA part 3: Wired interview with David Byrne and Thom Yorke, 12/18/2007

About Jennifer Berk

I'm an analytics and data leader with a marketing and product mindset. I like online newspapers, science fiction and fantasy, and ugly fish.
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