What Radiohead gets
By letting people choose how much they wish to pay for their new album, Radiohead are sacrificing a certain amount of guaranteed income. But to offset that loss, the band gathers a great deal of extremely useful data.
For a start, everyone who buys “In Rainbows” (either the download or the diskbox) has to register as a user. Registration requires you to enter your personal details, including email address and mobile phone number. Purchasing requires you to enter your credit or debit card details.
And everyone who chooses the digital download gets to choose their price. From Radiohead’s point of view, everyone who signs up with their contact and credit card details spells out clearly exactly how keen a fan they are.
Radiohead ends up with a database of fans, neatly divided up by the amount of money they were willing to shell out, up front, for the album.
The purchasers of the diskbox are the premium customers. Now that Radiohead knows who they are, they can be plied with special offers, invites to gigs, special releases – with the band fairly sure that most of the people in this category will pay whatever they’re asked to pay, within reason. These are the ultimate fans, willing to spend their money to ensure the music continues to be made. They must be looked after carefully, and they will be.
Below them come many strata of fans; those who spent about a tenner; those who spent the same, even though they are in the USA and would be effectively charged double thanks to exchange rates; those who paid just a few pounds; those who got away with as little as they could.
Every single category can be exploited in different ways. Some will be lured into spending more; others will be dangled cheap baubles of content, perhaps asked to pay 20p for a snippet of studio out-take (which of course the premium fans will have been given, for free, a week previously via SMS invitation to download).
This is Customer Relationship Management. Radiohead is a premium brand, striking out on its own and with this initial release, simultaneously testing the waters and building the most valuable database it can.
And the most striking thing of all?
So far, no-one has heard a note of any of the songs.
UPDATE: Some people took the above comments as cynical and critical of Radiohead. That’s not my intented aim at all. I applaud what they’ve done and think it’s a brilliant move. The record labels as we know them are doomed; I’m just thinking aloud about what the music marketplace will look like once they’re gone.