How Bad Is Music File Sharing? – Part 14

In his 2006 working paper Lee investigated how price and free music availability jointly affect the consumer’s willingness to buy and how price and non-price factors (rating of singers, genre preferences, number of songs on CDs, and music consumption style) change the “free” vs. “non-free” Internet availability conditions. The results of a survey of about 500 students of Korea University in Seoul indicate that there is a weak interaction of CD prices and free music availability, whereas in the non-free Internet availability situation price has a significant effect on consumer purchasing patterns for some CDs. More can be read here:

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The Radiohead Revolution?

The British alternative rock band Radiohead caused a sensation when they announced on their website on October 1, 2007 that the new album In Rainbows was completed and would be released in 10 days for free. Fans were instructed to obtain a registration code in order to download the new album in MP3-format. Music consumers were left to determine the price on their own – ranging from US$ 0.00 to US $ 99.99. The response was overwhelming, and within a few weeks more than 1.2 million downloads were counted. According to the Internet market research firm comScore, 38% of the fans paid an average of US $ 6 per album, which resulted in US$ 2.4 million in revenue. Is this business model really as revolutionary as it appears at first sight?