As it turns out, not as much as Radiohead's evil record label used to. As The Register reports on the Open Season podcast, not only have Radiohead fans been misrepresenting how much they've been paying for the free In Rainbows, but even if we take their word for it, it's still not as much as Radiohead would make had the band stayed with EMI.
People told the survey that they paid 8 pounds ($16), but the numbers don't support this. People actually paid closer to 2.50 ($5). Radiohead normally make about 3 ($6) (after royalties and such) with their record label. As such, Radiohead is actually making less giving the songs away than they did with the greedy capitalist record label, EMI.
So, was Radiohead foolish to experiment with free distribution? Or is it the sort of model that only millionaire artists can afford to indulge? (And is there an open-source analog here?)
I'm not sure, but I really did pay $20 for my copy of In Rainbows, and it is well worth it.
Oh, and by the way, Capgemini did a report which found that iTunes and the unbundling of singles represents a far greater threat to the record labels in terms of revenues lost than peer-to-peer file sharing:
Capgemini calculates that of 480 million pounds lost to the (British music) industry since 2004, 368 million pounds was the result of format changes: principally the unbundling of the CD into an "a la carte" selection of digital songs. Of the remainder, 18 percent was lost to piracy.
We're experimenting with all sorts of new models in the realm of digital goods. I believe this is an absolute requirement. But perhaps we're not quite as efficient as we like to claim? Or maybe these are just the necessary teething moments on the way to a more productive, efficient distribution system for music, software and literature?