Now here's an innovation: "music on demand," in the truest sense of the meaning. Radiohead, the juggernauts of intelligentsia rock, announced that they will give away their new album "In Rainbows" as a download for whatever price consumers are willing to pay. The band is free to sell the new album directly from the official website because it is no longer tied to a record label. So far, the album is only available to pre-order, but it can be downloaded when released on October 10.
It's not the first time that an artist or group has opted to charge nothing for an album (Prince, for example, gave away a whole record as a supplement in a newspaper), but the move is significant: Radiohead is one of the biggest bands in the world, and the self-distribution model could inspire other artists. It is is interesting from both a moral and economic perspective: As for the former, the band obviously relies on the "invisible hand," the self-regulatory forces of the market, to determine a fair price at the intersection of supply and demand, production value and perceived value. Radiohead trust that their fans follow an intrinsic moral imperative, ignoring possible "they're millionaires anyway" concerns and paying an appropriate fee for what is usually a superb artistic performance. Most people will probably just follow the pack, and it would actually be interesting if the Radiohead website showed in real-time the latest average price paid.
From an economic viewpoint, Radiohead's decision is far less radical than it may appear. First of all, the biggest chunk of revenue for them will continue to come from touring, merchandising, and copyright payments. Giving away the album for any amount won't really hurt them, even if no one pays a cent. But that won't be the case: The New Musical Express has conducted a poll among UK fans, and from those responses the band is making an average of £5 per album. There is some debate going on about the break-even: Salon claims it's $1.50 per album.
In any case, it's a nimble PR move, creating a side story the media (and bloggers like me) can pick up. Plus, it's smart marketing. Through the download offering, the band will build a pool of registered users as potential targets for future marketing campaigns.
Ps. In case you wonder: I would have paid hundreds of dollars for Radiohead's landmark "OK Computer" album. For this new release, coming after a long period of (radio) silence, I think I'd pay, let's say, $20. And you?