Bonny Faliandri Hudi
Master of Management
Gadjah Mada Univ.
NAME YOUR OWN PRICE:
Radiohead’s Pricing Strategy
Radiohead's name-your-own-price sale of its new In Rainbows album has generated
lots of commentary
Bill Rosenblatt bemoaned the low price, calling it a race to the bottom.
Tim Lee responded by pointing out that Rosenblatt's quot;race to the bottomquot; is just
another name for price competition, which is hardly a sign of an unhealthy market.
The music market is more competitive than before, and production costs are lower, so
naturally prices will go down.
But there's another basic economic point missing in this debate: Lower average price
does not imply lower profit. Radiohead may well be making more money because the
price is lower”
That raised an obvious question – how many fans would still
opt to pay to get the album?
How about PROFIT ??
Wisdom of the Crowd
Radiohead believes in humanity, fairness
and how they can affect marketprice
Reaching out to a loyal audience
Sell conventional album for “In Rainbow”
The report also stated that the discbox sold 100,000 copies.
Price paid was more like £2.50
Less than 2 in 5 agreed to pay any amount for the download
What did Radiohead do right?
Well they did a lot of right..
What did Radiohead do wrong?
◦ The payoff was little or nothing..
that the majority of music consumers feel that digital
recorded music should be free and is not worth paying for
When Radiohead want to increase their credibility
and profit in the future, they should go for it,
But for higher profit instantly? They should focused more
on traditional method