Wednesday, October 3, 2007

Absurd Interpretation of Fairness

This article condemns Radiohead for ripping off consumers by allowing them to pay what they think is appropriate to download the group's new album. Apparently, some consumer might pay Radiohead money that should rightfully go to the major labels. Read this and laugh.

"Will Radiohead leave fans high and dry? It may sound preposterous to accuse the British rockers of gouging their followers. The band is letting them decide how much to pay for a downloaded version of new album "In Rainbows." But early indications suggest that Radiohead's loyal followers are paying too much for the band's seventh disc."

"According to a poll conducted by United Kingdom music magazine NME, the average fan appears to be willing to pay $10 for a digital copy. Now, that may not sound like a blow out. It's the going price for most records on Apple's iTunes. And that price, in turn, looks to be about right for a digitally downloaded album."

"Consider the economics of the average CD. It retails for about $16 and costs about $6.40 to manufacture, distribute and sell in a store, research outfit Almighty Institute of Music Retail says. These costs are essentially zero when music is sold online. That's why iTunes can charge roughly $10 for a downloaded album."

"Radiohead's fitter, happier approach slices out even more cost. The band pulled the ripcord on EMI, so it doesn't have to share profits or help pay the label's overhead. As a well-known band it's also able to take the knives out on marketing and promotion costs, cutting these by as much as two-thirds. Subtract these expenses and Radiohead may be able to distribute an album for as little as $3.40 a copy."

"Now, fans may be delighted to pay $10 because they think the album is

so good and Radiohead deserves the extra cash. But Radiohead prides

itself on its anticorporate and anti-materialistic ethos. To avoid letting down fans, it might be more productive to adopt a no-surprises policy and fix a simple, fair charge for its record."

Cyran, Robert, Rob Cox and Mike Verdi. 2007. "What Price a Download? Given the Option to Name Their Own Price for Album, Radiohead Fans Overspend." (3 October): p. C 14.

http://online.wsj.com/article/SB119136863867147050.html?mod=googlenews_wsj

4 comments:

Ben said...

I think this was a genus marketing plan. Radiohead has gotten way more publicity from this than they ever would have had they gone the traditional route. Even if people only pay $1, they are going to make a killing on this.

Unknown said...

I love how suddenly the labor theory of value holds sway! Radiohead's labor is only worth $5 an album and they are getting $10! How they are ripping off their fans!

Anonymous said...

My marxism is crusty. Assuming that the downloaded songs have smaller value (in terms of TLTOV) that money voluntarily paid by fans, whose surplus is being appropriated by whom?

exxf (or piotr)

Michael Perelman said...

The exchange would no longer be a commodity transaction but rather a gift, meaning that no surplus value would be involved.