The future of the music business...now

So the big music news this week is that Radiohead are letting fans choose how much to pay for their new album, inrainbows. From free.

I'm really excited about this. Firstly because I think Radiohead rock and if Thom Yorke's last solo effort is anything to go by, then this will be an amazing, innovative, beautiful record. Secondly there's the whole business model thing.

I've blogged before about how stupid the record industry is and so it's great to see a band freeing itself from the corporate shackles and messing with the model. In case you haven't seen the coverage the deal is as follows: there are two formats, MP3 download at a price that you choose (from nothing); super-duper deluxe box set with two CDs two vinyl records and the usual trimmings at 40 quid. I understand there will be a full release (hmv, itunes etc.) later in the year too.

There are so many things I love about this model.

First, and foremost, there is no greedy acme co getting between the band and their fans. Radiohead have recognised the power of the new (essentially free) distribution and jumped on it.

Second is that by letting fans choose how much to pay they are acknowledging the highly subjective nature of the valuation of art. A Radiohead album is worth a lot more to me than it is to you, while a Picasso is obviously worth a lot more to an modern art collector than it is to me. The counter-argument here is that there is no incentive for me to bid high because I get the thing I want however I bid. But I'd argue that the incentive here is not about receiving this Radiohead album, it's about making sure they (want to and are able to) make another one. It's a donation with a fee gift. Like buying an annuity with the first payoff being this album. When you look at it like this then the smart money will flow to bands that prove they can deliver the goods over and over again. I think that deep down it is this that the (short-sighted, hit-focussed, x-factor-obsessed) record companies are most worried about.

Anyway, I'd love to see the data. I bet there are three groups in the distribution.

• Close to zero - probably not huge fans. Might have bought the album, but most likely when it was at a big discount in a few months. they're losing money here (opportunit cost), but not very much and for it they're buying a big fan base.
  
• A few quid - these hits would by the album as early as they had a chance; my guess is that radiohead are probably a little better off from this group due to the removal of acme co.
  
• More than a tenner - die hard fans, would get the album on day one and can't live without radiohead.
  

One thing I would have liked to see at inrainbows.com would be the current average (or median) price. Right there in bold next to the submit button so that every participant could make their own judgement about how they wanted to bid relative to that.

As it happens, I gave them a fiver. And I think I've just convinced myself I will pay more for their next one!