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Studying the business of Radiohead

Thom Yorke of Radiohead performs during the band's headlining set on the first weekend of the 2012 Coachella Valley Music and Arts Festival, Saturday, April 14, 2012, in Indio, Calif. (AP Photo/Chris Pizzello)
AP
Thom Yorke of Radiohead performs during the band's headlining set on the first weekend of the 2012 Coachella Valley Music and Arts Festival, Saturday, April 14, 2012, in Indio, Calif. (AP Photo/Chris Pizzello)

In 2007, Radiohead had an album but no record company. After mulling over the possibility of re-signing with its former label, the alt-rock supergroup decided to do something never before seen in the music industry. Noticing how the Internet and music distribution were becoming more and more intertwined, Radiohead chose to sell “In Rainbows” through its website and implement a “pick-your-own-price” (PYOP) sales model for the first three months of its availability.

“It was perceived as a very innovative strategy which led to huge media coverage,” said Dr. Pinar Dogan, a die-hard Radiohead fan and lecturer of public policy at the Harvard Kennedy School. Dogan coauthored the research paper “Making Money by Giving It for Free: Radiohead’s Pre-Release Strategy for In Rainbows,” which was published this summer as part of the HKS Faculty Research Working Paper Series.

“I was really aching to get the data, what people actually ended up paying,” she said. “But the band never released that information.” Instead, Dogan and her colleagues Marc Bourreau and Sounman Hong collected data on the physical and digital sales of “In Rainbows” after the PYOP offer expired. They had found that the physical sales of “In Rainbows” were right on target and its digital sales were actually higher than average. PYOP didn’t hurt Radiohead, it helped the band. “My guess is that this worked so well because it was Radiohead, because it was innovative, and they had the media coverage.”

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According to Dogan, in recent history other groups have tried to release albums with PYOP sales models but with significantly less success. It seems that “In Rainbows” was a perfect storm of timing, ingenuity, and media exposure, but there is always more research to be done.

“My main motivation was really because I love this band and I was interested in finding out what the impact [of “In Rainbows”] was,” Dogan added, acknowledging that her research was unique for academia. “Usually we write with the aim of getting published. But from the beginning I’ve been saying that my aim is either getting more data from Radiohead on the prices people paid — or to get a VIP ticket to their next concert.”