Always New Mistakes

November 7, 2007

Some numbers on the Radiohead album

Filed under: Business — Tags: , , — Alex Barrera @ 3:01 pm

Yesterday, Comscore made a press release with some numbers on the Radiohead album experiment. The data is from the first 29 days of the experiment and is based on a sample of 2 million people. The percentage of people that payed for the album was 38% (worldwide), while the percentage of free downloads rose to 62%. This numbers leave behind the ones I posted on the bagels experiment, 62% of free downloads versus a 87% of free bagels. As I’ve said before, could this be due to Internet’s anonymous nature? I am beginning to think it has to do with a feeling of pre-visualization. People download the album for free, they play it for some days and if they like it, they buy it. So, it’s more of a quality-reward scheme. For me it’s like the shopping experience. You take several t-shirts, you first put them on, see how cute you are in them, and only if you look good, you’ll buy them.

Nevertheless I think Comscore’s numbers might be a little flawed. Most people I know have downloaded the album first, and after a while they’ve bought it. Because the sample only registers the first 29 days, it’s quite probable that some of the people’s downloads that are eventually counted in as free, would later become payed ones. This is specially true for the first period of any experiment, specially if there has been a great deal of fuzz around it. Right now I think the current rate of free downloads might be a little lower.

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UPDATE: As Mathew notes, Radiohead made a press release stating that comScore’s numbers are way innacuarate. Although they haven’t said what the real numbers are. I expect higher percentages of payed albums.
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UPDATE2: As I suspected,  Thom Yorke said very recently: “In terms of digital income, we’ve made more money out of this record than out of all the other Radiohead albums put together, forever.

November 4, 2007

Radiohead and their bagels

Filed under: Business — Tags: , , , — Alex Barrera @ 9:52 pm

Hello everybody!

Finally I’ve decided to start my own blog, so if it’s your first time here I welcome you to my personal blog. Today I was watching episode 122 of Diggnation when Alex Albrecht talked about Radiohead’s newest album commerce scheme. For those of you that haven’t heard of it, Radiohead has ditched the music industry and is selling their latest album, “In Rainbows” on their website. The cool part is that if you want to download it, you are asked how much you want to pay for it (including $0 or free as in beer). Alex raised a very good question, why should you pay for the album? Why should people pay for it if they have the option of getting it for free? He gives an example of a friend that downloaded it for free the first time and after listening to it, he went and payed for it. When asked, he was fast to answer (as well as Kevin Rose did in the same situation), that although he had downloaded it for free, he was going to pay it.

So now you might be thinking, what the hell has this to do with bagels? Well, here it is. Currently I’m reading Freakonomics from Steven D. Levitt and there is a story about an economist called Paul Feldman and his bagel business. Mr. Feldman’s business model was quite unusual: “[…] he would deliver some bagels and cash a cash basket to a company’s snack room; he would return before lunch to pick up the money and the leftovers. It was an honor-system commerce scheme, and it worked. […] “. Pretty amazing by it self, but the interesting point is that as an economist, he was able to analyze the percentage of customers that payed and the ones that stole from him. His conclusions where pretty staggering, the overall rate of paying customers was around 87% by the summer of 2001 and went 2% higher after 9/11. So, with these numbers at hand, we can say that humans are, in general, honest, which might go against what intuition tells us.

Nevertheless, I’ve been wondering if such a high rate was because of fear of being accused of theft by coworkers or because of innate human honesty. Now, back to Radiohead, Alex’s question reminded me of the bagel business. Do people pay for it because they are honest of because of another reason? I would love to see Radiohead’s numbers on their experiment. Would they yield the same rates as of Mr. Feldman or by contrary be far lower due to the anonymous nature of the Internet? Humans can do terrible things if they know no one is watching, so, do people pay because of fear of what friends might think about them or because they are really honest and value the album? It’s interesting that prior to downloading the album they ask you for all your personal details, including your country and zip code. So, not only are they getting free marketing, but they are also harvesting a pile of very valuable data. It could even be sold to other artists/bands willing to follow their path (like Madonna). Here you go, another way of making revenue with this experiment.

What do people think about this?

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