This model does seem to show potential and alot of others musicians are following. Just look at the new Trent Reznor / Saul Williams collaboration - and the site http://www.musicneutral.com

It is possible that the articles numbers might be skewed slightly. for instance: i downloaded a free copy of "in rainbows" to see if i liked it. having decided that i did in fact enjoy the album, i then paid $9 for it. i.e. i'll pay for what i like but i'm not gonna pay for a songs i've never heard before.

Furthermore, i felt that the article suggested that for a band to be monetarily successful they have to be promoted and advertised by a large record company. if artists were left to fend for themselves and radio stations weren't owned by a few national companies then "the cream of the crop would rise to the top." meaning that good music would find its place and paid for by appreciative fans!

come on people its 2007, let's get it together.

dinosaurs will die!

If it's really a 40% conversion rate of visits to purchases, that's awesome.

Anecdotal reports have people downloading from P2P services and then paying on the site because the distribution mechanism was slow or the payment processing was overloaded.

I think it is a great business model for musicians and bands it will cut the middle man out and allow the bands music to get to more people.

"That's a large group that can't be ignored and its time to come up with new business models to serve the freeloader market."

A business model that 'serves the freeloader market' means 'get them to pay for the album'. That's not gonna happen - that's why they're freeloaders, because they don't want to pay. If you think there's anything you can do to make them want it so bad that they'll just have to pay for it, you're wrong. If you somehow made Radiohead music always require payment, the freeloader crowd would just never listen to Radiohead, and chances are you would put off your paying customers for making them jump through additional security hoops to keep out freeloaders. You should focus on adding value for your paying customers, not trying to squeeze value out of inevitable freeloaders.

"...the majority of music consumers feel that digital recorded music should be free and is not worth paying for...."

Sure, the statistics show that a majority of site visitors downloaded the album for free. Who cares? A majority of music listeners to any given album listen to it for free these days, whether on the radio or by filesharing it, and never buy the album.

So like I said, majority is irrelevant and is not a measure of success. The goal wasn't to get at least 51% of downloaders to pay something. The goal was to make money and cut out the middle man. A more useful statistic for you to explore would have been: has Radiohead made more money this way than they would have with a traditional CD release?

I paid a minimal amount for two reasons. I didn't want to pay full price before hearing samples of the music. Now that I've heard the music I'm ready to purchase the CD with uncompressed music files. That's the second reason; I want to buy a CD. I want to hear music both on my PC as an mp3 file and on a commercially produced CD that I can play on my stereo or in my car. I assume at some point Radiohead will sell CDs and I'll buy one, hopefully directly from them. If my digital music files go away, I'll still have a physical copy of the CD that I can rip any time I like. I could burn a CD from the mp3 files, but it's not the same music quality I can get from a real CD.

Some interesting insights Andrew, but I also agree with some of Tippy's and Jim's criticisms above.

On the other hand, this could be the first useful measurement of where the balance lies between freeloaders and those who continue to support artists. Until now, the former were essentially operating in a black market and Radiohead's approach is the equivalent of lifting a stone up to see what's going on beneath.

I work in radio, running my station's website. Ever since we've been trying to get in-house performances up for downloads or streams, it's always the same thing: the label rep who works in the promotion department wants us to put it up, because he knows it will help drive sales. The legal department has other ideas, and they usually win the argument.

It's impossible to break the death grip corporations have over radio playlists. Even when you work at an indie and have a little more freedom, you have little chance at financial success, there's simply no competing against the resources the corps have.

The internet is where it's at for people who want to expose good new music. I used to get paid to do that, now there are others who will do it for free. I've learned to accept this and adapt, as have most of my peers. The other parts of the industry that haven't accepted that need to grow up and face the fact their economic world is changing, and change with it.

Only 40% are paying, but Radiohead keeps 100% of the profit as opposed to getting a fraction of what a record label would give them. In the end, the band is much better off, as is the consumer. The only ones missing the boat here are the record labels.

Great piece of research, thanks for sharing. Just remember this is not a business model, it is a promotion scheme and it only works this well because: a) Radiohead already has a rabid fan base, and b) This promotion scheme is still new. Once it has been done 50 times, these high response rates will settle down. Where will the numbers go? The best comparison is public radio and public television, where a single digit percentage of people pay on a guilt/commitment basis. After the hype is gone, the same will happen here. Don't be too surprised if you see your favorite artists inserting the following into their next album, "If you enjoy this music, please support it by making a donation at..."

But at some point in the not too distant future, the music industry will run out of artists who have had major label support in helping them build a huge fan base. The question is: how will new artists be able to use this model in the future if they haven't built a fan base in the millions in the years leading up to the release of their album under the pay what you'd like model?

The assumption is that only major music labels can build a fan base. The new model involves leveraging the power of the internet through social networking sites to fulfill that role.

Also, the current status of a few bands making millions will give way to many bands making a decent wage. This will lead to a much more diverse and interesting music scene.

Like other comments I find the results a little odd. I downloaded and paid £7 - how big was this survey sample?

Considering a major label band usually gets around $1 for a CD sale, which means that Radiohead's average of $6 for a download is six times more profitable. Considering that Radiohead's last album sold 300,000 copies and In Rainbows has already sold 1.2 million, that's four times as many sales multiplied by six time higher profit = 24 times more money for the band. So what part of 24 times more profitable is a failure exactly?

Interesting description. However, this is just one business model, which is probably not representative for the rest of the industry and all bands.

It will be interesting to follow which one of all the numerous business models currently emerging in the music industry will be able to establish themselves (e.g. Amie street, etc.)