The Price is Right!

Following on the heels of a recent Radiohead promotion where they marketed and sold their new album directly to consumers, AND (this is the key thing here) let the fans pay whatever they wanted for the music, is this article from DM News:

"Paste magazine kicked off a new subscription offer this week, allowing consumers to name their own price for a one-year subscription to the music and entertainment glossy."

I loved the concept for Radiohead. But, I'm not sure it will work for a printed magazine. In the case of music downloads there are no significant fixed production costs. Some initial software/website development costs were incurred, of course, but Radiohead didn't have to spit out and ship something to the fans who ordered the new album.

If I'm reading the article correctly, Paste magazine will be shipping out 11 glossy magazines plus a CD, and subscribers can receive all this for a price-point as low as $1. Significant costs...No ensured revenues.

Of course, if Paste is as successful as Radiohead, (the rumor is that their promotion made them $6 to $8 million), then this is a great gamble. And, Paste magazine seems to be aware of the risks.

"Even if the promotion fails to bring in revenue, the added subscribers will be a boon to the ad-supported magazine. Advertisers and other magazine execs seem intrigued by the name-your-price model, said Jackson (Paste editor-in-chief)."

I'll be watching this promotion closely. And, I'll be looking out for other innovative pricing strategies from other industries. The price could definitely be getting 'righter', at least for us consumers!

Power to the People

I am so intrigued when I see true out-of-the-box thinking. When a company (or in this case a band) turns conventional sales and marketing on its ear and decides to go their own way.

This time it comes from Radiohead. From Yahoo News: Pay what you want for new Radiohead.

"On Monday, Radiohead sent shockwaves through the music biz with the announcement that its new album, "In Rainbows," will be released for download from www.radiohead.com on Oct. 10. The price? Whatever you choose. You elect how much to pay, be it one cent, $15 or $100. (A special edition box set with a vinyl version and other items is also available for approximately $81.)"

It's a great concept. And, talk about "Direct" Marketing! Radiohead is thinking of their fans. But, they're also thinking of themselves. Apparently, conventional music sales only garner musicians something like 10%. By going direct, and putting the power to the music buyers, they're almost certain to profit by more than 10%. And, then there's the side benefit of building fan relationships, and collecting customer data for future projects.

And, guess what? It appears that the concept is right on target. This Wired blog post quotes band spokesperson Murray Chalmers: "Although the idea is that you can decide what you want to pay, most people are deciding on a normal retail price with very few trying to buy it for a penny."

I think this is an idea whose time has come. I tip my hat to Radiohead and vow to do my best today to rethink the conventional ways that I do business.