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RADIOHEAD’S “IN RAINBOWS” RELEASE STRATEGY

Radiohead is releasing their new album “In Rainbows” in an unusual way: The band manufactured, distributed and promoted their music without a record label; they allowed the customer to “price” the digital album by themselves and sold a deluxe CD set version at $80. In order to evaluate the extent to which this strategy may influence on record companies and on the entire record industry, we need to estimate its impacts on the artists and the music audiences. While Radiohead’s release plan may have some certain influences on record labels, those impacts are not big enough to be considered a threat to the record industry.

Impacts on artists:
Some record companies may worry that Radiohead’s strategy would encourage more artists to self-publish and self-promote their album as it may help artists earn more profit margins, which would render record labels obsolete. However, this claim is not necessarily true and it might be a risk for artists to follow Radiohead’s strategy. As Radiohead let people decide on their album’s price, there are risks that many people will not pay anything for the digital downloads. The estimated ratio of 20 illegal downloads for very track sold suggests that majority of people are unwilling to pay for music downloads. Thus it is unlikely that Radiohead’s earnings from digital downloads would offset the band’s costs. Radiohead also tried to make profit by offering a deluxe box set at a costly price. Though the band has a really good reputation and indeed has seen an impressive numbers of historical album sales, they could not expect such a high sales volumes for physical album this time. Firstly, “In Rainbows” is priced at $80, which is 8 times more expensive than the price of a common album ($9.99). This is a quite high price in the age that people prefer free or nearly free music. Secondly, the

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