OK, computer, download for free

Study: Radiohead's pricing gamble not paying off

Denver — If a product is worth only what people will pay for it, then what is a digital album worth? Not much, according to Internet research group comScore.

In a study examining how consumers reacted to Radiohead's "set your own price" gamble with the digital release of its new album "In Rainbows," 38% of buyers paid an average of $6. The rest paid nothing.

Of those who did pay, 17% paid less than $4, 6% paid $4.01-$8, 12% paid $8.01-$12, and 4% paid more.

"This shows pretty conclusively that the majority of music consumers feel that digital recorded music should be free and is not worth paying for," said Fred Wilson, managing partner of Union Square Ventures, a New York venture capital firm. "It's time to come up with new business models for the freeloader market."

In the 29 days after the album was made available, the Radiohead site received more than 1.2 million visitors, most to download the album.

Among U.S. residents, about 40% who downloaded the album paid to do so. Their average payment was $8.05, the firm said. Some 36% who downloaded the album from outside the U.S. opted to pay; on average, those fans paid $4.64, according to the study.

The results of the study were drawn from data gathered from a few hundred people who are part of comScore's database of 2 million computer users worldwide. The firm, which has permission to monitor the computer users' online behavior, did not provide a margin of error for the study's results.

Radiohead, which also offered fans the option of buying a lavish box set for about $82, plans to release the album in CD format some time next year.

Antony Bruno is a contributor to Billboard. The Associated Press contributed to this report.
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