What's music worth? Radiohead apparently believes that it's anything a fan is willing to pay - or not pay. They're right. Fans recognize implicitly that the value of a single digital song file is something more than the marginal cost to make it - i.e. zero. We live in a world where anyone with a Powerbook, Garageband, some high-quality microphones and a quiet room can create CD-quality music - for the cost of their time. Distribution via email is at the same cost - free. It's no surprise that fans of P2P generally see their activities as un-legal, maybe not legal by the definition of the law, but non illegal either according to their sense of the value of what they're taking.
Where's the economic value if the traditional music asset has no value? After all, an artist has got to eat.
I believe that the value is in the emotional connection between the band and each fan. Online marketing means that each fan is a market of one. Value can be derived from that relationship, through the voluntary support of the artist by the fans, the willingness to pay more than zero for music, buying tickets to performances, buying merchandise licensed and/or endorsed by the artist. Just ask the Rolling Stones what's more valuable, their music or the proceeds from their reunion concerts. The Grateful Dead must have been laughing all the way to the bank; they were living the digital model in an analog era.
The valuable asset is no longer the music file but the email address that represents the passionate relationship of the artist to the fan. It's the means by which the artist can capture and then maintain a stream of economic value that can give even a small artist the ability to maintain a workaday living through music. Radiohead obviously recognizes this. Check out their registration to purchase music. The information requested will not only allow them to maintain these relationships, but also to understand the demographics of their most passionate fans. As any savvy marketer knows, that's invaluable. But it's a simple lesson music folks still ignore. When's the last time you went to a concert and the venue or band asked for your email address?
The one throwback to the pre-digital age that does mystify me is Radiohead's adherence to the full-album model. I had a eureka moment last week when a well-known VC revealed his theory that one of the causes of the demise of music was the CD - more than twice the music as compared to a vinyl LP. The relative brevity of the LP, he argues, forced the artist and producer to make hard choices about song inclusion, leading to a more carefully considered and higher quality album. More is not necessarily better. When Radiohead releases my download to me, I'll let you know.
By the way, I'm paying US$10.00 for the digital download. How about you?