Download - Radiohead - "Pricing"
NAME YOUR OWN PRICE: Radiohead’s Pricing Strategy
BY
Benih HartantiBonny Faliandri Hudi
Citra Rinanty
Master of ManagementGadjah Mada Univ.
RADIOHEAD’S CASE: NOW SHOWING!!
Brief SummaryRadiohead's name-your-own-price sale of its new In Rainbows album has generated lots of commentary
Bill Rosenblatt bemoaned the low price, calling it a race to the bottom.
Tim Lee responded by pointing out that Rosenblatt's "race to the bottom" is just another name for price competition, which is hardly a sign of an unhealthy market. The music market is more competitive than before, and production costs are lower, so naturally prices will go down.
But there's another basic economic point missing in this debate: Lower average price does not imply lower profit. Radiohead may well be making more money because the price is lower”
Name Your Own Price, what does it mean?
OK.. Enough watching that vid..
The "Name-Your-Own-Price" (NYOP) system is where a
buyer specifies a price and a product and/or service, and asks
sellers to match that combination
PROBLEM
That raised an obvious question – how many fans would still opt to pay to get the album?
How about PROFIT ??
Is that strategy doing any good?
ANALYSIS
Wisdom of the Crowd Trust Economies
Radiohead embraces the Wisdom of Crowd and Trust economies
Radiohead believes in humanity, fairness and how they can affect marketprice
Credibility Reaching out to a loyal audience
It’s Not All About Money
Sell conventional album for “In Rainbow” The report also stated that the discbox sold 100,000 copies.
How if that strategy failed :
Backup plan
Price paid was more like £2.50 Less than 2 in 5 agreed to pay any amount for the download Freeloader
The Bad: People taking advantage??
Now, please think positively..
They do gain many other benefits like
credibility
Targets for future marketing campaigns
Free albums also drive demand for live tours,
SUGGESTION &CONCLUSION
What did Radiohead do right? Well they did a lot of right..
What did Radiohead do wrong? ◦ The payoff was little or nothing..
Brand New Strategy : Our Thought About it
that the majority of music consumers feel that digital recorded music should be free and is not worth paying for
When Radiohead want to increase their credibility and profit in the future, they should go for it,
But for higher profit instantly? They should focused more on traditional method
Suggestions...
Time for Discussion : Let the questions remain unanswered..