The archive · Business Models · Financial decision · 2007–2008
Radiohead sells In Rainbows as a pay-what-you-want download — fans name the price
In 2007 Radiohead let fans name their own price for In Rainbows — and made more digital money than all earlier albums combined.
Radiohead
What it had to solve
After their EMI contract expired in 2003, Radiohead were the world's biggest unsigned band; by 2007 the music industry's answer to piracy was flat single-price downloads, leaving the value of a new album wide open.
How it works
In September 2007 Radiohead, unsigned since their EMI contract lapsed in 2003, announced In Rainbows would be released in ten days as a download from their own website at a price chosen by each customer — from nothing (plus a 45p administration fee) upwards. The only other option was a physical 'discbox' edition with bonus material, vinyl and a book for about £40. No label, no retailer, no fixed price.
The release went live on 10 October and the site was flooded beyond capacity for hours. Because the band paid almost nothing for distribution, nearly every pound received was income; management told Rolling Stone most fans paid something, while Greenwood said the variable price was about making people stop and think about what music is worth. Rival artists, managers and labels spent months arguing over whether the move was courageous or destructive.
The numbers were debated for years: comScore estimated only 38% of downloaders paid, an average of $2.26 per copy, while Radiohead called that research 'wholly inaccurate.' In October 2008 publisher Warner Chappell said the album had been bought 3m times in total — 1.75m CDs, 100,000 discboxes and the rest downloads — with the discboxes alone grossing £4m, and Yorke told Wired that In Rainbows had made the band more digital money than all their other albums combined.
Why it lands
- It replaced a fixed price with a question about value, making fans think about what music is worth instead of just paying.
- Direct-to-fan distribution cut out the label and retailer, so nearly every pound paid landed with the band.
- The tiered physical discbox gave fans a way to pay more and get an object in return, capturing the album's biggest spenders.
- The debate it triggered — critics calling it reckless, peers calling it courageous — was free promotion that kept the release in headlines for months.
What it did
comScore estimated only 38% of downloaders paid, an average of $2.26 a copy; publisher Warner Chappell later reported 3m purchases across all formats, including 100,000 discboxes worth £4m gross. Thom Yorke told Wired the band made more digital income from In Rainbows than from all previous albums combined, and the release became the industry's most debated experiment of 2007.
What you can take
Let the audience set the price and the pricing itself becomes the campaign: fans feel involved, enough pay well to cover the free riders, and the debate sells the album beyond the buyers.
Since then
The physical CD followed in early 2008, and the album later won the Grammy for Best Alternative Music Album. Radiohead never repeated the pay-what-you-want model, but the experiment seeded a decade of direct-to-fan pricing: Nine Inch Nails released a pay-what-you-want album months later, Amanda Palmer raised $1.2m on Kickstarter, and surprise own-platform drops became routine. Ten years on, NME's retrospective judged the lesson not the honesty box itself but the willingness to try a new relationship with fans.
Sources
- Inside Radiohead's Biz-Shaking Release
- Did Radiohead's 'In Rainbows' honesty box actually damage the music industry?
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