Select your localized edition:

Close ×

More Ways to Connect

Discover one of our 28 local entrepreneurial communities »

Be the first to know as we launch in new countries and markets around the globe.

Interested in bringing MIT Technology Review to your local market?

MIT Technology ReviewMIT Technology Review - logo


Unsupported browser: Your browser does not meet modern web standards. See how it scores »

{ action.text }

But few eMusic subscribers meet that description. Since the quotas don’t roll over from one month to the next, a given subscriber’s average payment per download can fluctuate widely: 30 downloads last month may have meant an average of 33 cents per MP3, but 10 this month means an average of a dollar. “Across all of our customers and all of our usage, the effective price that consumers are paying is less than 99 cents, so we don’t believe that 99 cents is the right price point,” says Pakman. “For non-hit music, it’s probably somewhere between 60 and 75 cents a song. And that’s based on data. That’s not my gut. That’s based on what we see people willing to pay in the market.”

Pakman doesn’t believe that eMusic’s low prices are seducing anyone away from piracy, though. “Our customers are really not the piracy-prone customers,” he says. “I think that generally, piracy is the domain of youth, and we just don’t focus on the youth customer. So we don’t see piracy as eating into our ability to sell music.”

But what happens when today’s piratical youths, unintimidated by file-sharing technology and accustomed to free music, become adults?

In 1998, Bruce Schneier, a celebrated cryptographer and chief technical officer of the network security firm BT ­Counterpane, proposed an answer, a mechanism he called the street performer protocol. A band would announce the completion of a new album, and the band’s fans would begin paying arbitrary amounts of money into an escrow account. Once the total in the account crossed some threshold, the band would collect the money and release the new work into the public domain. Schneier showed that data encryption can ensure that the artist doesn’t swipe the money without delivering the goods, and that if the payment threshold is never crossed, the contributors can all get their money back (plus interest).

But Schneier himself now believes that such measures will prove unnecessary. “In real life, you’re more likely just to use trust,” he says. “Radiohead just said, ‘We’ll do it.’ They’re just relying on the good will of their fans, and their fans’ trust in them, and so on. And that just seems more plausible in our world.”

Radiohead’s reliance on the good will of its fans probably netted it more than a million dollars in the month of October, and possibly much more. But Radiohead is also the beneficiary of years of major-label publicity. In a world of unrestricted, open-­format downloads, where record companies have no way to recoup the costs of huge marketing campaigns, bands will have a harder time achieving Radiohead’s level of celebrity in the first place.

Nonetheless, smaller experiments with new methods of distribution and promotion also indicate that people are willing to pay more than they have to for music they care about. The Canadian folksinger Jane Siberry, who last year changed her name to Issa, began using the tip-jar model to sell her recordings a good two years before Radiohead did, although her website recommends that customers pay the industry standard 99 cents a song. According to statistics posted on the site, about 20 percent of downloaders pay nothing. But the average payment per song is still $1.20. Magnatune, a website that sells 569 albums by 258 artists, lets its customers choose how much to pay but sets a lower bound of $5 an album. Its 50 top albums, however, sell for an average of $8 to $10. In a slightly different vein, Team Love Records posts all of its artists’ recordings to its website as free, high-­quality MP3s. But its most popular acts still sell thousands of CDs, which is pretty good for a small independent label.

It may be that in the brave new world of Internet music distribution, rock bands will no longer generate so much revenue that they can afford to throw TVs out of hotel windows or insist that all the brown M&Ms be removed from the candy bowls in the greenroom. But Radiohead’s online release of In Rainbows contributes to the mounting evidence that musicians who build an audience will still be able to make a living doing what they love.

0 comments about this story. Start the discussion »

Credit: Robin Sellick/Headpress/Retna

Tagged: Business

Reprints and Permissions | Send feedback to the editor

From the Archives


Introducing MIT Technology Review Insider.

Already a Magazine subscriber?

You're automatically an Insider. It's easy to activate or upgrade your account.

Activate Your Account

Become an Insider

It's the new way to subscribe. Get even more of the tech news, research, and discoveries you crave.

Sign Up

Learn More

Find out why MIT Technology Review Insider is for you and explore your options.

Show Me