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..