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On Free Music

Robert H. Frank’s book, The Economic Naturalist: Why Economics Explains Almost Everything is a fascinatingly interesting work and there are two vignettes that encompass some of the ideas we have been trying to explain and he does so in simple economic terms.

On page 97 he answers the question as to why a band would allow fans to name their own price for the digital download version of their new albums. Using the Radiohead example, where in October 2007 they allowed fans to download their album at whatever price they wished to pay, including free, he states that the band:

  1. Received a lot of favourable media attention and in the first week the album was downloaded 1.2 million times in contrast to their previous album whuch sold 300,000 copies in the first five weeks.
  2. The band got to keep 100% of the revenues so generated
  3. The band generated incredible amounts of goodwill among its fan base.
He sums it up by saying that it looks like a shrewd marketing move.

On page 68, he asks another interesting question; why established musicians oppose free music sharing programs and why talented ones favour the same. Essentially, for the talented independent musician it poses no threat to CD sales as they have no CD sales in the first place and that popularity, via free music sharing programs, is far more important to such artists because they can monetize such popularity later on, in the form of concerts and future CD releases.


And in other news, Nine Inch Nails have, again, released their latest album as a free download. And they *are* a popular band. To quote Masnick, “Trent Reznor has shown that he’s actually really interested in the economics and business models that will work in the online world.”

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