Radiohead

>> Hi. Let's talk about the Radiohead case. The purpose of this case is to better understand the costs  and benefits of a pay what you want pricing strategy. Let's begin with some background. In October of 2007, the famous British rock band Radiohead released its new album titled "In Rainbows". At the time of this release, Radiohead had just ended its contract with its recording company and decided to self-release this new album. So it made this album available for download on its website. This was innovative distribution decision. However, what was even more innovative was its decision to allow its fans to download this album for any price they wanted, even for free. 

This strategy was so new and different that it created a whole new pricing strategy called pay what you want or PWYW. As a point of reference, if Radiohead had sold its album through a recording company, it would be priced for about 14.99 US dollars. If Radiohead were to receive about 15 percent of this total, for about $2.25. Radiohead share would be even less, about $1.40 US, if this album was sold via iTunes. Now this presents to the core issue of this case. 

This innovative pricing approach obtained a lot of attention for Radiohead and excited lots of music fans, but the core issue is the degree to which this was a good pricing strategy for Radiohead itself. In particular, I'd like you to focus on three questions responding to this case. First of all, was the pay what you want strategy a good business decision for Radiohead? 

Second of all, what could Radiohead have done to make the strategy even more effective? And, finally, is the pay what you want strategy something that could be employed by more traditional firms? 

I look forward to your responses.