Pay-what-you-can is an old story in the arts world. Many club performers, theatre groups and art galleries have used a “pass the hat” model for live events as long for as long as anyone can remember. Recently, this model has started to migrate online. International rock stars Radiohead and Nine Inch Nails have offered their most recent releases using some form of audience determined pricing. Canadian pop icon Jane Siberry (who now performs under her new name, Issa) has been allowing folks to pick their price to get digital downloads for a few years now, and many independent bands have also gone this route.
I’ve been thinking lately about how far the model of consumer’s setting their own price could be taken; what are the logical kinds of products and services this model could be applied to?
Customer price setting traditionally works well if a few different criteria are met.
- Low or no incremental cost. If you’re a musician, the cost in time and energy of playing to an empty room or a packed house are the same. For digital downloads the cost for allowing each additional download is negligible.
- Instant gratification. Downloads or live shows are things that can be experienced immediately. In fact, in many cases the consumer has the opportunity to pay after the fact, allowing them the benefit first and asking them to pay according to their sense of value after the fact.
- Emotional or intellectual value. Does the product in question actually have a perceived value to the consumer? It’s interesting to note that Nine Inch Nail’s leader Trent Reznor had spoken out against the consumer price setting model after an unsuccessful experiment by Saul Williams with an album Reznor had produced. The difference between Williams’ experience and Reznor’s? Saul Williams was an emerging music with essentially no commercial or artistic track record, whereas Reznor and NIN are well established celebrities whose output has inherent value due to their existing and avid fan-base. It’s not strictly necessary to have an established audience to use a consumer price setting model, but it sure helps!
So, what’s your feeling on letting consumer’s pay-what-they-want? What kind of goods and services do you feel it could work for, if any?
Popularity: 11% [?]
Add to iTunes
RSS/XML Feed
Related Articles
5 users responded in this post
Hey,
Great post, I think It’s time that people explore the pay-what-you-can model a bit more. It has a lot of potential and I think would allow for more customers than the traditional $setcost.
Love the post, will check out the rest of the blog now
PWYC is great so long as the MP3 are decent quality (192-320 is fine for my ears), properly tagged (fille out theose ID3 genre tags as well dammit!) and most importantly, void of any DRM. Local acts need to start allowing people to download their songs from their MySpace pages more, dammit.
Ryan, that’s interesting… would you pay more for higher quality? Would that be a factor for things other than music as well?
Related aside: Reznor gave Radiohead crap for the “In Rainbows” downloads in part because they were 160 kbps, but I thought it was funny that in reporting that, no one mentioned that iTunes regular files are 128 with DRM! I do love how no one is ever allowed to call Apple for ripping people off, but gawd forbid Thom Yorke does it…
Jay,
Heh, I think it would be great if we could all get stuff for free (sorry I mean PWYC) but there has to be some value placed on music doesn’t there?
If I phone a plumber, or a taxi, or a chef for a service that I experience, maybe even need – what would happen if they said PWYC…..I thought so.
I’d love a model that much like the way sports ticket pricing is going, you pay highest to receive it first (or to use a sports metaphor, a better seat), after a period of time or after a certain number, people eventually pay nothing and it becomes part of public domain.
You’ve paid for the social currency of hearing it first and eventually allowed people to get it for free who are less music-centric or less well-moneyed. It may incentivise better music and create some kind of quick revenue stream back to the artist.
Perhaps we treat it like a work of art…there are only 1,000 prints, what is the PWYC for a shortened supply on the market. If we’re fine with it for sculpture, paint and photo – why can’t we be fine with it for notes?
The Radiohead model only works because they are a large established band that a) cut their label out of deal $, b) can sell T-shirts $$ and c) can sell tour tickets $$$. If a small and up coming band sold for PWYC, they don’t have too many other revenue streams to fall back on.
Given my cynicism about PWYC and the human greed instinct, shouldn’t it be PWYW (want) or PLAYC (pay as little as you can)?
Other goods – PWYC might work for – it seems it works a little bit for charity, what about the chance to watch tv or browse the web with only ads that are entertaining,
Bah humbug..talk soon
Sean: I think a lot of it has to do with social expectation. For example, restaurants have a fixed price for the food, but what about the tip? You gear it to the level of service you feel you received at the end of the meal. There are some jerks in the world who never tip, but we all consider them jerks, and in my experience most change their behaviour eventually.
Social pressure is a pretty powerful force, and I think that’s what Radiohead and co. are (probably unintentionally) trying to harness.
Leave A Reply
Please Note: Comment moderation maybe active so there is no need to resubmit your comments