“Pay As You Wish” Pricing

Jagmohan Raju and Z. John Zhang

On October 9, 2007, the English alternative rock band Radiohead began an experiment: Rather than price their music the conventional way, they let their fans pay whatever they wanted to download their latest 10-song album, In Rainbows. At the checkout page of the inrainbows.com website, visitors came to an empty price box. When they clicked on the box, a message came up that said, “It’s up to you.” On the next page, another message appeared that said, “No, really, it’s up to you.”

Radiohead’s decision to leave pricing to their fans came after years of frustration with traditional distribution. The Oxfordshire-bred band had decided not to renew their contract with their old record label, ...