Radiohead And Opportunity Costs

There was a slight disturbance in the force of the economics blogosphere when the band Radiohead announced they would be giving out their new album for "free"--and customers who downloaded the music could donate whatever amount they wanted to the band in return. (See here, here, and here).

The discussion, however, did not sufficiently emphasize an important lesson of economics. Even at zero cost, I suspect that millions of iPod owners will still not have a single Radiohead song in their catalog. As good as they are, Radiohead produces music that tends to attract the devoted attention of a relatively few cultish fans. Tyler Cowen pointed out that their albums tend to start out strong in the charts, but sales drop off quickly thereafter (as soon as those fans have bought their copies). Their highest ranking single in the U.S. "hot" singles chart was "Creep", peaking at #34.

The band's history suggests that many people (misguided as their tastes might be) would rather listen to something else. Even at a nominal cost of zero, many of these people will still not want to hear Radiohead's music. The time spent listening to Radiohead has an opportunity cost, and Radiohead will have to lower the price even further--below zero--in order to attract them. In other words, the band will have to pay listeners for the right to invade their airspace.

One more music-related point: All the buzz about Airhead's innovative pricing scheme might make it easy to overlook the real news in the music biz this week. The Boss Is Back!

I heard Bruce Springsteen's new album, Magic, last night. It is terrific. He is back in form: the soaring melodies of his early work, the Spectorish Wall of Sound, and the evocative descriptions of life in Anytown, U.S.A. And, not coincidentally, the sanctimonious political preaching of much of his recent work is (mostly) gone.

It's too early to rank the album in Bruce's canon, but there are already a couple of indications that it will do well: (a) I did not skip a single song in the album; and (b) I heard the entire album twice. Here are the intro lyrics to one of my favorite songs in Magic, "Girls In Their Summer Clothes":

Well the street lights shine
Down on Blessing Avenue
Lovers they walk by
Holdin' hands two by two
A breeze crosses the porch
Bicycle spokes spin 'round
Jacket's on, I'm out the door
Tonight I'm gonna burn this town down

And the girls in their summer clothes
In the cool of the evening light
The girls in their summer clothes
Pass me by

Comments

[mc]

Radiohead and Bruce are both great.

[Mike Fladlien]

I downloaded a free song from iTunes from Magic...I guess people also explore the alternate choices of free goods...