Another successful “pay what you want” experiment

In the vein of Radiohead’s famous “pay whatever you want” distribution of its last album, a restaurant in the UK has decided to ask diners to pay whatever they feel their food is worth during the month of February. And surprise surprise – it’s working:

“Anything between a penny and 50 pounds ($70) will make me happy, it’s entirely up to the customer to decide,” Ilic said on Tuesday, sounding confident about the prospects as he sat on a purple couch is his brightly colored, arty restaurant, known for its bistro-style Mediterranean cuisine.

If people like something, they’ll pay for it, the idea goes, and already Ilic has seen evidence that it works.

“Customers have already paid 20 percent more than the original price,” he said, confident that he will more than cover his expenses for the month. “People want to be polite and would be embarrassed not to pay enough.”

I’m glad to hear it. Here’s hoping the experiment is a great success and that others try the same thing.

Music sharing is not A Bad Thing

Mike Masnick has pretty much been my hero lately, with a string of brilliant posts on alternative revenue models being used by various musicians, all based off the idea that giving your music out for dirt cheap or free and encouraging your fans to share it is A Good Thing. One of the artists he uses as an example, Adam Singer, goes so far as to say that the Creative Commons license is the “ultimate music promotion tool” – something with which I think Jonathan Coulton might agree.

The concept here is that punishing your fans for liking your music and wanting to share it with their friends is incredibly stupid. That seems like an obvious statement to make, but there’s more than one major industry player out there who thinks that this is exactly what the industry SHOULD be doing – which is why many bands, big and small, old and new, are abandoning “the industry” as it stands.

There are a handful of basic ideas being tossed around on his blog that have been used, in various ways and degrees, by several different musicians. Note that each of them revolves around the idea that the music is free and that sharing is good. I’ve categorized them as follows:

  1. “Just pay me whatever you think it’s worth.”  This is the strategy used to great success most famously by Radiohead and Jonathan Coulton but also numerous smaller acts. This seems to work best for artists who already have a fan base, but has worked very well for smaller acts as well.
  2. “The music is free, but please buy my merchandise!” This strategy seeks to build a fan base with free music who will then in turn buy “special edition” CDs, t-shirts, and concert tickets. This strategy is tailored for the smaller artist because it seeks first to build your fan base, and second to make a profit, but would work for an artist of any size as the profits will only increase as your fan base does. The risk here comes with the fact that you have to execute it well: your merchandise has to be worth the separate purchase. Don’t insult your fans with CafePress t-shirts. Adam Singer talks about this method at his blog.
  3. “If I get enough money in donations to cover my costs, I will release a free album.” This method carries almost no risk, because if you don’t get enough money, then you don’t make the album, and you don’t lose anything in the process (at least monetarily). The tradeoff is that your fan base who is doing the donating needs to be confident that you will produce something worth their investment, so you have to have that base before you can attempt this method. This works not just for music, but almost any medium: books, digital art, whatever. Once the album/ebook/whatever has been released, it is free to share and will build your fan base who can then purchase your other stuff (option 2) or give you more money next time you want to solicit donations for your work. Marillion succeeded using this model.
  4. “The music is free, but if you buy XYZ too, you’ll get more that you wouldn’t otherwise!” This one starts with a smaller body of work that is free to share, but rewards the buyer with extra stuff they wouldn’t get otherwise. This can take many forms – Jill Sobule had different levels you could buy at that included perks such as getting the album before its release date, a free concert at your home, or even performing on the next album. Trent Reznor offered the first CD of “Ghosts” for free, with additional content costing extra, and options to buy higher-quality recordings, vinyl record, DVDs, books of accompanying art, or autographed merchandise at different price points. This is very similar to numbers 2 and 3, but has a different enough focus that I gave it its own number.

Using these methods and combinations of them gives artists many new ways to find fans and make money while connecting with those fans on a much more personal level than they might otherwise. As Masnick said, you can’t ask your fans for favors when you’re suing them. In addition, it automatically solves the “problem” of piracy – you can’t pirate something that’s already being given out freely! Make the economics of scarcity your friend, not your enemy, and watch things just work.