Caso

9-508-110
REV: SEPTEMBER 14, 2009

ANITA ELBERSE JASON BERGSMAN

Radiohead: Music at Your Own Price (A)
“No really, it’s up to you.” A short announcement in early October 2007 on www.radiohead.com, the website of British band Radiohead, spoke volumes about the planned release of its new album In Rainbows. The music would be available exclusively as a digital download on the band’s website,at least initially, and would allow each fan to decide how much to pay for it—a decision that fueled intense media speculation about the future of music. Scheduled to take effect on October 10, 2007, the highly unusual plan represented a significant break from the industry standard of fixed prices for music—typically $0.99 for individual digital songs and $9.99 or more for complete albums. Was theplan, conceived by the band and its managers Chris Hufford and Bryce Edge at U.K.-based Courtyard Management, a brilliant idea, or, as some industry insiders suggested, another nail on the coffin of the dying music industry?

Radiohead
The Band
Formed by five friends attending an elite English private boarding school in 1985, Radiohead was one of the most popular and artistically significantcontemporary bands of the late 20th and early 21st centuries. Named after a song by Talking Heads, a popular act at the time, Radiohead consisted of singer/guitarist Thom Yorke, bassist Colin Greenwood, keyboardist Jonny Greenwood, drummer Phil Selway, and guitarist Ed O’Brien. Known for its brooding style, Radiohead made a splash in the U.S. market with its single Creep in April 1993, whichintroduced music buyers to its debut album Pablo Honey. Building on the band’s success in its home market, the United Kingdom, Radiohead’s label Capitol Records had identified the launch of Radiohead as one of the company’s key marketing priorities for 1993, releasing Creep simultaneously on MTV and modern rock radio stations. Album sales peaked in early August, before the release of two follow-onsingles and a fall tour of the U.S.1 Pablo Honey went on to sell 2 million copies by 1995 in the U.K. alone.2 The band released five more albums between 1995 and 2003, which collectively sold over 8 million copies in the U.S. (see Exhibit 1). OK Computer, Radiohead’s third album, was met with adulation________________________________________________________________________________________________________________
Professor Anita Elberse and Jason Bergsman (MBA 2008) prepared this case. This case was developed from published sources. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright © 2008, 2009 President and Fellows of Harvard College.To order copies or request permission to reproduce materials, call 1-800-5457685, write Harvard Business School Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without thepermission of Harvard Business School.

This document is authorized for use only in CEAG by Francisco Saraiva Junior from September 2012 to March 2013.

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Radiohead: Music at Your Own Price (A)

from the music media internationally. It garnered the band’s first Grammy award, for Best Alternative Music Album. Influential British rock magazine Q named the album “the second best Britishalbum ever,” behind the Beatles’ Revolver,3 echoing British fans who frequently ranked it near the top of “best albums ever” lists.4 Subsequent albums also were critically acclaimed. Along the way, Radiohead accumulated a “huge following, large enough to make albums zoom to number one and devoted enough to plaster the Internet with Radiohead fan sites, blogs, song discussions, and bootleg...