For new music, pay what you want
Door-to-door sales companies exploit this psychology in their marketing strategies. The sample piece of ham is included in the product price. Economists have been ferreting out on the truth of free offerings for so long that customers are now well aware of what they are getting into. No product can be offered free.
Recently, rock band Jang Gi-ha and the Faces tested this age-old adage. The stage is set in the online music market, where some people believe there is a “free lunch.” Jang Gi-ha and the Faces released a new single and let the customers set the price. As Jang Gi-ha released the digital single titled “Thought It Was Good, But Was Not,” he declared that the listener could determine how much he or she is willing to pay for the song.
When asked why the band chose the unique approach, the members replied that they would like to make sure the profit goes to the owner of the music - or the copyright holder. So, the income from the sale is not shared with the record company. In the Korean music download market, less than 10 percent goes to the creator because of the distorted distribution structure. The band wants to change and reform the unreasonable structure.
English alternative rock band Radiohead is the pioneer of the “pay-what-you-want” model. As the band released “In Rainbows” on October 10, 2007, the band let consumers set the price. For a month, one million people downloaded the album and paid an average of $2.26. About 40 percent paid for the music, and Radiohead made more money than their two last albums combined. The online music market was stirred. People raved that Radiohead offered an alternative to the online music market that believes creation and information come for free. However, the success was short-lived, and other bands who followed this model failed one after another. As more free downloads were made, people paid far less for the music.
How about Jang Gi-ha’s experiment in Korea? In about 10 days, 1,400 people downloaded the music and paid a total of 2 million won ($1,754) - an average of 1,400 won per download.
It is far more than the average price of 100 to 600 won. More than 70 percent of the downloaders paid for the music. Jeong Tae-yeong, the CEO of Hyundai Card who co-planned the event, said on Twitter, “Many people cheered for Jang Gi-ha and the Faces.”
The final result is yet to come, but it has been successful so far. Koreans believe that if you like freebies, you become bald. So can they really change the online music market?
*The author is an editorial writer of the JoongAng Ilbo.
by Yi Jung-jae