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Inc.'s Failed "Pay-Whatever" Experiment

Inc2

They only offered it to 5,000 prospective customers, but Inc. magazine reported their recent attempt to mimic Radiohead's pay-whatever model produced dismal results.  In fact, "the mailing produced a third fewer new subscribers than the magazine's standard direct-mail piece," according to Patrick Hainault, Inc.'s director of consumer marketing.

Hainault noted that Inc. did a poor job of hyping the offer in the mailing.  He made another statement that's perhaps the most important point: "Unlimited choice is not, in the end, a good inducement.  Consumers want a buying decision to be made simpler, not more complex."  He went on to say that, "when you give people multiple choices, they freeze."

I hope other content providers will continue to experiment with this model.  While I think Hainault's points are valid I still think someone will eventually find a way to make this a viable option.

Comments

Kevin

I tried something directionally similar to Radiohead's promotion with my new book. Basically, 70% of the units were freeibes, 15% were a $7.95 download, 15% were the $14.95 paperback copy of the book. To-date, the results are not optimistic ... if the sole purpose is to sell a book (which is not my purpose for publishing books).

Here's the two summaries of my experiment:

http://minethatdata.blogspot.com/2008/06/more-on-giving-away-books-before-they.html

http://minethatdata.blogspot.com/2008/06/does-giving-away-draft-copy-of-book.html

Thanks,
Kevin

Robert Walker

I agree that the whole "let the reader decide what they want to pay" model probably won't work. Indeed, while many people did choose to pay for the Radiohead album (myself included), reports suggested that the vast majority chose to download it for free. Of course, there are many reasons why one would choose not to pay when offered something for free. Especially given the fact that not paying is a statement against the current system, which is so greedy as to be rightly judged as ridiculous. Then again, I chose to pay because I like the idea of giving my money directly to the artist. I think that there are a lot of music fans who would also prefer to pay a little less and have more of that money go to the artist as opposed to some greedy corporation who doesn't give a crap about what they're selling, namely: music.

As for books, I think that once affordable and viable e-readers become widespread, new models will obviously need to arise. As an author myself, I would prefer to sell my novel for, say, $5. I also think that's a reasonable amount to pay for a full album. I'm against inflated prices, especially when most of that money goes to a bureaucratic corporate system I, and many others, don't believe in.

Joe Wikert

Hi Robert. You make an interesting point that I hadn't considered. The pay-whatever model probably works best when it's consumer-direct-to-artist as opposed to a label or publisher in between. I'm sure you're not alone in feeling like you've overpaid for CDs/books in the past, and this is one way for consumers to get some revenge. If you're right, and I suspect you are, it will force labels and publishers to come up with some new way to add other value to the pay-whatever formula.

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