Radiohead is so much smarter than the recording industry. Well, pretty much anyone is smarter than the recording industry, but that's beside the point. Radiohead has always been a forward thinking band (OK Computer changed rock music, Kid A further expanded it, etc), but this week they have established themselves as perhaps the most influential band of the 21st century. By now, everyone in the world has heard of Radiohead's "pay what you want" stunt. If not, check it out (and participate!) here. It came as a surprise when they announced it via their website two weeks ago, but the sheer novelty and unexpectedness of it has made it all the more of a pop culture frenzy. The experimental move is sheer and utter genius. Let me count the ways: 1) Giving the album away via download has no distribution costs. Thus, any goodwill payment (and people have largely been paying SOMETHING, if only a pound or two) is nearly pure profit. No record label to siphon away profits, no physical goods to ship. It's a transaction directly between Radiohead and consumer, and early numbers show it's paying off... big time. Cutting out the middleman is the exchange of the future. 2) There is one thing (and it's a BIG thing) that you have to do in order to download the album: you have to provide your personal information (name, address, email, phone number, etc). In today's world of target-marketing and audience-as-commodity, this data (which can be sold to advertisers for big bucks) is where the real value is. 3) Radiohead has realized what the recording industry apparently has not: in a market that is increasingly overcrowded, the problem is not piracy, it’s obscurity. By becoming a “news story,” Radiohead has already won half the battle. As Don Tapscott and Anthony Williams write in their 2006 book, Wikinomics: "In today’s information-soaked environment … content creators need to find ways to permeate people’s consciousness. Giving away content and building loyal relationships are increasingly part of the arsenal creators use in the battle for people’s attention." 4) Essentially what Radiohead has done here is build up an incredible buzz machine, all because of a three sentence message that showed up on their website a few weeks ago (it wasn't sent out to the world in a massive e-blast... it had to be sought out and spread virally). In the networked world we live in, linkage and bottom-up marketing is the generator of real value. It expands the sphere of an artist, allowing more and more people to be drawn into the Radiohead world--where they will eventually spend some money (either on concerts, an $80 special edition box set, or a physical copy of the CD) and reward the band for instilling a sense of trust. 5) More than anything, the circumvention of the record companies is a move that establishes a rapport with an increasingly active audience--sick and tired of being attacked, harassed, and generally manipulated by corporations shoving crappy music down their throat. Kids are more savvy and want to be respected as an audience, not just treated as a Pavlovian mass that buys on impulse or command. They WILL get music for free, regardless of if it is legal, and when a band does it willingly (like Radiohead, but also others like Derek Webb), the fans respond positively, and word of mouth takes over. It remains to be seen if Radiohead's experiment will pay off in the long run, but I'm going to bet that it will. In a year's time--after all ancillary revenues, tour sales, etc are tallied--I expect that Radiohead will be swimming in money and accolades. And I bet there will be many more artists who follow suit.