Back in 2015, I was interviewed for a documentary called The Millennial Dream. I then completely forgot about it until somebody tweeted it at me yesterday. So the documentary is out – it was released last year – and you can rent it or buy it on iTunes.

The documentary calls into question the [North] American Dream. This idea that you just have to work hard, save up, buy a house in the suburbs, pay off your debt, and then everything will be just fine. For many, that dream is quickly disappearing, if it hasn’t already.

Enter the Millennial Dream. Our economy is changing. Our jobs are changing. Our cities are changing. And by 2020, the Millennial generation is expected to form 50% of the global workforce. What is this generation dreaming about? That is what this documentary is about.

But I should probably stop here because I haven’t actually seen the film. I could be overselling it. I’ll watch it this weekend and then report back. If you can’t see the trailer embedded below, click here.

[youtube https://www.youtube.com/watch?v=CVCNXJk2fT8&w=560&h=315]

In my pricing class this morning we looked at the strategy used by Radiohead with the release of its In Rainbows album. For those of you who aren’t fans, what they did was offer up the new album via their website on the basis that customers could pay whatever they want.

At first blush this probably sounds ridiculous. But if you break it down, it turns out to be pure brilliance.

First, it’s important to understand how pricing overall works in the music industry. In the olden days when people still bought CDs, an artist might make 15% of that sale price. So if you buy an album for $14.99, the artist’s royalties would be in and around the range of $2.25. The rest goes to the record label, their overhead and so on.

With the advent of iTunes, artists still make around 15%. But now a typical album costs $9.99. This is because overhead costs are lower for an online-only store. Still, the artist now only makes $1.50 or so per album sale.

In case the of Radiohead, their record label contract had expired and so they decided to self release In Rainbows. This obviously means that they were able to cut out a lot of overhead and other expenses. But would it not have been better to just sell the album for a fixed, but discounted, price?

The thing is, when you give people the option of paying nothing, you maximize your potential distribution. This is good when you’re trying to sell concert tickets, merchandise and other revenue producing items in the future.

But interestingly enough, when you give people the option you also maintain a business model. In this case, it turns out that, on average, people paid over $3 per album. This may sound irrational, but people do it for a number of reasons: because they’re big fans, because they want to support the artist, etc.

Whatever the reason, Radiohead actually brought in more per album than if they had gone through a record label and/or sold through iTunes. In fact, In Rainbows netted the group over 8x more than their previous album Hail to the Thief - which was released through a record label. 

This got me thinking.

What other markets would be well served by a pricing model such as this? Could you make parking a pay what you want service? I know that Shakespeare in High Park uses the model. So does it only work for artistic markets where people feel an emotional connection? I certainly don’t think we could sell condos using this approach.

Back in 2015, I was interviewed for a documentary called The Millennial Dream. I then completely forgot about it until somebody tweeted it at me yesterday. So the documentary is out – it was released last year – and you can rent it or buy it on iTunes.

The documentary calls into question the [North] American Dream. This idea that you just have to work hard, save up, buy a house in the suburbs, pay off your debt, and then everything will be just fine. For many, that dream is quickly disappearing, if it hasn’t already.

Enter the Millennial Dream. Our economy is changing. Our jobs are changing. Our cities are changing. And by 2020, the Millennial generation is expected to form 50% of the global workforce. What is this generation dreaming about? That is what this documentary is about.

But I should probably stop here because I haven’t actually seen the film. I could be overselling it. I’ll watch it this weekend and then report back. If you can’t see the trailer embedded below, click here.

[youtube https://www.youtube.com/watch?v=CVCNXJk2fT8&w=560&h=315]

In my pricing class this morning we looked at the strategy used by Radiohead with the release of its In Rainbows album. For those of you who aren’t fans, what they did was offer up the new album via their website on the basis that customers could pay whatever they want.

At first blush this probably sounds ridiculous. But if you break it down, it turns out to be pure brilliance.

First, it’s important to understand how pricing overall works in the music industry. In the olden days when people still bought CDs, an artist might make 15% of that sale price. So if you buy an album for $14.99, the artist’s royalties would be in and around the range of $2.25. The rest goes to the record label, their overhead and so on.

With the advent of iTunes, artists still make around 15%. But now a typical album costs $9.99. This is because overhead costs are lower for an online-only store. Still, the artist now only makes $1.50 or so per album sale.

In case the of Radiohead, their record label contract had expired and so they decided to self release In Rainbows. This obviously means that they were able to cut out a lot of overhead and other expenses. But would it not have been better to just sell the album for a fixed, but discounted, price?

The thing is, when you give people the option of paying nothing, you maximize your potential distribution. This is good when you’re trying to sell concert tickets, merchandise and other revenue producing items in the future.

But interestingly enough, when you give people the option you also maintain a business model. In this case, it turns out that, on average, people paid over $3 per album. This may sound irrational, but people do it for a number of reasons: because they’re big fans, because they want to support the artist, etc.

Whatever the reason, Radiohead actually brought in more per album than if they had gone through a record label and/or sold through iTunes. In fact, In Rainbows netted the group over 8x more than their previous album Hail to the Thief - which was released through a record label. 

This got me thinking.

What other markets would be well served by a pricing model such as this? Could you make parking a pay what you want service? I know that Shakespeare in High Park uses the model. So does it only work for artistic markets where people feel an emotional connection? I certainly don’t think we could sell condos using this approach.