November 06, 2007

By By Antony Bruno, Denver

If a product is worth only what people will pay for it, then what is a digital album worth? Not much, according to Internet research group ComScore.

In a study examining how consumers reacted to Radioheads' "set-your-own-price" gamble with the digital release of the new album "In Rainbows," 38% paid an average of $6. The rest paid nothing.

Of those who did pay, 17% paid less than $4, 6% paid between $4 - $8, 12% paid between $8 - $12, and 4% paid more.

"This shows pretty conclusively that the majority of music consumers fell that digital recorded music should be free and is not worth paying for," said Fred Wilson, managing partner of Union Square Ventures in a statement. "It's time to come up with new business models for the freeloader market."

In the 29 days after the album was made available, the Radiohead site received more than 1.2 million visitors, most to download the album.

The study also broke down U.S. sales vs. the rest of the world, and found U.S. fans are willing to pay more. Of the users who downloaded the album, 40% paid for it from the U.S. vs. 36% of non-U.S. fans.

On a broader scale, ComScore says the average U.S. paying customer will pay $8.05 for a digital album, compared to $4.64 for the rest of the world.

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