More on “the Radiohead economy”

Before it slips away, I wanted to draw attention to this excellent article in the Toronto Globe and Mail about the interpersonal elements of the Radiohead pricing experiment. It draws on an article I’ve used often when I teach nonverbal communication about tipping, which I thought was a clever link on the writer’s part:

But so far, economists don’t understand much about what motivates people to make payments voluntarily—and those of us doing the paying don’t understand it, either. When it comes to restaurant tipping, for instance, a “gifting” practice that continues to baffle economists, research indicates that the actual quality of service doesn’t make much of a difference to the tips a server receives. Although patrons invariably cite service as a major factor in how and why they tip, research data show that it only accounts for a 1.5% difference. What makes a greater impact, according to studies done by Professor Michael Lynn of Cornell University, is the degree of interpersonal connection we feel with a server. One subject in the study who made the simple change of introducing herself to diners by name saw her tips increase from 15% to 23%. Tricks such as touching customers on the shoulder, writing “thank you” on the bill and crouching beside the table to take an order were shown to generate even greater monetary rewards.

Another piece, also exploring the extent to which this model might be expanded into other products appeared recently in AdWeek. Its author speculates that games are ripe for this sort of pricing scheme, and quotes me (this is getting old, I know) making the interpersonal point:

In general, game developers build successfully on a key element of consumer-generated pricing: passion. According to Nancy Baym, an associate professor of communications studies at the University of Kansas who studies online fandom, that factor is the assumption or reliance on “an audience that cares about you enough to pay for something they can get for free.” It’s a dialog, she says, that “melds a commercial relationship with a social relationship. There’s something more than commerce.”

At any rate, both articles are notable for replacing hype with reasoned comparisons to other phenomena that rely on user-generated pricing.


On a personal note, my apologies for my irregular posting to anyone who misses more regular updates. At least until the new year posting will stay sporadic: We are hosting 4 job candidates in my department this week (during an ice-storm that has left Kansas in a declared “State of Emergency”) and next week I am headed off for an exciting little combined work and pleasure jaunt to Oslo and Copenhagen. Sunlight? Who needs it!

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