Radiohead is all over entertainment news right now.
Because they've created a new album called In Rainbows... and they're giving it away FREE starting October 10, 2007.
In fact, they are letting fans pay whatever they want for the album, including nothing at all.
As a result, Radiohead is getting tons of press. I imagine their fan base will grow by at least 50% from the exposure.
So how will Radiohead make money?
Of course, there will be some donations, of which they'll keep 100% since they don't have to split it with a record label.
More importantly, their live concerts will be more likely to sell out.
The precedent has already been set by Prince. He released a free album earlier this year and then proceeded to perform at 21 sold-out concerts in London.
In marketing and advertising circles, we call this "back-end marketing." Make the free or inexpensive sale first, then sell the customer a higher priced product on the back end--for instance, a concert.
Bravo to Radiohead for being willing to take a risk. Let's see how long it takes for other musicians to give this business model a test-drive.