Economists are very excited by the Radiohead's voluntary pricing scheme, mainly because it will provide a data set with which to test assumptions about tipping and about the future of the music industry. Prognosis? It's fucked, according to Bob Lefsetz (quoted here): "This is big news. This says the major labels are fucked. Untrustworthy with a worthless business model. Radiohead doesn’t seem to care if the music is free. Not that they believe it will be. Because believers will give you ALL THEIR MONEY!"
There's a strong temptation to be faintly cynical about Radiohead's motives and look for the advantages the band reaps through this highly publicized gambit. Tyler Cowen explains how it's a good publicity stunt for bands that make their money by seeming cool to their fans and by touring. Megan McArdle points out the clever deployment of price discrimination:
While the download is free, the physical discs with all the notes and bonus material are 40 quid . . . or about $80. This is quite a lot to pay for an album, even if you really, really like the band. So in effect, Radiohead may have created a really effective price discrimination system: the free download might not only rope in lukewarm fans like me who would have put off the purchase, possibly to forever, but also create goodwill that encourages more of their fans to buy the super-expensive (in America) discs.Price discrimination can seem sort of nefarious, but in charging people different sums in order they may have a slightly different experience of the same basic good, just enough rope is supplied to consumers to hang themselves how they choose. And superfans can try to feel connected to their idols by making larger and larger pecuniary sacrifices. That they are buying an illusion doesn't necessarily mean they should be kept from doing so.
Another way it might work is that the very popularity of the free (or low cost) download might force dedicated fans to spend a lot in order to signal their committment to the band. Music has a substantial status component to its consumption. If everyone and their lame younger brother has downloaded the new album for a pittance, you might have to order the discs just to set yourself apart from the hoi polloi.
As someone who grew up listening to music on a collection of homemade cassette tapes, I have never understood the idea of showing one's loyalty to a pop band by finding occasions to pay them for their work; in the crowded world of pop music, it seems enough just to pay with the much scarcer currency of attention. In fact, people may have few qualms about stealing music because they see no correlation between the amount they pay and the value they get out of the work -- because they don't price aesthetic pleasure, despite the culture industry's desperate wish that they do so (I paid $5 for an Astral Weeks LP; I got the unspeakably awful Poetic Champions Compose for $15. I certainly didn't get three times as much pleasure from it.) Some peope might find that investing money in cultural product commits them to putting in the time necessary to embellish its value, to weave it into the fabric of one's experience, bind it up with memories; but when price isn't an issue, the process seems to me a little bit more organic (if not altogether arbitrary).
You also can't put a price of being socially relevant, and that is something you can monetize in innumerable ways, something Radiohead is probably aware of. My impression is that the artists making music worth hearing would make it even without the financial incentive (expression at that level is its own reward), so there's no need to worry about "supporting" them so that their innovations can make it into the world. Intellectual property arguments applied to artistic expression seem to me to debase art out of all recognition and turn it into nothing more than a patentable idea, art as entrepreneurship.