Record companies are not enjoying the digital information revolution. Last year I ran into Magnatune, which is attempting to be the the first real Internet-era record label. Their motto is “We Are Not Evil“; and this is echoed in their commitment to no DRM, high quality CC by-nc-sa licensed try-before-you-buy mp3s, decent payment of artists, and full CD quality downloads.
One of the distinctive features of Magnatune is that customers decide the price they pay for an album (between $5 and $18). Because buyers know that a full 50% of what they pay goes directly to the artist (rather than the measly 5% or so that artists usually get when you buy a CD), they are often willing to pay even more than is recommended.
Radiohead recently tried a similar scheme with its new album In Rainbows. Similarly, they found that fans are even more willing to purchase music when they know their money isn’t being hoarded by a greedy middle-man.