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On the eve of Radiohead’s “pay-what-you-want” release of In Rainbows, it’s interesting to speculate what effect the semi-novel purchasing scheme will have on consumers, what it means for Radiohead, and what it may signal to the music industry. Since the announcement of the donation model a week-and-a-half ago, fans have praised Radiohead for the seemingly innovative move that aims to accommodate the wishes of a broad range of fans.

Tyler Cowen, Professor of Economics at George Mason University, spoke to WNYC’s Bob Garfield on WNYC’s “On the Media.” Cowen points out that Radiohead’s intentions may not be as altruistic as you might think. Under a typical major label agreement, a band like Radiohead would probably receive about $2 from the sale of each record. Even if consumers choose to pay nothing for In Rainbows, the donation plan carries a $1 transaction fee. So, Radiohead will be receiving, at minimum, half of what a major label would have paid, assuming the worst case scenario that fans stiff Radiohead completely on the donation.

Cowen also observes that if many other bands attempt to implement this model, those artists will see diminishing returns–the urge to donate would get on consumers’ nerves, people would start to shut it out, and just end up doing what they want (Bittorrent, anyone?). Cowen also doesn’t see the model as replacing major label contracts, because the labels provide many things that Internet does not–they pay for production costs, they have distribution connections, etc. He claims that the donation model only works in very limited circumstances. Radiohead is a critically-acclaimed, successful band that doesn’t need a label anymore. They’ve put out consistently great albums, and fans trust them.

Listen to the full interview here.