A couple comments, in no particular order:

• Scott makes a very forward-looking argument. There’s value in digital content — not just personal value to whoever made it or visited it in its earlier incarnation, but social value. Social scientists of all stripes may be interested in the content as artifacts of human communication. That’s why we have archives of any variety.
• The eviction analogy applies equally for particular users as for the wholesale shutdown of a service. If your account will be shut down for whatever reason (e.g. because you are accused of violating the terms of service), your data should be saved for a minimum time for you to retrieve it. (For public-facing services, it’d be acceptable to remove the content from public view.)
• If you were inclined to legislate in this area (see below), there’d be an easy hook to do it: Section 230 of the Communications Decency Act, or Online Copyright Infringement Liability Limitation Act of the DMCA. So you say you host user-generated content and should have a safe harbor from responsibility for the content? Okay — but in order to qualify for limitations on liability, you have to follow some guidelines to protect users and preserve the historical record.
• You could use the same hook to legislate on other issues of consumer protection for UGC sites, such as privacy or data portability.
• So is there an argument for legislating here? I think there might be. “The market” may underserve users (and historians) here, because by the time a company has decided to shut down a service, it’s pretty much turned its back on those customers. It’s the same issue with eviction: once your landlord has decided to kick you out, he’s probably not planning to do more business with you. In both cases, there’s little incentive to treat the consumer fairly.

  But on the whole, this kind of behavior will erode consumer confidence in these services. So will companies offer (and abide by) more favorable terms, and will consumers choose services that do? Maybe — but there are collective action problems, bounded rationality, and monopolistic competition (network effects, etc.) to contend with. So the market may not be good at solving this problem for users, to say nothing of the public good of historical preservation.

• What exactly should the service provider’s responsibilities be? At a minimum, the procedures should provide users with a reasonable opportunity to retrieve their data. For public-facing services (e.g. Web hosting, public photo sharing, etc.), there should also be a reasonable opportunity for archivists to make preservation copies. In both cases, there are significant questions of utility: in the former, the question of portability (OK, you have your data — now what? Is it in an open format? Can you take it elsewhere?); in the latter, the question of access (all this stuff is presumptively copyrighted — how can it be made available?). There’s also the more immediate question of how to enforce such a policy (whether it originates in private contract or public law).

The Guardian story frames this as basically a loss for the band or the industry — perhaps understandable in British terms, where Virgin Megastore carries Radiohead’s CDs for £9.99 – £13.00. But purchasing power is considerably different in U.S. dollars, let alone rupees or reais. The commentary in comScore’s press release, and on their blog, provides a more useful perspective.

But I found this news interesting for another reason: that’s about what I paid. Here’s why:

• I knew I was looking at £0.45 (about $1) just in processing charges already, plus a foreign transaction fee from my credit card. The band sees none of that, but I still have to pay it — comparable maybe to the cost of driving to a store. (The prices in the study exclude these fees.)
• I was downloading an album I hadn’t heard one bar of, solely on the basis of b(r)and recognition. I had very little assurance I would like even a single song on the album. In fact, I don’t recall being able to find any pre-release reviews, either.
• The download was 160 kbps. I would have paid more for a higher bitrate or lossless compression. To me, 160 kbps is less than the full product.
• The download was only available in patented MP3 format, rather than an open format like OGG or FLAC.
• On the plus side, the download was not crippled with DRM — a sine qua non for my purchase.
• The album is still under full copyright: I can’t remix it or share it with my friends, etc. Now, I don’t realistically expect Radiohead or bands similarly situated to release their latest album under a Creative Commons license or into the public domain, but I would have been willing to pay a premium
• The download didn’t come with any album art, track information, or lyrics.
• The download carries low overhead and near-zero marginal cost of distribution, so the additional costs of physical manufacturing and distribution can be factored out of the price.
• Minus the aforementioned overhead, 100% of the download revenue went directly to the artist: nothing to the label, retailer, iTunes, or anyone else. If overhead amounted to as much as 20%, the artist still gets $4 from my purchase. That’s a lot more than most musicians will take home from sales of a physical CD on a major label.

In other words, $5 actually seemed like a relatively generous price, rather than stingy as the Guardian thinks. As it happens, my fellow Americans paid even more, on average: about $8.05.

If I was a band with an established fan base, I’d have to take this as a very encouraging business model. I’m not suggesting this will work well for everyone: not everyone has thousands of fans willing to spring for an album they’ve never heard, and not everyone has the resources to self-finance professional-quality production. But the myth, until now, has been that the Internet helps the artists in the long tail, not the superstars. This is an encouraging anecdote for established acts.

I think I’d put a minimum price on the download, such that each download at least covered the cost of overhead — maybe $1. I think a lot of the 60% of unpaid downloads would convert at that price point, and few would instead turn to p2p. The biggest obstacle here is probably people without a credit card (teenagers).

I think this model could succeed with a minimum as high as $5 (though I think that the higher the minimum, the less “extra” some buyers may be willing to shell out — at some point, “minimum price” simply looks like “the price”).

A reasonable “suggested price” might not hurt, either. If the checkout box listed $8 by default, rather than being blank, some people would still adjust the price up or down, but I think the average price would end up higher than with no suggestion.

I’m sure that advocates for the status quo in the music industry will spin these numbers as arguments for maintaining the status quo. But a deeper analysis shows a big win for both artists and consumers. This is an important experiment, and I hope the lessons — autonomy and a decent take-home for the artist — will be communicated well in the public discourse.