Economics of Music

A quick post to collect a recent flurry of writing on the economics of music:

  • UPDATE: Joe Malchow links to a blog, Recording Industry vs The People, that monitors RIAA activity.
  • UPDATE: Boing Boing: “DMCA’s author says the DMCA is a failure, blames record industry” (via Instapundit).  Chris Anderson comments: “Music in an abundance economy.”
  • Alex Ross: Dead or Alive. Are classical music sales up or down? No one knows. “[T]he whole point is that there are no hits in classical music.”
  • Norman Lebrecht in La Scena Musicale: What are the top-selling classical albums of all time? “In a whole century of recording, no more than 25 classics topped a million sales, the oldest being Enrico Caruso’s ice-breaker of 1903 and the most recent, in 2002, the first appearance of a Japanese conductor, Seiji Ozawa, at the internationally televised New Year’s Day concert from Vienna.” (Via Tyler Cowen).
  • New Music Box is midway through a three-part series on the economics of new music (via Tyler Cowen):
    • Part 1: Free to Compete, by Marc Geelhoed of Deceptively Simple: “New music presenters are well aware of the potential draw as well as the pitfalls of giving a free concert.”
    • Part 2: The Malady Lingers On, by Matthew Guerrieri of Soho the Dog: “Baumol’s cost-disease (sometimes more prosaically referred to as the Baumol-Bowen effect) is well-known among economists and arts administrators, but not many working musicians have even heard of it.”
  • Free Exchange (economist.com): Music Wants to be Free. “[D]o we say farewell to the recording industry? iTunes sales are not, and may never be, enough to support a large recording business. What would the world look like without the major labels?” (Via Megan McArdle.)
  • Free Exchange (economist.com): “[T]he problem that artists have is not the recording industry. The main problem musicians face is other musicians. There are too many of them.” (Via Megan McArdle.)
  • Joe Malchow: The Recording Industry Association of America is demanding money from college students for allegedly downloading music illegally, though it probably can’t link illegal activity to specific individuals. “[R]ecord companies have let loose on colleges and universities another barrage of extortion letters, each demanding around $5,000 from students.”
  • Amazon.com launches a “Classical Blowout” store with CDs priced under $10. Chris Anderson notes “Amazon’s listing is customized for classical music, while iTunes isn’t.” Barry Ritholtz asks what might be the profit-maximizing price for music: “Shouldn’t an online store, with theoretically infinite shelves, and extremely low cost of marginal product manufacturing, offer a wide variety of products at very competitive prices?” I’ve written about a related topic in the past: Catching iTunes with Classical Music.

In addition to having strong yet fragmented tastes, classical music fans are potentially very heavy music users. Asking a classical music buff how many Beethoven recordings he should have is like asking a wine connoisseur how many bottles of Bordeaux she needs.

Admittedly, I’m an extreme case: I probably have 15 sets of the Beethoven symphonies, mostly on LP. I would buy another set, but for a very low price – say, $6 for the nine symphonies. Amazon is going in the right direction. I am happy to see that “Classical Blowout” purchases are still eligible for free shipping.

The next step is deeper discounting on large bundles. The Napster/Grokster file sharing phenomenon, and the success of downloading services like Rhapsody, showed that there is large unmet demand for music at prices lower than iTunes and retail CDs. How about a quiet market test of 60-CD bundles for, say, $279?

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One Response to “Economics of Music”

  1. Free Music « Zeal and Activity Says:

    […] SEE ALSO: Zeal and Activity’s previous roundup of music business blogging. […]

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