What Ails the Music Industry?

Tyler Cowen recycles some insights from his highly recommended Good and Plenty:

In the past most people didn't much like or listen to most of the music they bought, or in any case most of the value came from their very favorites. A relatively small percentage of our music purchases accounted for most of our listening pleasure. So if people can sample music in advance, and know in advance what they will like, music sales will plummet. This will be a sign of market efficiency, not market failure.

Right. Obviously, from the point of view of a record company executive, a "healthy music business" is one which maximizes his profits. From a more reasonable point of view, the relevant metric is consumption of music. On the one hand, you have declining sales. On the other hand, you have the basic truth that people now have easier access to a wider array of music than ever before, along with better devices on which to listen to it, and much more convenient ways to store it.

Comments

surely it's about albums? i always used to resent paying 15 bucks for a CD when i only liked three of the songs - now i don't have to.

in fact, the above is one of the reasons i got into classical music: the value for money is way higher in classical: one haydn string quartet is pretty much as excellent as the next.

Posted by lucretius | September 29, 2007 3:57 PM

"i always used to resent paying 15 bucks for a CD when i only liked three of the songs - now i don't have to."

I see what you mean and mostly agree with you, but there's still something that bothers me about this. With more consumer choice and digitization, an album can now be split up into its songs. It's like cutting off the good parts of a painting or chipping off the good pieces of a sculpture.

Apart from messing with an artist's work, there may be value lost to the consumer too. Many albums work horribly when listened to on an Ipod playlist, but sound great as an album (like, Yankee Hotel Foxtrot). And, sometimes things that aren't instantly enjoyable grow on you. I've had many CD's that I've hated, but come back to years later and loved (like, the Pixies).

Posted by Chris_ | September 29, 2007 4:09 PM

"In the past most people didn't much like or listen to most of the music they bought,,,"

What's he talking about?

Posted by Guy in Jersey | September 29, 2007 4:21 PM

chris, i think your assumptions about they way musicians put together albums gives them too much credit. generally, they put out an album because they're under contract to put out an album. they aim to do say twelve songs, because any fewer wouldn't justify the price of a CD. the technology (based on the LP, in fact - the c40 minute album is a relic of the capacity of twelve inch vinyl) drove the creation of the music. now, presumably, the bands can release music as and when they have some good music to release. it's not as if they'll ever be prohibited from putting out something of album length if the material merits it.

doesn't everyone win here (maybe even the record companies)?

Posted by lucretius | September 29, 2007 4:40 PM

While musicians may construct an album in a certain way, to maximize what they think is the intent or meaning of the individual songs, I'd say very few albums are constructed as one long story. Andrea Corr's solo album "Ten Feet High" is constructed as a series of "little stories" and I don't think the order really matters.

Blue Oyster Cult and other bands used to structure albums that way, however. If one likes that, there's nothing stopping one from downloading all the songs and organizing them in the appropriate way - or even better, in an "inoppropriate" way.

The notion that one is "messing" with the artists reminds me of George Lucas declaring that an artist such as a sculptor should be able to sue the owner of one of his works if he paints it blue which the artist did not intend.

This is just ridiculous. It's like one of Ayn Rand's more ridiculous scenarios where Howard Roark blows up a housing development because they modified his architecture.

An artist's work is no more sacrosanct than any other human invention or creation. If you don't want someone changing it or using it in ways you did not intend, own it yourself and don't allow anyone else access to it.

Of course, artists want to eat, too, so this isn't very feasible. So like all humans, they turn to the government to achieve something they can't do - order someone else to do something they'd like, regardless of the actual merits for the species.

This particularly applies to actual "art" - as opposed to practical inventions - since "art" is, in the long run, utterly insignificant to the survival of the species. Artists have some great social reputation due their being "creative". In general, most artists are more indulgent than creative. As someone once said about niche academic specialties, spending a lifetime studying Sumerian script is more license than discipline. The same is true of art.

Bottom line: take art less seriously, and don't allow artists to set the terms of the interface between technology and economics.

Posted by Richard Steven Hack | September 29, 2007 5:04 PM

I think everyone is ignoring the elephant in the room, which is that many many people aren't paying for the music they download (and keep) at all. I don't know how this can really be addressed (and certainly the RIAA's policy of randomly suing people seems counterproductive and unjust). This is a case of value migration--in the early decades of the record industry, value resided with the record companies via horribly iniquitous contracts with musicians and composers combined with a technology (vinyl records) that allowed them to control distribution of the music to consumers. In the 60s and 70s, musicians fought for more control (not always successfully, but often enough that the excesses of wealthy musicians in the 70s became legendary), so value migrated slightly up the supply chain. But cassettes also pulled value down the supply chain a little to consumers at the same time.

MP3s have moved value almost completely down the supply chain. Record companies and musicians essentially have to compete with free music. No one is going to shed tears for the record companies, or worry to much if musicians aren't living sybaritic, Led Zeppelin-style lives. But I think all music fans would like for musicians to make a living at what they do--if only to have a continued motivation to keep making music.

Posted by RWB | September 29, 2007 5:09 PM

Lucretius--Yeah I suppose. Just offering up the other perspective.

Reminds me of this pitchfork article calling this the "Chumbawamba factor." Everyone ran out to buy their CD in 1997 to get that hot new dance song Tubthumper. But, the rest of the CD wasn't like that, and people get mad. File sharing allowed consumers to preview music.

A local DJ used to warn listeners before playing Incubus' "Drive" that the band sounded nothing like that on their CD. That's weird. It's like warning potential Atlantic Monthly subscribers that the magazine isn't like Andrew Sullivan's blog or something.

Posted by Chris_ | September 29, 2007 5:14 PM

RWB thinks "all music fans would like for musicians to make a living at what they do", and I agree. The problem is, WHICH musicians? I'm no free-market fanatic, but I really can't think of a good way to pick the people who deserve to earn a living as musicians, except the "free market".

The most extreme practicioners of "free-market" economics, music-wise, are those guys who play the guitar and sing in subway stations, with their guitar-case open at their feet. Passers-by are more or less forced to "consume" their music in the auditory sense, but NOT in the economic sense. If a musician can earn a living using THIS business model, he deserves to.

Of course, even the subway musician is vulnerable to "stolen" music on I-Pods. His potential "customer base" is reduced when most commuters are "consuming" music pumped directly into their ears. Not even the most devoted music fan can "consume" more than 24 hours of music per day. This notion would seem to conflict with the economic doctrine of "insatiable wants", on which all of economics is built, but the conflict is resolved by carefully differentiating the auditory and economic senses of "consume": you can certainly BUY more music than you could live long enough to listen to.

Some years ago, I got into an interesting discussion on sci.econ with David Friedman (son of Milton, and an economist in his own right) by raising this question: did anybody make a living as a writer before Guttenberg's printing press came along? (His answer: "Yes. Aretino. But he was mostly paid to NOT write.") The point of my question was that technology has come full circle. Before the printing press, the 1,001st copy of a text cost exactly as much to produce as the 1st copy did. (N.B.: 1st _copy_.) Now that digital storage and broadband communication has evolved, the cost of the umpteenth copy of a piece of "intellectual property" is again equal to the cost of the 1st copy, and this time it's approximately zero. So, if you believe that economic forces are mightier than any kind of man-made laws in the long run, then we may be entering an age where nobody can make a living as a musician any more -- except maybe the subway guy.

-- TP

Posted by Tony P. | September 29, 2007 6:16 PM

Reminds me of this pitchfork article calling this the "Chumbawamba factor." Everyone ran out to buy their CD in 1997 to get that hot new dance song Tubthumper. But, the rest of the CD wasn't like that, and people get mad. File sharing allowed consumers to preview music.
A local DJ used to warn listeners before playing Incubus' "Drive" that the band sounded nothing like that on their CD. That's weird. It's like warning potential Atlantic Monthly subscribers that the magazine isn't like Andrew Sullivan's blog or something.

I think one underappreciated contributor to the demise of the Major Record Label was that they mostly stopped issuing singles in the early 90s. In the 80s and 90s, major acts used to pull 4-5 singles from an album; eventually people would hear enough to buy the album (after buying 1-2 singles from it, meaning even more $$$). If a band had only one good song, you'd make coin from the single and dump the album on the market without promotion, then dump the band when their time had passed.

But they got greedy, thinking--erroneously, I think--that singles cut into CD sales. So they released far fewer singles, forcing music fans to buy mediocre $19 CDs for one song (which, perversely, often did not contain the radio version of the song they wanted), and, over time, people got sick of it.

Singles were also an affordable way for teenagers/college students to become music fans, so killing the single may also mean fewer obsessive music consumers...

So yes--the "Chumbawumba Effect" deserves as much blame as file sharing--people are pissed that they had to spend $19 for that one Fastball song, so they feel they're entitled to some free songs...

Posted by thefax | September 29, 2007 7:00 PM

I'd like musicians to be able to make a living at what they do. Of course, there's no reason that they can't do that the same way that musicians made a living from their art before the technology came along that allowed them to profit from selling recordings of their work. They can perform live and sell tickets.

Oddly enough, that is the way that most musicians make money from their music these days. Only a very very small percentage of working musicians see much in the way of profit from their recordings. Most of it is sucked away by the recording industry and middlemen.

Posted by Chuchundra | September 29, 2007 7:07 PM

Musicians will always be be able to make a living, and yes, it will be according to the dictates of the free market. They will perform their music live and people will pay to go see them. That's how many bands have made the majority of their money long before file sharing came along.

Posted by nolaboyd | September 29, 2007 7:16 PM

Well, it's almost musical the way Tyler can just make something up and Matt can riff on it.

And having listened to some of the music vids Matt has posted here, I'm inclined to agree that a whole album would be way too much.

The music I buy on cds, though, is a great bargain compared with the per-song price for downloads. Lucky thing, that.

Posted by serial catowner | September 29, 2007 7:37 PM

Re: It's like cutting off the good parts of a painting or chipping off the good pieces of a sculpture.

Nah. With a few rare exceptions (like "Tommy" or "the Wall") an album is just a bunch of songs released toegther, but which have very little to do with one another. Any one of them exists in isolation just fine from the others.

Posted by JonF | September 29, 2007 7:45 PM

Y'know, it's simply great that computers are so easy to use that people can make comments on the internet even if they never had no fancy schoolin' or booklarning.

But, just for the record, there were writers, and new books that everyone just had to read, and publishing houses to publish them, in the time of the Romans.

The difference was that the printing press totally reversed the ratio of book makers to book readers.

Posted by serial catowner | September 29, 2007 8:29 PM

"albums" are a modern construct: the original "albums" were boxes of 78s and nothing more. once the album form became popular, musicians began to think in those terms, but if the album form becomes less and less popular, musicians will less and less care to think about a "bigger" picture.

that all said, the notion that the "chumbawumba" effect was typical and not atypical in not what i would call an "insight." my polite term would be fertilizer....

Posted by howard | September 29, 2007 9:17 PM

So if people can sample music in advance, and know in advance what they will like, music sales will plummet

But people have always had a way to sample music in advance: it's called "radio". Back in the days when DJs still chose the music they played and freeform stations played albums in their entirety people could get a wide sampling of new music. But with restricted playlists radio simply isn't very useful to discover new music anymore. The collapse of radio is a major factor that a lot of people overlook.

Also, the Chumbawamba effect is nothing new. Pretty much every "one hit wonder" ended up that way because their one hit wasn't representative of their music as a whole.

Posted by C.L. | September 29, 2007 10:53 PM

Anyone who goes by "serial_catowner" is automatically a good person, in my book. So I ask this with all respect:

Which Roman was it, exactly, who "made a living" as a writer? There were poets and playwrights even in classical Greece. But did they make a living at it? Or were they the kind of person that we would today call "independently wealthy"?

To elaborate on the importance of the printing press in the economics of "intellectual property": a printing press is capital. It earns the capitalist a return because it can make copies of a text at much lower cost than hiring scribes to do it. The capitalist makes his money by keeping his press busy. He is willing to share some of his profit with writers who can provide text that will keep the press busy. It's the publisher (capitalist), not the reader, who pays the writer. When the capital required to reproduce "intellectual property" becomes so cheap that the cost of reproduction falls to zero (as today) there's not much profit left for capitalists to share with authors.

-- TP

Posted by Tony P. | September 29, 2007 11:19 PM

I disagree, lucretius, none of the others really compare to Opus 76.

Posted by Gabriel Rocklin | September 30, 2007 1:11 AM

I should point out that the same Internet which makes selling CD's unprofitable also makes live performance very profitable.

Bands in the future will perform live from studios and broadcast it over the Net to their fans. The performances will be by subscription. Nobody will care if the performances are copied and redistributed since the main value is in "live" (and "prerecorded live"). You can't copy "live".

And the bands won't need the record labels at all. All they need is bandwidth and somebody who understands the Net well enough to do the promo. All the income from the subscriptions and the ad revenue from the sites will go directly to the band minus bandwidth and promo expenses.

Imagine a band with one million fans worldwide charging them five bucks a month for access to their live music. That's sixty million a year minus expenses. Bigger bands will do even better.

There's a female artist in London who did audio broadcasts over the Net. She wasn't even signed to an indie label. She had as many as 70,000 people listening to her broadcasts.

This is the wave of the future. Add a little live touring to live broadcasts. It makes promo easier because you don't have to tour all the time - which is a killer lifestyle eventually. You maintain contact with the fans better because they aren't waiting years for your next album. You can even broadcast music development sessions or just "jam sessions." Let the fans see the album as it develops. Even let them influence its development!

This is how it can be if someone gets the smarts to start it.

Bands like The Corrs, "visual bands" who are best experienced live rather than on CD, could clean up with such an approach.

Posted by Richard Steven Hack | September 30, 2007 2:29 AM

The impending collapse of the subscription-funded scientific journal industry is another example of efficiency and welfare gains running contrary to GDP indicators. Remember, the contribution of Wikipedia to GDP is next to zero (just the salaries of the few employees of the Wikipedia Foundation). But its welfare value is far greater than that of any paying encyclopedia, as it's on the virtual shelves of half a billion people. And that's true even if you discount the value for unreliability, or more accurately unverifiable authority, by some excessive factor like 50%.

Posted by James Wimberley | September 30, 2007 8:38 AM

ah, but gabriel, there are SIX opus 76 quartets, each one as exquisite as the next - naxos makes the kodaly quartet's recordings of them available for about $20 - that's right, $20 for all six. better value than the klaxons, i'd say....

Posted by lucretius | September 30, 2007 11:30 AM

I imagine that Menander was able to live off of his writings. It takes time to write and produce a play and he wrote around 100 of them.

Posted by Jeffrey Davis | September 30, 2007 12:07 PM

The original way to sample music in advance was to hear discs in a listening booth, found in every good record shop. (Not many people under 50 remember these.) The listening stations at chain stores such as Borders and Barnes & Noble and sound clips on Amazon and other retail sites are throwbacks to this antique amenity. So are today's net music sites and services. What's missing, of course, is the savvy store clerk who points customers to promising new artists and bargains.

Tip for classical and jazz bargain hunters: Berkshire Record Outlet, www.broinc.com, which has a huge inventory of cutout CDs, also some DVDs and books, even a few LPs, at roughly one-third of retail prices. (No, I don't work for them.)

Posted by allbetsareoff | September 30, 2007 1:22 PM

I'll admit at the outset to being no great expert on Romans or the classics. However, I did learn a few things in a class I took from somebody who was.

The question about whether Romans earned a living writing is similar to the Peter Benchley question. Did he earn a living as a writer, or inherit one?

Or take Cicero- he was undoubtedly independently wealthy in one sense, and just as obviously part of the clientele of his patron, Atticus. Atticus in turn bobbed and weaved in an effort to avoid naming either Caesar or Pompey as his patron.

We do know that wealthy Romans employed rooms full of slaves to publish many copies of the same book at one time (Roman books were scrolls which were read aloud by unrolling one end and rolling up the other). The likely reason for doing this would be so that you could read what everyone else was reading, which implies something new and trendy.

We know the Romans loved histories, travel books, racy stories, and the theater. Every town of any size has a theater and every "destination resort" yields bushels of souvenirs. The quality of the theater performed probably varied immensely, even on the same night.

So it's very easy for me to imagine authors cranking out the books and plays, but they were probably slaves. The Romans themselves were not very artistic and imported Greek art, and Greek slaves to make art, educate the Romans, and perform medicine. Some of these slaves were eventually manumitted and in some cases set up quite handsomely by their former owners.

Ultimately though, I just have to pull a Cowen and say the real point here is that, just as the printing press reversed the ratio of readers to bookmakers, recorded music has reversed the ratio of music makers to listeners.

The oddity here is that collectively we may have benefited immensely from this change while suffering individually from it. YMMV.

Posted by serial catowner | September 30, 2007 4:38 PM

I believe this guy puts his finger on about 60% of the issue:

"But people have always had a way to sample music in advance: it's called "radio". Back in the days when DJs still chose the music they played and freeform stations played albums in their entirety people could get a wide sampling of new music. But with restricted playlists radio simply isn't very useful to discover new music anymore. The collapse of radio is a major factor that a lot of people overlook."

- Posted by C.L

Radio is so bad I hardly listen to it. And Commercials are sooooooo baaad that it hurts to listen.

Posted by S Brennan | September 30, 2007 4:48 PM

Dropping the prices of CD's and iTunes downloads would be the easy way of combating free downloads, but the no-talent hacks at major studios and labels automatically think "lower prices = lower profits," so they don't do that. The people who are in the corporate side of much of the entertainment industry - music, movies and television primarily - are not that bright. They're often the uncreative people who wanted to be around the creative beautiful people and tell them what to do and get on the casting couch. They don't really know what their consumers want. The producer who greenlit the pilot episode of "Lost" got fired because it was believe to be too expensive, but it turned out to be a huge hit. Think of all the crap they unload on us that they think we'll like, like Lindsay Lohan in a movie about a schizo stripper. These people really don't understand the economics behind they're own industry. They think that looking at graphs that any middle schooler could understand makes them good at business.

Posted by Reality Man | September 30, 2007 5:24 PM