Notes From Babel

The “death of the music industry”

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Matt Yglesias shares the following chart illustrating the “death of the music industry”:

Apparently, I gave up on the music biz—and sold out to become a lawyer—just in time.

However, I don’t think Yglesias is right when he says this:

This is one reason why I would discourage bands from trying to underprice tickets at their own shows as a reward to fans. Since digital copies of recordings are non-rival and basically free to make, any non-zero sale price entails some deadweight loss. And since concert tickets are necessarily scarce, any sub-market price entails some deadweight loss. The optimal strategy for a popular band that wants to do something nice is market pricing for concert tickets, plus free recordings. Or even better, you could release your records into the public domain.

Part of the problem with the iTunes model of digital distribution is it allows consumers to purchase only the songs they heard on the radio or over the store audio system at Target.  As a result, artists, even the ones getting heavy airtime, are having trouble selling out venues.  Maybe Yglesias is right in a very narrow sense when he revers to “popular bands”—it’s just that there is a shrinking number of popular bands anymore.  The average age of a touring musician is currently 46, and getting older.  With this in mind, look at the where the graph above tops out, and it’s not hard to understand that album sales and ticket sales are closely linked.

Written by Tim Kowal

February 19, 2011 at 3:42 pm

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