The economics of creativity

Has wholesale piracy, free streaming, and general consumer rejection of payment for recorded music really led to anything but a disaster for professional musicians?

It may be that the comment below hasn’t been written by someone with a fully confident grasp of written English. But their analysis is still perfectly clear.

Certainly much clearer than the idiotic and illogical commentaries on this topic one gets from the Freetard community, who ever more desperately, in the face of overwhelming empirical evidence, continue to perform the equivalent of insisting the world is flat.

So, for all those who lack clues, herewith, an elementary economics lesson.

“The technos have told musicians if they give away their work via the internet, they could make up their costs performing live shows and selling merchandise. Unfortunately, that idea is severely flawed.

First of all, consider that creating music for a recording or a live show involve costs and labor. As a matter a fact, any one in the music business can attest that it costs far more to produce a recording than prepare and play a show. And for any band to make it, there are very large costs for development and promotion, which up until the digital age were financed via record sales. Then consider that nearly everyone listens to recorded music. However, few people attend shows, and those that do, do so infrequently. So what would have to happen is that show revenue would have to go up enormously to pay the cost of recording, development, and promotion. But here is where the problem is.

In Economics there is such a thing as a supply and demand schedule. Supply is the good itself, and demand is the desire and ability to purchase that good. The schedule is often shown as a graph. What it shows that as the cost of the good goes up, the quantity demanded (that is purchased) goes down. If the price goes down, the quantity purchased goes up. Here the good we are talking about is a live show.

So if we want to increase our revenue, the technos are saying musicians need to play more shows. But here lies the problem. If the musician wants to play more live shows, the laws of supply and demand tell us we will have to lower our price to encourage more people to attend. But that is a course a problem since that means our revenues would go down, not up. If we try increasing the show price, that causes another problem in that attendance – and revenues – will go down. The same could be said about merch.

From an Economics perspective, it is a really silly idea to expect sales from one good (live shows or merch) to subsidize another (recorded music) that actually is consumed far more. Actually it is downright ridiculous. And by the way, how do the technos see it as their right to tell musicians they no longer have a right to make the revenue from something they produced with their money and labor ? A right who’s protection goes back 300 years? And how is it the techos give themselves the right to make money from a musicians work without their consent? Have we lost all sense of common sense ethical behavior?”

By Nikkokola

About Costa Botes

I'm a freelance film maker based in Wellington, New Zealand. I make mainly long form independent documentaries about characters I find interesting.
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