The Economics of Enough_ How to Run the Economy as if the Future Matters - Diane Coyle [93]
Performers’ earnings must therefore rise even though there is a limit on the size of the audience they can reach through live events. The upshot is that the cost of each concert ticket will climb relative to other prices in the economy. Attending string quartets playing Mozart concertos is therefore also what economists would call a luxury good: demand for such concerts will go up as incomes rise, and spending on the tickets will grow faster than the economy’s average growth rate. An ever-higher share of income will go on concert tickets, whether for the Orchestra of the Age of Enlightenment or U2.
Music is an apt example because it also demonstrates a second effect, on top of the long-standing trend toward a ervice-based economy. That is the impact of information and communication technologies on the structure of the economy and the way we think about and measure productivity and growth.
Tastes differ but almost everybody loves some kind of music, and music has always found its way swiftly to new technologies. There are many music radio stations. Music is played in stores and subways. Now that we can, many of us carry our music round with us all the time, plugged into our own musical world via an iPod or other MP3 player. And lots of people too go to concerts of all kinds. Of course, in the pregadget past going to a concert—or making one’s own music at home or with friends nearby—was the only way to hear music performed. It had to be live, and as a result the amount of time people could spend listening to music was limited. Technology changed this dramatically. The telephone was first envisioned as a technology for broadcasting music—users were supposed to dial in to a concert performance. The radio and the gramophone won out instead, although technology is coming full circle now as more and more people are listening to music over their mobile phones.
These new technologies—and Radio Corporation of America was the hot technology stock, the Google of its day—massively expanded the market for music. The life of a performer in the early twentieth century had been one of constant touring and live concerts; but performers could reach a much larger audience through these new technologies than they could by performing live. Their earnings were augmented by record contracts and rights payments by radio stations. The commercial music industry started to take its modern shape. Demand for records grew and grew. Artists innovated—there were more of them as a larger market can sustain many more producers and making music became a viable career for many more people than had been the case in the past. Different genres emerged, and record companies became big business.
The technology has moved on again. The Internet has made the cost of distributing music digitally essentially free. But artists still want to make a living—or preferably a fortune—and the record companies and some musicians are even more upset about being disintermediated. U2’s lead singer Bono sounded off about it in the New York Times: “A decade’s worth of music file-sharing and swiping has made clear that the people it hurts are the creators.”13
Is this true? They (or their record companies) do have to cover some high upfront costs. Marketing to turn an artist into a big name and publicize new albums is expensive, and there are costs in the initial recording. On the other hand, the new technologies have dramatically reduced the cost of creating and publishing new music. As the purpose of copyright is to incentivize innovation, by creating a temporary monopoly for artists, there is a fraught policy debate at the moment about the extent to which governments need to use the power of the state, and the threat of jail, to enforce music copyright. Bono and others