Krueger on the Economics of Rock and Roll

Paul Krugman linked to a talk by Alan Krueger on the economics of rock and roll compared to those of our country the other day.

…Many of the forces that are buffeting the U.S. economy can be understood in the context of the music industry. I have also learned from 25 years of teaching that the best way to explain economics is through the example of the rock ‘n roll industry … We are increasingly becoming a “winner-take-all economy,” a phenomenon that the music industry has long experienced. Over recent decades, technological change, globalization and an erosion of the institutions and practices that support shared prosperity in the U.S. have put the middle class under increasing stress. The lucky and the talented – and it is often hard to tell the difference – have been doing better and better, while the vast majority has struggled to keep up. These same forces are affecting the music industry. Indeed, the music industry is an extreme example of a “super star economy,” in which a small number of artists take home the lion’s share of income.

– Alan B. Krueger, Chairman, Council of Economic Advisers, from Land of Hope and Dreams: Rock and Roll, Economics, and Rebuilding the Middle Class

If we buy Krueger’s arguments, what are the implications for the majority of artists?

First, psychologically accomodate the results of the Salganik and Watts experiment on song popularity; luck and social snowball effects have much more to do with the popularity of one song or another than we commonly acknowledge. Artists can put their music in places where it might be discovered, but we can’t control what happens after that.

Second, due to rising income inequality since the late 1970s, most people simply have less money to spend on shows, recordings, and merch than they used to, and it’s getting worse.  Plus, musicians face more competition than ever for entertainment dollars.  We have to think seriously about what we ask listeners to pay, and provide low-barrier entry points.  For example: play a free show, give older albums away (or charge #1 or pay-what-you-want), or put a merch coupon on your website that can be redeemed at shows.  Also, make sure listeners feel great about the money they spend by putting on a great show, being available to talk at shows and online, providing good customer service at merch tables and web stores, and bundling bonuses like download codes with CDs and tees.

Support music in schools with your vote, and with any other political activity you engage in!  The decline in music participation among students from lower-income families Krueger shows is terrible.  These kids are our future stars, collaborators, and listeners.

Along with music in schools, a progressive economic agenda – a strong minimum wage, universal health insurance, progressive taxation, and so on – both supports musicians directly, and creates more potential listeners with the leisure time and resources to enjoy music.  In a divided, unequal, “super star” economy, who are your listeners?  No one.  You’re scraping by, and the few with the means to support your music don’t give a damn about you.

Finally, be satiable.  We’re fortunate enough to have the instruments and free time to make music.  How many of our great-grandparents were so lucky?  If you want more – better gear, more sales, bigger shows, nicer studios – build it.  The world doesn’t owe us artistic success in those terms.  Let go of the illusion that this is a meritocracy; that might be nice, but it isn’t reality.  Learn the game and play it how you like – here comes the Buddhist in me – attachments to illusions will only cause you, and those around you, to suffer.