alt

Depressed by the fact that my superannuation fund has less in it than it did several years ago, I have recently taken to reading the finance columns. In so doing, I ran across some interesting statistics about the music industry. It seems that economist Moshe Adler looked at what makes a musician a ‘Superstar’ and discovered that whether people prefer one singer over another is not determined by how talented they are, but by their popularity. Adler says that consumer desires are not innate preferences, but are instead influenced by society: we all apparently lust after the same art, culture and music other people lust after.


Apparently, this is what makes ‘boy bands’ so popular: girls don’t so much listen to their music as gossip about the boys in the band. And if you’re in a boy band now, it seems your earning potential is better than it would have been at any time in the past. The reason, according to another economist, Sherwin Rosen, is the ‘superstar’ phenomenon, which says that every customer in a market must want to buy what’s on offer and that whatever’s on offer must be able to be distributed cheaply to all customers who want it. Thanks to television and the Internet, boy bands now have the world as their oyster. So how does this affect their earnings? According to Pollstar, a US concert organiser, in 1982 the top 1 per cent of artists earned 26 per cent of total concert revenues.

Two decades later, the same 1 per cent of artists earned 56 per cent of total concert revenues! What’s equally stunning is how concert revenues stack up against music earnings. U2 picked up $US156 million from concerts, US$3.2 million from album sales and just $US1.6 million from track downloads. This contrasts with Taylor Swift (US$98M, 20M, 9M respectively) and Lady Gaga (US$64M, 31M and 15M) [Pictured above, photo www.flickr.com/photos/nellyfus/]. Andrew Harris, a business journalist for the Brisbane Times newspaper, did some number-crunching on whether musicians’ income would improve with a streaming model versus consumers buying albums via electronic download. ‘According to my royalty statements, in December last year iTunes sales generated 70 cents per download compared to Spotify’s 0.393 cents per stream. Based on those figures, if you’d previously have bought an album via iTunes you’d now need to stream it in full 180 times to generate the same revenue for the artist.’(1) Harris continued: ‘Many argue that over a much longer period of time this could happen (although a quick look at your iTunes play count can answer this pretty accurately), also believing per unit royalties will increase when the number of users and revenue pie grows.’

Although I have gradually come around to the idea of electronic downloads of music (if you accept that ‘come around’ is synonymous with ‘dragged kicking and screaming’), I am still completely antipathetic to the concept of music streaming, which certainly makes me ‘odd man out’ in the office. If you have any good reasons that could make me change my mind, please let me know! 
greg borrowman