“Your music makes me physically ill”. While this appears to be a harsh student proclamation of my music taste, I do have to rejoice in honesty and admit that my preference is a little ‘niche’. My playlist is currently dominated by Slim Cessna’s Autoclub and Freight Train Rabbit Killer. ‘Who?’ is typically followed by ‘what?’. I’m fine with that. Heterogeneity is a marvellous achievement; we should embrace our differences. But what if that heterogeneity is under threat? And what economic lessons could emerge from that threat?
Let’s look at the remarkable success of Ed Sheeran. As we are both Ipswich Town fans, I do qualify for intimacy and get to call him Ed. His Divide Tour is reported to be a world record breaker, grossing an estimated $775.5 million. The Sunday Times rich list has him doubling his wealth in a single year to a whopping £160 million. It’s a figure that I struggle to comprehend. Forgive me Ed, but I do see your contribution to music to be one which rests somewhere between vapid and insipid. However, to be kind that may well reflect that my own preferences make me an outlier. A check on Spotify shows that Ed has 69,259,580 monthly listeners. That compares to 8,638 for Slim Cessna’s Auto Club and 248 for Freight Train Rabbit Killer. In this blog, mind you, I want to suggest that there could be something much more at play here than my own bespoke music tastes.
First, roll back to 1989. Jive Bunny and The Mastermixers are number 1 in the charts, proving that dodgy tastes are not specific to any specific generation. Shops like HMV are the sellers of choice. They are governed by economic scarcity. There are physical constraints on what they can sell. Attempting to maximise sales, they focus on the blockbuster and the big hitting artists. Weirdos like me, looking for a niche product, are forced to shop at indie record stores catering for the Avant Garde. Market demand is characterised by a ‘short tail’. Music purchases are limited to a relatively small number of artists, falling sharply to a near zero for those on the periphery.
We shift now to 2006 and the apparent democratisation provoked by the information revolution. Applauded by Andersen, there is purportedly a shift to ‘long tail’ demand conditions. The popularity stakes still hold firm. Justin Timberlake, I’m sad to say, is number 1 in the charts. But, while there will always be national and international favourites, it is assumed that there will be a significant increase in sales of music encompassing a much larger pool of artists. Why? From online retailers to the wonderful invention of the mp4, we are no longer physically constrained by the shop. Instead, encouraged by an ocean of web destinations, it’s a world which encourages the niche to thrive. We become less reliant on the record company and their advertising budget. Music genres blossom or wither; they are but a click away. Enabled by this creative destruction, demand will tend to flatten. Culture is unfettered by economic scarcity.
Now it’s 2017. Ed has a ridiculous total of 16 songs in the top 20 music chart. Gobsmacked, folk blubber ‘where is the long tail?’. Why is there instead evidence of intensified market concentration? One possible riposte is that we’ve simply misjudged the features of supply and demand. For a minority of listeners, like myself, the economics of search will hold. I look for new musical offerings every week; the new technology makes it easier to peruse a greater pool of music. That’s splendid news; annoying my family and friends with a new set of dirge is an important weekly goal. Most consumers, however, will not invest time in such malarkey. The independent musician is as cast away on the web as he was in the shop. Alternative economic concepts, intensified through the power of social media, govern choice. First our cooperative nature, informing how we learn in a social context, becomes an automatic constraint on what is consumed. Then the information cascade causes the consumer to ignore personal preference to follow the crowd. Together these concepts contribute to ‘herd behaviour’. Ed’s music then spreads in the same way as a virus. That doesn’t, mind you, challenge the rationality of Ed’s fans. They efficiently invest in their social capital, avoiding those expensive time costs suffered by music searchers like me. Going viral is a useful time saving trait.
Back to today. What’s my overall point? This isn’t just a chance to whinge about Ed’s musical output. Excluding his questionable acting ability, he could deserve his triumph. No, this blog is one that wants to indicate that capitalism, following the information revolution, could be more prone to market failure. The Economics of Ed Sheeran is a lesson in how technical progress can engineer greater market power. Given the nature of new giants (Amazon, Apple, Facebook and Google), perhaps we all should be a little concerned about that?
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The economics of music which demands a profit from the investment made by the big publishers means that the music buying public at large get force fed people like Ed (i’m a Town fan too!) at least with Apple music I get to peruse the lesser known artists offerings and support them through my subscription. the power of corporate money and greed with almost all our economy including entertainment means we are changing from a market economy to a market society where greed and self importance is king.
That’s a fascinating comment, encompassing two interlinked issues that are pertinent to pluralism in economics. First, we have question marks over the power of the consumer. Within a libertarian perspective, that power supposedly enfeebles the corporation. As rich information is fed to the consumer, any firm which attempts to abuse its position will necessarily be punished. They are forced to behave as if they operated within perfect competition. This media example is suggesting something which could be more disturbing. Excluding folk like you searching out for new music, we have an institutionalist perspective which suggests that information flows can engineer greater market control. Second, we have consideration of the evolution in the capitalist paradigm. What happens with the market economy as we experience technical progress? An orthodox perspective refers to growth and income; a minor shift in the equilibrium. A heterodox alternative, such as Schumpeter’s creative destruction, suggests more radical outcomes are on the horizon. The end result being socialism. We might be looking at something which, unless controlled, could be much more insidious. From the recent press over poor labour conditions to media “privacy-focused techlash”, we have increasing concerns of market power running amok.
Glad to see that you’re also a fan of the Pride of Anglia. Its a rational outcome.