ROCKONOMICS: THE ECONOMICS OF POPULAR MUSIC

This is the title of a paper by Connolly and Krueger, actual Ivy League economists. 

Here's a link:
people.stern.nyu.edu/wgreene/entertainmentandmedia/Rockonomics.pdf

For some aspiring musicians it may be an interesting read.

I came upon it via Paul Krugman, an actual Nobel prize winning economist, who linked directly.   He regularly writes about music that he likes, but in my infrequent readings this is the first I've seen him refer to the economics of music.  An article about his recent SXSW appearance speaking on the same topic is quoted below.

...Krugman proceeded to speak with more sense than just about anyone else...The music business is going through a huge period of introspection amid the rise of streaming music platforms, and the decline of CD sales and digital downloads (and somewhere in all this is a surprising resurgence for vinyl). But Krugman said the primary way for artists to make a living out of music is no different than before. “It has always been live performance,” he said. “There is really no reason to think that’s going to change.” 

It’s tough for artists to make money out of recorded music, but it always has been, he noted. Arcade Fire lead singer Win Butler, seated next to Krugman on the panel, concurred. “Essentially artists have been getting screwed over at the same rate since the beginning,” Butler said. Now, he argued, it’s just different middlemen doing the screwing. 

Krugman worries that there is a “1% phenomenon” emerging in music, which perhaps offers a parallel to the broader problem of inequality in western economies—another concern of Krugman’s. “The share of those revenues going to a few bands at the top has massively increased,” he said. As Krugman himself noted, not everyone can command high ticket prices and fill out arenas to make a viable living from music. “I actually don’t quite understand how the bands I like are even surviving,” he said. “It’s remarkably tough out there.”

In his column he echoes that sentiment again, "I think about how easy I had it — my very first teaching job paid the equivalent of about $60,000 in today’s dollars — and am deeply thankful that so many wonderful talents love music enough to stick it out and enrich our lives."

The paper that is the title of this blog post has interesting anecdotes such as the following about contract enforcement.

The following remark by Sharon Osbourne (2002; p. 56) underscores the difficulty of contract enforcement in the concert industry: “My husband’s whole career, people stole from him. They walk off with thousands of dollars that’s yours. So the only way, unfortunately, for me is to get nasty and to get violent.” She described the following disagreement with John Scher, a legendary New York promoter, who claimed advertising expenses for ads placed long after a concert had sold out: “[H]e would not give in, and he was threatening that ‘Ozzy will never work in the New York area again.’ All this crap. So I got up and nutted him with my head, and then I kicked him in the ….” Caves notes that contract enforcement in this industry relies heavily on repeated transactions among parties who value their reputations. The Osbourne method is apparently another contract enforcement mechanism.