The economics of droplifting

Droplifting occurs when small bands "anti-shoplift" their CDs onto the shelves
at music stores.  They take shelf space without paying or asking, presumably to recruit future fans. 

This is a Pareto improvement if you think there is slack in the system.  The store has one more CD (book?), and no one is harmed.  Alternatively, you might believe that CDs are "queuing" for shelf space and that something gets pushed out, if only probabilistically.  The question is then whether your slotting is welfare-maximizing, relative to the retailer’s choice.

The retailer will care about expected profit from sales.  If you are a band, you care about your own income and fame.  This may or may not be closer to consumer surplus than is expected profit; on average I predict it is further away (e.g., The Beatles didn’t need to droplift).

If you are a listener discarding a previous purchase, odds are you didn’t like it much.  For the typical listener/discarder, this loser CD will lower social welfare, since on average others share your tastes.  But when it comes to books, what if you only give away your best reads…?  Now we are getting somewhere…

Thanks to Mark Atwood for the pointer.


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