The economics of copying in light of superstars

Here is an argument I had not thought of, courtesy of Francisco Alcalá and Miguel González-Maestre:

We provide a new perspective on the impact of unauthorized copying and copy levies on artistic creation. Our analysis emphasizes three important aspects of artistic markets: the predominance of superstars, the dynamics of talent sorting, and the importance of promotion expenditures. In the short run, piracy reduces superstars’ earnings and market share, and increases the number of niche and young artists. From a dynamic perspective, piracy may help more young artists start their careers, thereby increasing the number of highly talented artists in the long run. The long run impact on artistic creation of levies on copy equipment may crucially depend on whether their yields primarily accrue to superstars or are allocated to help young artists.

I wonder, though, if piracy doesn't increase the returns to the most popular market superstars.  There are also expressive reasons for purchasing cultural commodities.  If you own copies of so many cultural outputs — possibly illegal copies — maybe you shell out for the real thing for the few "must-have" cultural products that everyone else is buying.  Imagine for instance a mother who buys her child the new Harry Potter on the first day because it is a "relic" of sorts and everyone else is getting it right away.  Or maybe a teenager wishes to "affiliate" with Eminem (in the old days) by actually buying and owning a copy of the best Eminem CD.

Hat tip goes to Eric John Barker.

By the way, here's a claim that Spain is responsible for twenty percent of the world's downloads.

Comments

It's an excellent point. Copyright exists at all in order to "promote the progress of science and the useful arts" (says so, right in the constitution). But the distribution-profile of it is infact very poorly doing that.

In the real world, the artists that sell most, can also demand the highest royalty pro sale. Whereas fledgling artists with unsure sales get a pittance on what little they DO sell.

If the goal was to stimulate the creation of art, it'd be better to do it the other way around: you get a high pro-copy royalty for the first few sales, less pro sale if you sell a lot.

Giving some superstar $100 million/year rather than 10, or even 1 has essentaily zero effect since either sum is sufficient to enable the artist to work full-time as an artist, and live in luxury.

Giving that fledgling artist $50K/year rather than $5K/year or $500/year however, has a huge impact. Reducing the $100M to $10M would free up 90M, sufficient to fully fund 1800 fledgling artists.

Would the stimulus for art-creation be GREATER or SMALLER if Madonna made 10 million less next year, and 500 fledgling artists that today are barely struggling by, earned a reasonable living ?

I'm not so certain about Tyler's thesis. Anecdotally, there are two big changes from my youth.

The first is that lots of young people now prefer the digital version as opposed to having make do with one because they can't afford the 'real' version. In other words, going 'legit' buys them nothing.

Second, and more importantly, it appears that a great number of young people have lost any sense that pirating is in any sense 'wrong'. By 'wrong', I mean not "oh my god I should go to jail", but at least some sense that there is at least a moral obligation to purchase if you can.

The net effect seems to be that
(1) many spend absolutely zero on music because paying for something you don't have to is 'just stupid' (as opposed to giving music its share of dollars and then pirating what you can't afford) and
(2) as they get older and can afford more music, spending on music still remains at zero or close to that figure.

*That* is why I think that music (and digitizable media in the long term) are in long-term trouble.

Johanna Blakley claims that the lack of copyright laws helped the fashion industry and art.

http://www.ted.com/talks/johanna_blakley_lessons_from_fashion_s_free_culture.html

So according to this model, young and/or emerging artists should promote copying in general, right? I wonder then do relatively unknown artists who feel copying is "immoral" and therefore avoided(and there seem to be plenty of them) are maybe implying some sort of intertemporal substitution. For example, if an emerging artist thinks one day they will become famous, maybe they feel if copying were "supressed" they can forgo today's benefits (which is smaller for them)while they are obscure in favor of larger payments when they become famous.

If this is true, then emerging artists who promote copying may either see themselves as never leaving the niche market, or just don't think of themselves as all that good.

Superstar musicians sell clothing, not records.

Sorry, missed a negative, should be "NOT plastic enough"

Copying increases exposure which then drives fans to concerts, which is where most bands make their money. Bands can hardly make anything off of album sales because of big label contracts.

Today a band could easily distribute all of its music for free and focus more on touring if it got a good market share.

It's easy enough to find and illegally download more obscure music (ie niche/young artists) from the US, but being Australian, it's almost impossible to find a lot of music online, so the only way we can get it is to buy it, which me and a lot of people I know don't mind because it's supporting great local bands anyway.

Owning CDs in my generation is not really a thing, and especially when there is so much emphasis on being 'alternative', it could be rather embarrassing in some crowds to be seen with the latest top album on your shelf. There is a big resurgence in vinyl record sales, though.

None of this is fact, though, just based on my observations and experiences, and I suppose somebody has to buy Top 40 stuff for it to become Top 40, right?

Owning CDs in my generation is not really a thing, and especially when there is so much emphasis on being 'alternative', it could be rather embarrassing in some crowds to be seen with the latest top album on your shelf. There is a big resurgence in vinyl record sales, though.

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