Larry Ribstein, law professor from my alma matter, posed an article on his influential blog Ideoblog, in response to UCLA’s Stephen Bainbridge's discussion of DRM on the Kindle as it relates to academic text books. Brainbridge mourned the possible loss of his future textbook royalties: "[T]he used book market takes a huge chunk out of my annual royalties. The drop off from the first year of a new edition to the second can be as high as 30%, for example. I can’t imagine the hit my royalties would take if e-books of my texts were available without strong [digital rights management]. But it seems safe to assume that anything remotely resembling an e-book Napster would be a disaster from my perspective. . . ."
Larry's response is linked above, but here in pertinent part, is what I take exception to: "Kinda reminds me of what I said four years ago about the effect on the music industry of digital music. I observed that live and recorded performances were to some extent substitutes, so we should expect the prices of both to be falling in the digital era. Yet live shows were getting more expensive. Why?"
Well, here's why, and why it's a good thing:
Dear Larry,
As an avid music fan and author of a music blog, I've attended 50-100 live shows a year for the last 15+ years, and from my, admittedly anecdotal, perspective, the cost of live shows, on average, have not increased to any material degree. Yes, I agree that top-tier, stadium and large arena, mostly top-40 and nostalgia acts have indeed demanded far more money for a ticket (not to mention astronomical service and ticketing fees) over the years. However, smaller and mid sized venues and non-top 40 national touring acts are more or less charging the same dollar-for-dollar ticket that they were in 1994. I have the ticket stubs to prove it.
Why haven't we seen the prices of top-tier venues/acts fall along with the "Napster-ization" of digital music? Because they're not substitutes. The days of a handful of large record companies driving demand via a one-way channel of pay-for-play and marketing-driven supply have largely disappeared, as a direct result of the loss of physical media. Because recorded products are now essentially margin-negative, any hope of maintaing any revenue has to come from merchandising and live performance. The proposed merger of TicketMaster and Live Nation is strong evidence of this, leaving the music industry fragmented between the top-40 set, able to generate profits with large-scale, summer blockbuster proportioned tours, and everyone else.
This is good.
The "have nots" in your analysis have been liberated from the industry-driven monopolistic atmosphere of the 1980s and 1990s into a more egalitarian and open model of artist-driven promotion/booking/performing/business running. This means far less profits for anybody not at the top, but far more money to be had when seen from the perspective of the whole pie. No longer are large individual slices being consumed by a handful of record companies, with crumbs eventually working their way to a limited number of artists. Instead, thousands of tiny slices are being consumed by the artists themselves, or at least shared more equitably between individual artists and small record labels. I believe this is better for everybody other than the few large labels and promoters. It is certainly better for the art of music, and therefore far better for fans. The demand side of the music economic is once again strong. It is inevitable to happen with all media (see, e.g. newspapers vs. bloggers). Profits will eke out, just in different ways and channels. Ultimately, in my opinion, for the betterment of the larger whole.
Sincerely,
Horsie Sauce
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