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May 20, 2013 | by  | in Features |
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Just How Much Is a Song Worth?

On iTunes, you’ll pay either $1.80 or $2.40. If you opt for a plain old CD, you will probably pay around $1.40, but you’ll have to buy the whole album. If you are willing to sit through a ‘youth-targeted’ ad, you can listen to a song for free on YouTube. If you go to a reasonably large gig, you’ll pay around $5 a song. On some sites, you’ll pay with your email address. On Spotify you’ll pay either nothing or a few cents. If you pirate the song, it could be free—or around 12 grand in court. It’s up to you.

Culture and capitalism have always had their differences. Pricing material goods isn’t necessarily easy, but it isn’t that hard either. Say you designed a T-shirt to sell. You work out how much money each shirt costs you to make and sell—materials, construction, transportation, sales tax etc.—you add a profit margin, and boom, $24.99.

Music, and art in general, lacks much of these constants. A digital music file costs almost nothing to transfer across the world, but recording it can cost thousands, or almost nothing. Some songs take years to write, some songs are hastily assembled in the booth. Some people would pay thousands of dollars for the new Daft Punk album, while others can barely be bothered streaming it. Trying to work out the amount of money that went into designing a tangible product can be pretty difficult—the formula for a new drug might cost millions in research, while the pill itself costs less than a dollar to produce—but once that is worked out you can sell the same formula over and over and over. Furthermore, a new pill is something of an objective product—we can all agree that it has a certain value. There is no consensus in culture. Most of us seem to enjoy The Beatles, but not to a consistent degree—some of us might think Revolver is the pinnacle of rock music, while the rest of us might only know Help!. You can’t assume anything.

Traditionally, the music industry got around all this by exploiting the monopoly they had on each song. As economist Paul Romer wrote in 2002, without file sharing, “the substantial markup of price over marginal cost made possible by effective copyright creates deadweight losses.” Basically, you could sell these goods for a huge profit—because you were the only ones selling them. One couldn’t just pick a cheaper version of the Nirvana album they wanted. Cultural goods are what consumer researchers call “experiential”—we don’t consume them for any practical purpose—so practical budgeting measures don’t really apply to how we buy them. Paying for a physical item like a vinyl or CD feels pretty okay, especially if that item provides hours of entertainment.

Then the internet happened.

No industry has felt the internet’s effects quite like the music industry. “The explosion in music and video sharing since 1999 suggests that the demand for music is very responsive to price”, writes Romer—if music is free or near-free we consume a whole lot more of it. Buying an album from every artist on the average user’s account (a service that tracks what music you listen to) would cost around $30,000.

“I don’t think most artists expect people to pay for all their music any more,” claims Wellington bedroom-musician Skymning. “I’ve even seen interviews with musicians like Rick Ross who say they don’t really care if people download their music ‘cos they’ll still be coming to the shows.” Skymning distributes his music through the website Bandcamp, either for free or on a ‘pay-what-you-want’ basis. “I really dislike the idea of forced payment on digital files,” he says, echoing much of his generation—but he doesn’t believe all songs are created equal. “I put my music up for pay-what-you-want because it didn’t cost me anything to make, as opposed to, for instance, a rap album where you’ve gotta pay the producers of each track, pay for studio time etc.”

Singles have always functioned as advertising—for themselves, for their artist, for the album they came from—but only to a point. We couldn’t replay them over and over again; that was what we bought the album for. Are albums themselves now just ads for concerts? Musician Derek Webb sees an album purchase as a one-time transaction, which only nets hims around a dollar, while at a live show “I make approximately $10 back [per fan], and twice that if they visit the merch table.” Webb swaps his music for the personal information of his fans. They get his album for free; he gets to email them when he’s touring in their town. Our personal data is already the price we pay to use Facebook and Google ad nauseum, would it be so bad if we could pay for music with it too?

Perhaps we are looking at music in the wrong way. Despite existing as an ‘experience’ rather than an object, music is generally sold as a product, that one ‘owns’. Most of us consume fine art, television and films as experiences—we pay to enjoy them once or twice, not over and over again, like a song. Music is explicitly designed to be listened to repeatedly, so ‘owning’ it feels like the easiest solution. When one could build vast shelved music collections, this ownership felt very romantic—much like it does with books—but it can feel ill-suited to a world where ‘owning’ a song just means another row on your iTunes. Spotify attempts to address this issue, transforming music from a product into a service. It allows you to stream any music from its gigantic library for free, with ads, or uninterrupted for less than $8 a month—cheaper than an album on iTunes. It can feel like a win-win, but it’s really the fair-trade coffee of the music business: you might feel a bit better, but you aren’t really helping anyone out, as most artists only see a miniscule fraction of a cent per stream.

Some of the world’s most accomplished works of art were assembled for cash. Michelangelo didn’t paint the Sistine Chapel for free, Dostoyevsky wrote Crime and Punishment in serialised form in order to pay his debts. Still, attempting to fit culture too neatly into capitalism will never really work. There is no perfect price for a cultural object, no way of valuing art that isn’t problematic. Musicians are making less money than they used to, sure, but there are more of them than ever before. “I think the last decade of music has been the most innovative since the advent of the piano,” proclaims Skymning, citing the explosion of sample culture. The current mess of different ways in which we can buy music resembles the complexity of the culture itself. A song is worth whatever you want it to be worth. And, trust me, this dubstep remix of ‘Chain Hang Low’ should be at least $10.

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  1. Jesse says:

    Hi Henry, thanks for a good article. The issue of deadweight losses caused by copyright is a really interesting one. I haven’t run numbers, but if these losses could be removed by more effective pricing of music and other intangible cultural goods the increased enjoyment (surely this is ‘wealth’?) would be immense.

    A while back I attempted an article espousing the benefits of an alternate ownership and pricing model for music. It may be somewhat outdated now, but take a look if you’re interested:

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