Well, Pomplamoose might not have made any money on tour, but band member Jack Conte’s accounting of revenues and costs has sure generated a lot of discussion, and hopefully more people who know about the band. My last post was about the fact that it has always been a tough way to make a living, but here I want to address an issue that has surfaced: is the fate of Pomplamoose, doing everything right (maybe) and still not generating net earnings a microcosm of the middle-class in America, increased inequality, and a winner-take-all economy?
At New York magazine, Annie Lowrey directs us to remarks made in 2013 by economist Alan Krueger, at the time the Chairman of the President’s Council of Economic Advisors. I have had my students read Krueger’s economic analysis of rock music (and he is a renowned economist in many fields, not just this one), and it is safe to say he is universally admired in the profession. He notes that the share of tour earnings taken by the top 1% of artists has been rising (as has the share taken by the top 2-5%), while the rest of the pack takes an ever smaller share. I don’t question the data – I’m wondering why this would occur.
Is it the superstar effect, where the majority of consumers all choose the same artists to buy, even if others can be enjoyed at a lower price? A dollar or two discount on a boring book or record does not turn us from paying full price for authors and musicians we know we enjoy. And since books and records and all sorts of broadcast or digital distribution is cheap and widely available, the more popular authors, musicians, and professional sports take the lion’s share of the revenues. Well, I can see it for those examples, but I’m not sure it translates into live performance. A million people can purchase the album 1989 in one week, but a million people can’t all go hear Ms Taylor in live performance in the same week – concert venues have finite capacity. I can buy any albums or books I want, from bands and authors from around the world, but here in Bloomington I can’t see live anyone I want, and so I take in the best that happens to come through town, even if they are not on my bucket list.
Krueger cites economist Alfred Marshall, who wrote, back at the end of the nineteenth century, about what sectors might generate what we now call superstars. Marshall included titans of industry, but not singers:
The idea of a “super star economy” is very old. It goes back to Alfred Marshall, the father of modern microeconomics. In the late 1800s, Marshall was trying to explain why some exceptional businessmen amassed great fortunes while the incomes of ordinary artisans and others fell. He concluded that changes in communications technology allowed “a man exceptionally favored by genius and good luck” to command “undertakings vaster, and extending over a wider area, than ever before.”
Ironically, his example of a profession where the best performers were unable to achieve such super star status was music. Marshall wrote, “so long as the number of persons who can be reached by a human voice is strictly limited, it is not very likely that any singer will make an advance on the £10,000 said to have been earned in a season by Mrs. Billington at the beginning of the last century, nearly as great [an increase] as that which the business leaders of the present generation have made on those of the last.”
Elizabeth Billington reputedly was a great soprano with a strong voice, but she did not have access to a microphone or amplifier in 1798, let alone to MTV, CDs, iTunes, and Pandora. She could only reach a small audience. This limited her ability to dominate the market.
In any profession requiring ‘live’ performance, the earnings of the very top of the class are limited because the scale of their market is limited – the very best plumbers, dentists, dancers, can make very, very good earnings, but it won’t be in the multi-millions per year, unlike those whose work can be read, listened to, or watched at a distance, like authors, recording musicians, and premier-league athletes. Plumbers, dentists and dancers can only perform for so many people at a time.
So what’s going on? Krueger also suggests that there are now fewer social sanctions against bands who adopt profit-maximizing pricing, and so that could drive up the top ticket prices of the most popular acts; i.e. the share of the top 1% is rising because they no longer feel a need to price below market.
But … I can’t find anywhere in the analysis, or in Lowrey’s, why they think there is a ‘middle-class squeeze’ in touring income. I don’t see it. Pomplamoose didn’t lose money because people were saving up to pay $200 to see U2 – their ticket sales were not bad, after all. Their revenues were pretty good. What got them was costs – buses and roadies and insurance and agents and parking and cheap hotels. Going on the road costs a lot, and you can’t cover high expenses playing small venues, except at very high ticket prices.
And these costs are nothing new – transport costs have fallen somewhat over the years, labor costs per person have risen although less labor over all might now be required – but it has always been a costly venture to take an act on the road. Krueger’s figures are concerned with the share of revenues going to the top bands, and, fair enough, stadium-filling bands can take in a lot of millions. But that doesn’t explain why small bands can’t make net profit on touring. There is no grand theory of winner-take-all that generates this result. So let’s not read too much into the story of a band on the road.
Truly interesting questions. One consideration might be the false assumption that people make musical choices based on free will and some sort of pervasive natural laws that determine taste. In reality, the popularity of most pop music is a consciously created social construct built by the music industry in order to make money. It has little to do with natural appeal, and relies mostly on the creation of desire by the market. Edward Bernays, referred to as the father of public relations, essentially made a science of creating mass desire in his book, “Manipulating Public Opinion” – written in 1928. His books played a large role in developing the advertising industry. In most pop music, advertising plays a vastly greater role than the music itself, in creating appeal.
After a time, it seems, people are conditioned to only want to see the idols created by the music industry. Lesser acts, even if of better quality, no longer appeal to the public’s somewhat brainwashed minds. Goebbels — a huge fan of Bernays — used his concepts to lead the German people into accepting horrific concepts and behavior. As we know, the effect was not only successful but totalizing. Dissent was voluntary and virtually unanimous. The winner took all.
Why did countless girls breaking into hysterical crying when seeing the Beatles? How are these forms of highly uniform irrationality explained, and how does the mass media exploit them? Perhaps economists need to study these forms of irrationality and social conditioning much more closely, since the advertising industry has essentially made a science of them.
This also reflects on our concepts of democracy, as Bernays illustrates with these chilling words:
“The conscious and intelligent manipulation of the organized habits and opinions of the masses is an important element in democratic society. Those who manipulate this unseen mechanism of society constitute an invisible government which is the true ruling power of our country. …We are governed, our minds are molded, our tastes formed, our ideas suggested, largely by men we have never heard of. This is a logical result of the way in which our democratic society is organized. Vast numbers of human beings must cooperate in this manner if they are to live together as a smoothly functioning society. …In almost every act of our daily lives, whether in the sphere of politics or business, in our social conduct or our ethical thinking, we are dominated by the relatively small number of persons…who understand the mental processes and social patterns of the masses. It is they who pull the wires which control the public mind.”
We thus saw Americans fully believing there were WMDs in Iraq, even though the rest of the world knew the idea was nonsense.
These small elites formulate the tastes of societies, and strongly govern our actions and view of the world. They so strongly condition people that they will pay $200 to see an idol perform a weak show rather than pay $25 to hear a truly fine group that has not been made into idols. In our highly conditioned society, if the group is not an idol, they don’t want to see it at all. Hence the winner takes all.
There might also be helpful anthropological approaches to understanding these manifestations of tribalism and irrational conformity since they seem to be found in lower primates as well In the long run, especially when violence arises, the societies that behave with the most uniformity seem to be the ones that survive. This might be rational in terms of survival, but the same forces can be tapped to create mass irrationality. People thus stream by the millions to see Kiss, Megadeth, and Mötley Crüe. The rituals of hysteria become part of the mass irrationality. Conformity itself becomes the product. Meanwhile, the local singer/song-writer with her moving melodies and meaningful poetry will perform for the rare 25 thinking people in a bar.
Should read: Consent was voluntary and virtually unanimous.