The distribution of artists' earnings is heavily skewed, much more unequal than in the population as a whole, between some who earn very, very much and those whose earnings are negligible (if not zero, in their search for free exposure). The economic analysis of 'superstars', pioneered by Sherwin Rosen, finds that when given a choice audiences will, by a great majority, buy from what is considered to be the very best, and so the very best capture the lion's share of the earnings. When are earnings likely to be most skewed? There are two main … [Read more...]

I was saddened to read of the death of Sir Alan Peacock, a most influential figure in the scholarship, and application, of economic analysis of the arts. The Daily Telegraph's obituary is here. I remember back to when I first began exploring the field of cultural economics, and his (then recent) book Paying the Piper was one of the first I picked up on the subject. Years later when the International Journal of Cultural Policy invited a group of us to write a short essay on the book that had most influenced us, that was my choice. … [Read more...]

In the past few months there are few businesses that have come in for such vilification as Amazon.com - including in many of the stories and blogs here at artsjournal.com - and so Brad Stone's book, subtitled 'Jeff Bezos and the Age of Amazon', is timely, to say the least. It has been the subject of deep reviews by George Packer at The New Yorker, and Steve Coll in The New York Review of Books, and I recommend each of those. It is hard in this case to separate a review of the book and a review of Amazon itself (I don't think I'm the only … [Read more...]

Commercial or nonprofit? In studying the cultural sector one of the key questions asked is why we see both kinds of firms in the arts, where nonprofits are more concentrated in some sub-sectors than in others, and I pose the question to my students: how does an entrepreneur choose the organizational form for her new enterprise? Today in the Times we have an opinion piece by Jeremy Rifkin, 'The Rise of Anti-Capitalism', who posits that the nonprofit sector is bound to rise in importance over the next few decades, not because of long-running … [Read more...]

I enjoyed George Packer's New Yorker article on Amazon, and recommend it. ArtsJournal's link to the story has the heading "Is Amazon good for books? Not just publishers, but books themselves?" The New Yorker's own sub-heading is "Amazon is good for customers. But is it good for books?" I find the question a bit puzzling. I can understand asking whether the rise of a particular corporation is good for buyers, publishers, authors, or other types of person. But what does it mean to ask, as a separate question, whether Amazon is "good for … [Read more...]

ArtsJournal links to this piece from Britain's Guardian on pricing at the Met (see here for an earlier post of mine on the subject). Tom Service writes: They filled just 79% of the seats in that huge, red-velvet covered house, and made only 69% of their projected box-office revenue. For all the millions who watched the cinema broadcasts, those are astonishingly low figures for the world's most expensive opera house. The Met's general manager, Peter Gelb, admits an experimentation with a more flexible pricing structure, borrowed from Broadway, … [Read more...]

In my previous post I wrote about companies offering superior levels of service (for a price) that necessarily involve making the service worse for other customers, such as offering a deal that allows high-paying customers to cut in line where there is a queue. Here is another example. Airlines are trying to further price discriminate in seating. The old model of simple differentiation between business and coach class is giving way to finer gradations in the coach section, where passengers can pay for extra legroom. But just as there is no … [Read more...]

The New York Times reports on Universal Studios Hollywood: It has introduced a $299 V.I.P. ticket, just in time for the summer high season, that comes with valet parking, breakfast in a luxury lounge, special access to Universal’s back lot, unlimited line-skipping and a fancy lunch. V.I.P. visitors also receive “amenity kits,” which include mints, a poncho to wear on the “Jurassic Park” water ride and bottles of hand sanitizer. Disney still serves up its roller coasters the old-fashioned way — one rank for everyone, white collar next to … [Read more...]

Blog neighbor Greg Sandow posts about the relationship between arts funding and gambling, especially regarding early Italian opera. It's tongue in cheek, but he concludes: For those without a sense of humor: I know very well that gambling raises moral questions, and legal questions, too, not to mention questions involving real estate. Where would the Met put its new casino? Where in the opera house would there be room enough?  But let’s not forget that gambling — I’ll never call it “gaming,” its euphemistic marketing meme — has spread … [Read more...]

As my blog-neighbor Lee Rosenbaum reports, the proposed 2014 budget from the White House would cap the tax benefit for charitable donations at 28%. In the U.S., where donations are deducted from the income tax base, the actual rate at which your donation is subsidized is your marginal tax rate, i.e. the rate that applies to your last dollar of income earned. Marginal tax rates rise with income, with a top rate of 39.6%, and so a wealthy donor who gives $100 to the local museum gets an income tax reduction of $39.60. The budget proposal would … [Read more...]