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186 sats \ 33 replies \ @Undisciplined 5 Dec \ on: Music Has No Economic Value; Convince Me Otherwise (TDE, Joakim Book) BooksAndArticles
I don't appreciate how Munger described me, but of course it's accurate and he's correct.
The broad thesis isn't right though. What's going on is that musicians tend to be poor entrepreneurs.
If music had no economic value, it would be hard to explain why people pay bands to play at their venues. The trick is creating a situation of scarcity for a good whose marginal cost can be near zero.
lol, are you referring to the 40 year old basketball player with a negative salary for playing ball? that's me as well
i know the article is meant to be fun and tongue in cheek, but I'd say the author is confusing consumption with production
The 40 year old basketball player paying for a YMCA gym membership is consuming basketball, he's not producing basketball for others' entertainment. Just like most songs on Spotify are actually consumption value for the musicians, they're just putting it on Spotify on the off chance that someone out there likes it and is willing to pay a bit for it (indirectly through Spotify)
It isn't much different from Stacker.News, honestly. Here we're mainly posting for fun (consumption value), but we sometimes get tipped (production of value for others)
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mmmm, not sure there's a meaningful distinction between consumption and production when the price hits (=goes below) 0.
That's Munger's point with the basketball players: production of basketball playing is actually consumption of it, since the non-elite guys are paying for the privilege to play. Similarly, musicians are paying for the privilege to play/make music, so what they're creating is consumption and not production.
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Right but I wouldn't say it's of zero economic value. I think when people play music or sports, they're acting as both the consumer and the producer, and the analysis of economic surplus can proceed as usual. They produce and consume up to a quantity of music/sports until their private marginal benefit equals their private marginal cost. The total surplus is the integral over the marginal benefits minus the marginal costs.
The difference between an amateur and a professional is that the professional's playing adds marginal benefit not just to themselves, but also to others who watch/listen. They are then compensated in the market for that production.
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That's an interesting point, but aren't you and I producing basketball for the other old guys at the gym to consume, as well as consuming it ourselves?
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Perhaps there is no market for the good you are contemplating. You can be both a consumer and a producer of a good. A dairy farmer produces milk as well as drink it.
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I think I explain that in the article...?
(With Queen Taylor being the monopoly provider of herself; the music, an economically valueless commodity, being a prerequisite for that monopoly scarcity pricing)
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So, what you and the author are claiming is that the music is bereft of any marginal value, but musicians make their money selling a unique experience (a live concert) or trademarked goods which have value only because of the band or song trademarked and used on the goods. Would you then not call the music a good of a higher order? Because in order to make the other products, you need the input of the song or band. You could not sell the other goods without the input of the music.
BTW, perhaps Queen Taylor now has earned a reverse Midas touch, everything she touches turns to sh*t.
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what?!
What has she done??
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(S)he really blew it with politics and football. Perhaps, (s)he can at least get a good song out of it! :)
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Oh yes.
My friend says she has a dozen songs about breakups but none about blowjobs. Might be the problem
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Which, the breakups or the blow jobs? :)
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Fine, I'll read the article and then criticize it.
Just know that that is not how the internet works.
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Obvs :))
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Ok, here's my issue. I think you're conflating economic value and market price.
Economic value should be thought of as something like "how much would people be willing to pay for this thing.": In the case of music, and other non-scarce goods, this pretty much equates to consumer surplus.
The argument you're making pretty much equates economic value with producer surplus.
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that seems like definitionally true...? Of course economic value and market price is the same..
but let me think about this.
My intuition is to answer you that at marginal price = 0, any quantity is entirely consumer surplus -- that's why we're willing to donate money in exchange for music (just like zapping for content on Nostr or SN).
Producer surplus is the area above the cost curve but below the marginal market price. Given that artists -- like basketball players -- pay to make their music, their cost curves are always above marginal cost, and so there is no producer surplus.
Also, relevant to the point I'm making is that music is not (since digital files 20+ years ago _has not been) a scarce good. Oxygen, poems, or the letter X are non-scarce, thus can't have any economic value but consumer surplus, I believe
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You may want to see an article relating directly to this subject:
#797031
There are also possible answers to your questions there.
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music is not (since digital files 20+ years ago _has not been) a scarce good.
- recorded music
ftfy
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Since there are so many “pirates” (THEIR name, not mine) out there, digital music is almost free (you still have to invest your time into getting it). This is the problem with copyright in the digital age. Copyright was originally for a different purpose.
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Agreed, and we pay Spotify etc for the tech and the convenience in giving us the songs we want when we want them.
They made a scarce service out of non-scarce foundations. That's their innovation, their value-add
Economic value of the marginal unit is equivalent to market price. Air and gravity have economic value (we would pay for them if we had to), but a zero price.
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no, that's pretty clearly wrong. They don't have economic value, simply because they exist in abundance (any feasible demand summed up across all humans is less than what's plentifully available). Hence no price.
So yea, you're right that I'm equating those things. Should I not?
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Economic value is the value that person places on an economic good based on the benefit that they derive from the good.
I just grabbed this from investopedia, not because it's authoritative of course, but I think it might help orient the discussion.
The way I think about economic value is that it's equivalent to what people would pay for something. What people actually have to pay for things involves a bunch of factors beyond subjective valuations, so it seems less relevant conceptually and further removed from the source of value.
Abundance can only generate consumer surplus if the abundant things are valued.
I gave him the link to the article I posted about this.
#797031
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It's heavy on the marginal value aspect, which is worth thinking about, but certainly not the whole story.
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Exactly, marginal value is not the only consideration, but just one of many.
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