Friday, May 2, 2014

What benefit is there in restricting their freedom and choices?

From How digital music services may be fuelling a ‘superstar artist economy’ by Stuart Dredge.

Both the research and the article highlight the extreme Pareto Distribution effect in the music industry.
Music industry analyst Mark Mulligan’s MIDiA Consulting has published a new report exploring the ‘superstar artist economy’. It suggests that while artists’ share of total recorded-music income has grown from 14% in 2000 to 17% in 2013, the top 1% of musical works are now accounting for 77% of all those artist revenues thanks in part to a “tyranny of choice” on digital services.

“The democratisation of access to music distribution has delivered great benefits for artists but has contributed to even greater confusion for fans, ironically culminating in an intensification of the superstar effect, with the successful artists relative share of the total pot of musical works getting progressively smaller,” as he puts it.

So, while the report suggests that the growth of streaming has boosted global artist revenues since 2010, it suggests that the $400m of streaming and subscription income for artists in 2013 was more weighted to the biggest stars than ever. The report breaks down the typical catalogue of a digital music service to gauge how much of it is meaningful.

“Of a typical 25 million digital catalogue only 6 million is ‘serious’ catalogue and of that only 1.25 million is streamed or purchased with any meaningful degree of frequency. The vast majority of the rest is only ever going to perform miserably in revenue terms,” it claims.
Several points.

While there seems to be an effort to cast this as a recent phenomenon, the Pareto distribution was 71% in 2000. So it is getting worse but only incrementally. The challenge is in the fundamental issue of Winner-Take-All economic systems (i.e. extreme Pareto).

There is nothing unique about music. These number mirror income distribution in the nation at large, in sports, in publishing, in virtually every field. The extremity of the distribution might vary a little bit but the Pareto nature of its distribution is common.

These numbers mirror those in the book publishing industry. Several millions of titles published, mostly since 1950. Only a few million in print (print on demand). Only a few hundred thousand with sales above a few thousand units.

These numbers highlight the quality issue - with huge production volume and low evaluative/critical volume how do you sort the wheat from the chaff?

These numbers highlight the filtering issue - How does a particular reader (listener) find that which they are interested in reading and hearing?

Why are we more concerned about its manifestation in some fields than in others?

What can we do about it? If we find some way to assess quality for all the volume of production and if we improve the means for matching reader (listener) to those books that are most likely to interest them, will it change the Pareto distribution. I suspect it will increase sales and increase consumer satisfaction and might benefit a handful of authors/musicians but that it will not significantly change the shape of the Pareto distribution. And if it doesn't, why would we care?

If people are freely finding and choosing that which they value the most, and that activity is valued by them, then what benefit is there in restricting their freedom and choices?

Easy and appropriate to condemn money made illegally. Easy to condemn money made from legal activities which we think ought to be less valued than they are (such as banking and investment). But what is the bad outcome that can be identified from a Pareto distribution? It seems like in a lot of ways, that is the market working in the way we want it to. Trialing lots of alternatives but a settled consensus for the time being on a few.

Take the music numbers. 25 million songs. 250,000 songs (1%) generate 77% of the revenue. So are the 24.75 million other songs wasted effort? No. Just as with evolution where most new variations are wasted and do not survive, it is the existence of those variations that allows the process of evolution to work. No variation, no evolution.

Likewise with the 24.75 million. They are are the raw ingredients for adaptation to new tastes. Tactically it may be wasteful but from a process perspective, the 24.75 million are necessary for the renewal, refinement and adaptation to changing musical tastes. Transparency and information will make the process more efficient but it won't get rid of the process.

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