Good economics is about figuring out not well-understood markets… like the
market for music:
…it is difficult to judge how a given level of illegal downloads will
affect economic efficiency. First, the quantity of music sold in a given
year is not a very accurate indicator of how much value consumers receive
from music. Fans commonly experiment by buying a number of CDs, only a few
of which pay off and become favorites. Many or most of the products bought
are quickly regarded as disappointments and discarded.
Evaluating the efficiency consequences of illegal downloads is difficult for
a more fundamental reason. Most generally, we do not understand the demand
for music very well. We do not understand what most fans want from their
music. Just as book buyers are not always readers, the music market is not
always about the tunes. Sometimes it is about symbolic values.
It is a mystery why fans spend almost all of their music money on product of
very recent vintage. Until we untangle this puzzle, and we have not yet, we
will not understand how Internet music is likely to affect consumer welfare.
Most likely the music market is about more than simply buying “good music,”
as a critic might understand that term. People buy music to signal their
hipness, to participate in current trends, or to distinguish themselves from
previous generations. Buyers use music to signal their social standing,
whether this consists of going to the opera or listening to heavy metal.
Others value partaking in novelty per se. They find newness exciting, a way
of following the course of fashion, and the music market offers one handy
arena for this pursuit. For some people music is an excuse to go out and
mix with others, a coordination point for dancing, staying up late,
drinking, or a singles scene. Along these lines, many fans seem to enjoy
musical promotions, hype, and advertising as ends in themselves, and not
merely as means to hearing music. They like being part of the “next big
thing.” The accompanying music cannot be so bad to their ears as to offend
them, but the deftness of the harmonic triads is not their primary concern.
In other words, the features of the market that matter to the critic may not
be very special to consumers at all. Most of all, consumers seem to care
about some feature of newness and trendiness, more than they care about
music per se. So how much does it matter, from a consumer’s point of view,
if weaker copyright protection reshapes the world of music?