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What is Music Worth?

4 February 2010 | Category: Arts
A Music Party

"A Music Party"

This 1864 painting by Arthur Hughes illustrates an idealized family enjoying music together in an age before recording.

In 2008, I posted an article at Acceity entitled Music Everywhere. In it, I asked whether the ubiquitous nature of recorded music in the digital age enhanced or cheapened the role of of music in our lives. Those who read the post replied that today's abundant music is a good thing. Although music may no longer be as highly valued as it was in the past, there are now unparalleled opportunities for everyone to enjoy it.

I've been prompted to consider the value of music again after reading the results of a study released two weeks ago by Wharton marketing professor Raghuram Iyengar. The study, which aimed to determine the optimal market price for digital music downloads, is summarized at the Knowledge@Wharton web site, which also provides a link to the complete paper. Iyengar's main finding: music today is too expensive.

Online music retailers like Apple iTunes and Amazon.com currently charge customers about 99¢ per song for most downloads. Iyengar's study showed that this price may actually be inhibiting demand. He based his research on conjoint analysis, which involves offering consumers a variety of theoretical purchasing options and prompting them to choose which, if any, they find attractive. Judging by consumer's choices, Iyengar predicts that if record companies would cut the retail price of their music to about 60¢ per song, the accompanying rise in demand and sales would actually lead to an increase in their profits.

There is no sign yet that any major record labels are paying attention to Iyengar's research, but any means of boosting profit should be welcome news to them. Traditional recording companies have struggled greatly with the technological changes of the past decade. Not only have computers and the internet changed the way consumers acquire and listen to music, but these technologies have also made professional recording studios and paid publicity obsolete to new generation of artists. Almost anyone with enough time, practice, and ambition can today record and distribute a professional sounding album, but the staggering volume and diversity of the music available now means that most new performers can only expect to build a small niche of dedicated fans. There is nothing wrong with that. Even as technology has made music more commonplace and mass-produced, it has also made it more personal, so that each individual is more likely than ever to posses a very different collection of songs than that of his neighbor.

Decreasing the retail price of online music might encourage people to build the diversity of their music collections and be more daring about spending their money for something new or unfamiliar. Iyengar's study is significant because it suggests that the increased sales from a dramatic price cut would actually help musicians and record labels earn more for their work.

I still wonder what it would really mean for listeners to peg the value of their songs at 60¢ a track — less than a candy bar. Such a low value strongly suggests that most recordings are regarded as passing entertainment or background noise, and only rarely as inspiring or transformational works of art. When is a song worth more than 60 cents? What is the future of meaningful music? Is that future outside the realm of recordings? What kind of creative innovations could make a song so moving, so thrilling, or so unique, that we would give it greater value?

Posted By: Joshua | Trackback

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