- What we need is a system that will continue to pack the corporate coffers yet be fair to music lovers. The solution: a real-time commodities market ..
Here's how it would work: Songs would be priced strictly on demand. The more people who download the latest Eminem single, the higher the price will go. The same is true in reverse—the fewer people who buy a song, the lower the price goes. Music prices would oscillate like stocks on Nasdaq, with the current cost pegged to up-to-the-second changes in the number of downloads. In essence, this is a pure free-market solution—the market alone would determine price.
The author proposes a system where demand for a song affects the price of a song. Sounds very free market, yah? Except for one thing: scarcity. I said free markets do the best job at allocating scarce resources. If someone with an orange grove produces a million oranges it will cost him twice as much to produce two million oranges - maybe more if all the good orange growing land is taken - that's scarcity. To make a song for download there are fixed costs up front but doubling the number of copies in existance is near zero. No scarcity.
His system would reward popular artists more than unpopular ones and it would be as good a way to measure the popularity of a song as quantity purchased. It isn't a market in the traditional sense. If the songs were a real commodity there would be a fixed number of copies around. If the songs were a real commodity there would be a resale market where people that owned a copy of the song could trade it. Everyone hates middlemen and speculators but they bear risk and smooth price bumps for the less specialized consumers.
I have no problem with charging more for popular songs. No one has a problem with the discount rack at Best Buy. I do have a problem with the author's hand waving 1-2-3
- Markets charge more for things in demand
- Charge more for popular songs
- Call it a market!
The practical upshot of the author's proposal would be preverse. The hard core fans who value a song the most would buy early at the lowest price before the song hit the radio (scarcity put on its head). Even if the system resulted in the exact same dollars spent on the same songs it would merely be a system where alubms sold at a flat price were considered a success by numbers (gold, platinum, etc) is replaced by a system where the area under the curve of numbers sold at what price determines success. I don't think the people at Billboard are itching to do integrals.