Thursday, June 09, 2005
Digital Killed the Concert Hall Star?
It seems to me that classical musicians, and composers especially, have not used recording and mass distribution as effectively as they might, and have not taken enough account of how mass distribution of recordings has changed the habits and expectations of the population. Alex Ross, in his recent wonderful piece in The New Yorker, discusses, among other things, how easy availability of perfectionist recordings raised the bar for live performance by increasing audience expectations. I would argue additionally that the shift of the audience away from live performance as the primary means of hearing music is crucially important. So in this sense, On An Overgrown Path is right -- people are hearing less music live and more music from recordings. But AOP is wrong, I think, in suggesting that increasing CD prices would improve the situation. The problem is this: most people learn about music through recordings these days, so to increase the barrier to hearing recorded classical music is to decrease the number of people who hear Beethoven and say "hey -- I'd like to hear this live." If CDs in general were to cost more and concerts were to cost the same or less the public might switch to the "I heard this in concert and liked it, maybe I should get the CD" model. (incidentally, this IS the model that small rock-bands use to get their start. You play gigs in venues that are cheap or free for the audience in order to build a fan base, and the fan base starts getting interested in buying CDs. Then you get a record deal. If you don't hit the big time, you still make more money playing gigs, but not enough to live on, and your CDs are substantially a promotional tool. If you DO hit the big time touring becomes a tool for promoting CD sales -- which might well be enough to live on.) But the current model works great for Big Media, so pop CDs won't be getting more expensive any time soon. And the average listener would rather buy two pop CDs than one classical CD that costs the same as the two pop CDs. If anything, cheaper classical CDs would be more likely to drive up concert attendance because more people would get familiar enough with classical music to want to attend.
So why doesn't the math work out to make classical CDs popular? Part of it is surely the combination of high overhead costs for producing the CD and a small market to begin with, but I suspect another factor is copyright. How many different recordings of Beethoven's 5th Symphony does the world need, exactly? And even if Beethoven's 5th sold more copies than The White Album (and I would not be surprised if it has) those sales are split up among hundreds of different recordings. The revenue from a copyrighted work travels down a narrow channel, but the revenue from an unprotected work is spread over all of the various versions. And the audience for protected (i.e. new) classical music is tiny. Furthermore, in the case of new music most of the actual money contemporary classical composers see is commission money -- CDs are predominantly a promotional too. In fact, under the old CRI model CRI didn't even expect to make up in sales the cost of producing the CD, so you had to find your own funding. Increasing the cost to the consumer of new music CDs is a good way to make the audience less likely to take risks, which will suppress sales and thereby suppress the PR value of the CDs.
Let's now turn to On An Overgrown Path's economic analysis: "The Deutsche Grammophon LP of Karajan conducting Tchaikosky's Pathetique Symphony which was my first classical record cost me one pound ten shillings ($2.20) as a student in 1969. By my calculation graduate starting salaries in the UK have increased by a factor of around twenty since then. That would price the LP at £30 (US$54.60) in today's terms. A full price CD in the UK today is £15 (US$27.30), so real prices have halved before deep discounts and budget priced labels such as LSO Live are factored in. In orders of magnitude I reckon recorded music costs about one quarter of what it did thirty five years ago. Concert tickets have shown little or no price deflation in the same period. So the balance of pricing has swung massively in favour of recorded and internet streamed media, and against attending live performances."
I found an inflation calculator (based on the Consumer Price Index), which tells me that "What cost $2.20 in 1969 would cost $11.68 in 2005." So for starters AOP's economics seem wrong -- if we believe his numbers ($2.20 then, $27.30 now) the CD is MORE expensive today in real terms than it was in 1969. Of course $27.30 seems pretty steep to me, and $11.68 seems on the low end of right -- so more likely in real terms the cost of a classical album has remained about the same. Plus, I'm not smart enough about economics to take fluctuation of exchange rates into consideration -- the dollar was considerably stronger in 1969 than it is today. But "real terms" is not whole story -- AOP's model of tying the appropriate cost of an album to wage level is deeply flawed. To be at any given economic stratum in 2005 actualy requires a higher salary in real terms than being at that stratum in 1969 did, because you have to have more stuff to be at that stratum. Grad students in 2005 need to have almost all of the things that grad students in 1969 did, but they also need computers and dozens of other additional things. (This is the same reason why switching Social Security benefit calculations away from "Wage Indexing" to "Price Indexing" would be so disasterous.) So the cost of a single album is a much smaller portion of one's salary than it was back then. I can't find hard data on ticket prices, but according to one source "Apparently, ticket prices rose much faster than the general price level [of other kinds of goods and services] without causing a drop in attendance. (I say "apparently" because we have no summary measure of ticket price movements.)" So while the underlying economics are flawed, AOP's instincts are correct -- the cost of live music and the cost of recorded music are diverging, with the cost of live music being higher.
But in addition the reasons I mentioned above there's another reason why these costs will not, cannot, and should not converge -- Baumal's Cost Disease. The above source for my information on ticket prices is a short article explaining this phenomenon. I recommend reading it, but the very short explanation is that while in most industries the amount of productivity possible by one employee increases steadily, in the performance arts productivity remains constant because you still need the same number of people to play a piece or act in a play. But since artists live in the same economy as workers in other industries, their salaries have to increase proportionaly to the salaries of their counterparts in those industries seeing increasing productivity. Since there's no increased productivity to provide the money for those salary increases, these arts groups need to find increased revenue elsewhere, and one place to do it is with increased ticket prices. So ticket prices stand to continue to increase, and financial pressures on arts groups will tend to increase over time as well.
Recording a classical album doesn't cost much less now than it used to -- you still need an engineer, a hall, an editor, and the rehearsal and performance time of the players. But distribution costs have been decreasing rapidly, and distribution mechanisms have been getting more and more wide-reaching. And thus, the affordability of making a classical recording available in comparison with the affordability of performing a concert will continue to increase, although Baumal's cost disease will affect classical CDs under current production strategies as well. If composers find ways around Baumal in CD production (take advantage of the increasing realism of synthetic instruents, write for smaller ensembles, do the recording and engineering oneself, et.) CDs will be more and more important to the career of the composer as live performance opportunties become more scarce due to the need for ensembles to conserve costs to fight the Cost Disease.
There's still a lot more to be said on this matter, and I think there's a huge potential to improve the state of the industry if we think carefully about the facts and adjust our behaviors accordingly.
posted by Galen H. Brown
2:28 AM
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