What is it about the music industry when it comes to discussing the grotesque levels of inequality that prevail today?
Last year, Alan Krueger used it to explain the “winner-take-all economy,” as a way of introducing the Great Gatsby curve at the Rock and Roll Hall of Fame.
The music industry is a microcosm of what is happening in the U.S. economy at large. We are increasingly becoming a “winner-take-all economy,” a phenomenon that the music industry has long experienced. Over recent decades, technological change, globalization and an erosion of the institutions and practices that support shared prosperity in the U.S. have put the middle class under increasing stress. The lucky and the talented – and it is often hard to tell the difference – have been doing better and better, while the vast majority has struggled to keep up.
And now we have Robert Frank doing much the same, using the example of his two sons, who “comprise two-thirds of the Nepotist, a band in the hypercompetitive indie music scene of New York City” (nepotism in the free national publicity, you say?) to discuss the difference between winner-take-all and long-tail economics.
No doubt, I’m biased, but I think that my sons are good enough to break out in today’s music market. Yet a stark reality persists: Because there are thousands of talented bands today, their odds of stardom are vanishingly small.
The fact is, the music industry is not at all a good example of winner-take-all economics. Sure, there are a few winners and lots of folks who struggle to get by at the bottom—and a long history of artists’ complaints about being ripped off by the recording industry.
But that’s not the story told by economists like Krueger and Frank. Their analysis is all about technology and market share, and the few artists who manage at any point in time to dominate the charts, perform in gigantic concert venues, and rake in the money. It’s as if being a winner is all about getting rents.
The problem is, musicians and other “stars” (authors, artists, athletes, and celebrities) make up only a tiny fraction of the winners, the members of the top 1 percent. The rest, the majority of the minority, get their incomes from elsewhere.
What Krueger and Frank don’t want to talk about is the real winner-take-all economy, in which lots of people produce the surplus that is then appropriated by a tiny minority at the top. A large and growing surplus that either shows up as corporate retained earnings or is distributed to others, both inside and outside those corporations, who manage to “share in the booty.” In that economy, the use of new production technologies means that corporate profits and the percentage of income captured by the top 1 percent are both soaring, while the wage share and the incomes of the other 99 percent continue to decline.
Workers and the other members of the 99 percent are, like Frank’s sons, not short on talent. It’s just that their talents are always at the service of their employers, who continue to be the real winners in the current economy.