Streaming Wars: Music vs TV
The Best Economics Textbook
I have a morning ritual for writing this newsletter. Monday morning, I wake up at 5:00 am (so I can get some things down without kids interrupting me) and I listen to music on YouTube while working out the story I want to share this week. Today I realize the story I want to share is about the music I listen to!
Not the actual music I listen to (but I’ll say that Yellowcard still slaps). But listening to the music reminded me of a meme I recently saw. I can’t find the image, but here’s the gist:
Music streaming: every song is available on every platform
TV streaming: Seasons 1-3 are on Netflix, 5 is on Hulu, 6-7 on Amazon Prime, and 4 is is only available on DVD
Since I’ve been reading about property and ownership (stay tuned for next week’s interview with the authors of Mine!), the meme stuck out to me. Why are licenses for music so widely distributed whereas the licenses for TV shows are dedicated to single services and sometimes split across platforms?
Two explanations have come to mind. First, music is available everywhere because that was the state of the industry when these platforms were created. Music has been streaming for a century; that is, if we loosely interpret streaming to include radio. In that century, the music industry built the infrastructure needed to distribute licenses and compensate artists (well, their labels). And while there was a struggle to transition to digital streaming, the model didn’t have to diverge much.
Movies, on the other hand, did not have that infrastructure. One reason is that the technology was more limited than radio. If you heard a song you liked on the radio, the next time you would hear it was the next day at the same time. But if you saw a movie you liked in theaters, the next time you saw it would be if the studio decided to re-release it years later. That’s where the Disney Vault comes from: Disney would release a movie, put it in the vault, then strategically re-release it to maintain a new generation of fans. That model persisted until the 1980s with the invention of VHS and people could watch movies in their own homes. Historically, studios maintained much more control over their product, so the infrastructure never developed to distribute to multiple platforms.
The second reason is that the marginal value of a TV show or a movie is much higher than the marginal value of a song or musician. People will add streaming services for a single show. When HBO Max released Wonder Woman 1984, the streaming service’s subscribers doubled. We subscribed for a month to watch it (terrible decision, but worth it for His Dark Materials). When the rights to a show or movie are up for grabs, the streaming platforms are willing to pay a lot of money to get exclusive access because they want that sweet, sweet subscription money.
You don’t see that for music. I can’t even name any artists that aren’t available on Spotify. Taylor Swift fought them years ago, but her stuff is there now. You don’t listen to a radio station for a single artist, and you don’t download a streaming app for them either. Indeed, Spotify’s strategy going forward is not about exclusive access to artists, but exclusive access to podcasts.
Seems like the marginal value of music is low.
The Best Economics Textbook
Today I continue my series on fun economics stories you can find around the world. Previously I talked about the economics of your phone’s keyboard and the economics of the Wizarding World of Harry Potter. With school starting soon, I decided to look at textbooks.
The textbook for my intro econ class was written by the instructor. He explained on the first day why he wrote his own textbook and very clearly explained how he was able to make good money from it. Most people hated his story. As someone who was already excited about economics, I loved it.
So jump over to Market Power if you want to hear the story for yourself!
Who is Economics For?
The Harvard economics department just got a new chair, Ed Glaeser. In a letter to his community, he included a nice paragraph explaining who should study economics.
If you are interested in policies that impact the environment or global poverty, then economics is for you. If you are interested in finding the causes of American inequality or Chinese economic growth, then economics is for you. If you are interested in fathoming both the strengths and weaknesses of market economies, then economics is for you. Those market economies both enable technological marvels and perpetuate terrible forms of discrimination. Understanding the global economy is the first step towards improving it.