In my spare time, I work for a band. Part of this is for pure entertainment value and part is because I am interested in how the industry works (or doesn’t work), especially from a consumer behavior perspective. In talking with musicians and their managers, I hear a lot of statements of the form “people would think our stuff is great if only they would listen to it.” As an economist,my initial gut response is something of the form “well then pay them to listen to it.” According to chapter 1 of basically any introductory microeconomics textbook, the law of demand states that, except under very unusual circumstances, demand curves slope downwards:
(Do you like how I’ve started resorting to grabbing stock images off of the Internet?) It seems simple: if you want people to buy more of something, lower the price. Most people seem to assume that the limiting case of this law is a zero price: “offer something for free if you want to maximize consumption.” But no, not me, I am good at thinking outside of the box. Think about it- you can theoretically keep extending the demand curve down and to the right indefinitely. The problem is that you get into negative price territory, but isn’t a negative price just a case where you pay someone to consume something?
Apparently some musicians think the same way that I do. From Bostonist:
The Globe reported that the Jazz Composers Alliance Orchestra is going to pay their audience for an April 29 concert at the Cambridge YMCA Theater at 8 p.m. The first 50 concert goers get $1 for coming to the gig, and everyone has a chance to win $50 in a lottery. Don’t spend it all in one place.
Darrell Katz of the JCAO, a group performing in Boston since 1985, says it’s simply a way to promote the Orchestra. He said:
“We’ve got some of the top musicians in Boston in the group, and we’re writing music that deserves to be heard. I just want people to experience the joy of this music.”
Score one for the People’s Republic of Cambridge. Before you give me my music marketing gold star, however, I do have to acknowledge that there’s a little problem with this plan. Ever hear of a little boy named Tom Sawyer? Something about whitewashing a fence, perhaps? The fact of the matter is that whether we are paid to do something at least in part affects how much we think we like doing that activity.
If you don’t believe me, ask Dan Ariely. He, along with coauthors George Loewenstein and Drazan Prelec, have a paper entitled, not surprisingly, “Tom Sawyer and the Construction of Value” that empirically tests for the Tom Sawyer effect. To do so, Dan offered a group of his students one of two questions:
- Would you be willing to pay Professor Ariely $10 for a 10-minute poetry reading?
- Would you be willing to accept $10 from Professor Ariely for a 10-minute poetry reading?
He then asked students to bid on the opportunity to come to poetry readings of various lengths. (Bids could be either of the pay or be paid form.) As it turns out, students who were initially asked if they were willing to pay for the poetry were, for the most part, willing to pay for the event and vice versa. Economists generally take willingness to pay (or accept) as a measure of how much people like (or dislike) something, so the differences in bids can be interpreted as differences in the perceived pleasure (or displeasure) from the activity.
Hm. Based on this evidence, it seems that the Jazz Composers Alliance Orchestra is doing itself a bit of a disservice by offering to pay people to come to the show- essentially, they are framing it as an “unpleasant” activity where people need to be paid in order to attend. This is probably not going to help their longer-term marketing efforts, especially when you consider that $1 isn’t even a big enough incentive to truly move the needle on attendance in the short run. More importantly, the payment is even putting a damper on the whole “experience the joy of this music” thing.
G.I. Joe thinks that knowing is half the battle. I would argue that knowing a little economics is way more than half the battle.
P.S. I’ll have you know that I am a member of the Recording Academy. No joke.
(Don’t worry, said membership is not related to musical performance, I swear.)