Rockonomics

by Alan B Krueger

  15. David J. Hargreaves, “The Effects of Repetition on Liking for Music,” Journal of Research in Music Education 32, no. 1 (1984): 35–47; Robert B. Zajonc, “Attitudinal Effects of Mere Exposure,” Journal of Personality and Social Psychology 9, no. 2, pt. 2 (1968): 1–27.

  16. For a technical discussion of this process, see David Easley and Jon Kleinberg, Networks, Crowds, and Markets: Reasoning About a Highly Connected World (Cambridge, MA: Cambridge University Press, 2010), ch. 18.

  17. Matthew J. Salganik, Peter Sheridan Dodds, and Duncan J. Watts, “Experimental Study of Inequality and Unpredictability in an Artificial Cultural Market,” Science 311 (2006): 854–56.

  18. This is from an interview with Jacob Collier on Feb. 16, 2018, in Miami Beach.

  19. See Mark E. J. Newman, “Power Laws, Pareto Distributions and Zipf’s Law,” Contemporary Physics 46, no. 5 (2005): 323–51; Dimitrios Rafailidis and Yannis Manolopoulos, “The Power of Music: Searching for Power-Laws in Symbolic Musical Data,” working paper, Department of Informatics, Aristotle University, Thessaloniki, Greece, 2008.

  20. Stephen Gandel, “Beware, Bitcoin Buffs, Bubbles Often Bite,” Bloomberg, Sep. 29, 2017.

  21. Chris Anderson, The Long Tail: Why the Future of Business Is Selling Less of More (New York: Hyperion, 2006).

  22. Paul Krugman, “Is This (Still) the Age of the Superstar?,” New York Times, Jun. 13, 2013.

  23. Author’s calculation using information from the Pollstar Boxoffice Database.

  24. Anita Elberse, Blockbusters: Hit-Making, Risk-Taking, and the Big Business of Entertainment (London: Macmillan, 2013).

  25. Smith and Telang make a related argument: “Long-tail processes can and will be used to produce not only long-tail products but also blockbuster products.” Michael D. Smith and Rahul Telang, Streaming, Sharing, Stealing: Big Data and the Future of Entertainment (Cambridge, MA: MIT Press, 2016), 76.

  26. Questlove interviewed by Tom Healy at the Bass Museum, Apr. 15, 2018, Miami Beach, FL.

  27. Author’s calculations using information from the Pollstar Boxoffice Database.

  28. Lawrence Mishel, Elise Gould, and Josh Bivens, “Wage Stagnation in Nine Charts,” Economic Policy Institute, Jan. 6, 2015.

  29. Steven Kaplan and Joshua Rauh, “It’s the Market: The Broad-Based Rise in the Return to Top Talent,” Journal of Economic Perspectives 27, no. 3 (2013).

  30. David Autor, David Dorn, Lawrence F. Katz, Christina Patterson, and John Van Reenen, “The Fall of the Labor Share and the Rise of Superstar Firms,” NBER Working Paper No. 23396, 2017; David Wessel, “Is Lack of Competition Strangling the U.S. Economy,” Harvard Business Review, Mar. 2018.

  31. Wessel, “Is Lack of Competition Strangling the U.S. Economy.”

  32. Paul Resnikoff, “Two-Thirds of All Music Sold Comes from Just 4 Companies,” Digital Music News, Aug. 3, 2016.

  33. “Tech Firms Shell Out to Hire and Hoard Talent,” The Economist, Nov. 5, 2016.

  34. “Knorr, Wabtec Settle with U.S. over Agreements to Not Poach Workers,” Reuters, Apr. 3, 2018.

  35. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (London: W. Strahan and T. Cadell, 1776).

  36. Federal Trade Commission, “Antitrust Guidance for Human Resource Professionals,” Department of Justice, Antitrust Division, Oct. 2016.

  37. David Clark, “Antitrust Action Against No-Poaching Agreements: Obama Policy to Be Continued by the Trump Administration,” National Law Review, Jan. 26, 2018.

  Chapter 5: THE POWER OF LUCK

  1. Transcribed from Elton John’s appearance on The Late Show with Stephen Colbert, Nov. 13, 2017.

  2. Peter Carlin, Homeward Bound: The Life of Paul Simon (New York: Henry Holt, 2016).

  3. Frank H. Robert, Success and Luck: Good Fortune and the Myth of Meritocracy (Princeton, NJ: Princeton University Press, 2016).

  4. Superstars would emerge even if all contenders were equally talented and equally hardworking. See Moshe Adler, “Stardom and Talent,” American Economic Review 75, no. 1 (1985): 208–12, for an extension of Sherwin Rosen’s superstar model where everyone is equally talented.

  5. Chris Hastings and Susan Bisset, “Literary Agent Made £15m Because JK Rowling Liked His Name,” Telegraph, Jun. 15, 2003.

  6. Shaun Considine, “The Hit We Almost Missed,” New York Times, Dec. 3, 2004.

  7. Mike Sigman, “John Hammond Looks Back (II),” Record World, Oct. 7, 1972.

  8. See Robert Burnett, “Dressed for Success: Sweden from Abba to Roxette,” Popular Music 11, no. 2 (1992): 141–50.

  9. Interview with John Eastman on Apr. 12, 2018, in New York City.

  10. Larry Rohter, “A Real-Life Fairy Tale, Long in the Making and Set to Old Tunes,” New York Times, Jul. 20, 2012.

  11. Jennifer Ordoez, “Pop Singer Fails to Strike a Chord Despite the Millions Spent by MCA,” Wall Street Journal, Feb. 26, 2002.

  12. Statistics in this section are based on author’s calculations using Billboard Year-End Top 100, 1960–2017.

  13. Fran Strine, Hired Gun, Vision Films, 2016.

  14. See Matthew J. Salganik and Duncan Watts, “Leading the Herd Astray: An Experimental Study of Self-Fulfilling Prophecies in an Artificial Cultural Market,” Social Psychology Quarterly 71, no. 4 (2008): 338–55. My description of their work combines two of their alternative universes to provide a simplified overview of their experiment, but it is faithful to their main findings.

  15. Duncan Watts, “Is Justin Timberlake a Product of Cumulative Advantage?,” New York Times, Apr. 15, 2007.

  16. Bruce Springsteen, Born to Run (New York: Simon & Schuster, 2017), 324–25.

  17. Andy Greene, “Max Weinberg Talks 43 Years with Bruce Springsteen, Health Scares,” Rolling Stone, Mar. 7, 2017.

  18. Alex Arbuckle, “A Young Frank Sinatra, Dapper and Rebellious from Birth,” Mashable, Oct. 19, 2015.

  19. Geoff Boucher, “Allen Klein Dies at 77; Powerful Figure in Music World,” Los Angeles Times, Jul. 5, 2009.

  20. “Princeton University’s 2012 Baccalaureate Remarks,” Princeton University, Jun. 3, 2012, www.princeton.edu/​news/​2012/​06/​03/​princeton-universitys-2012-baccalaureate-remarks.

  21. Orley Ashenfelter and Alan B. Krueger, “Estimates of the Economic Return to Schooling from a New Sample of Twins,” American Economic Review 84, no. 5 (1994): 1157–83.

  22. See Philip Oreopoulos, Till Von Wachter, and Andrew Heisz, “The Short- and Long-Term Career Effects of Graduating in a Recession,” American Economic Journal: Applied Economics 4, no. 1 (2012): 1–29; Lisa B. Kahn, “The Long-Term Labor Market Consequences of Graduating from College in a Bad Economy,” Labour Economics 17, no. 2 (2010): 303–16.

  23. Paul Oyer, “The Making of an Investment Banker: Stock Market Shocks, Career Choice and Lifetime Income,” Journal of Finance 63, no. 6 (2008): 2601–28.

  24. Lawrence Mishel and Jessica Schieder, “CEO Pay Remains High Relative to the Pay of Typical Workers and High-Wage Earners,” Economic Policy Institute, Jul. 20, 2017.

  25. Marianne Bertrand and Sendhil Mullainathan, “Are CEOs Rewarded for Luck? The Ones Without Principals Are,” Quarterly Journal of Economics 116, no. 3 (2001): 901–32.

  26. David Cho and Alan B. Krueger, “Rent Sharing Within Firms,” draft working paper, 2018.

  27. This draws from an interview with Cliff Burnstein on Jul. 27, 2018, in New York City.

  28. Burton Malkiel, A Random Walk down Wall Street: Including a Life-Cycle Guide to Personal Investing (New York: W. W. Norton, 1999).

  29. Burton Malkiel, “Index Funds Still Beat ‘Active’ Portfolio Management,” Wall Street Journal, Jun. 5, 2017.

  30. Chana Schoenberger, “Peter Lynch, 25 Years Later: It’s Not Just ‘Invest in What You Know,’
 ” MarketWatch, Dec. 28, 2015.

  31. Joan Goodman, “Playboy Interview with Paul and Linda McCartney,” Playboy, Dec. 1984.

  32. Brad M. Barber and Terrance Odean, “The Courage of Misguided Convictions: The Trading Behavior of Individual Investors,” Financial Analyst Journal 55, no. 6 (1999): 41–55; Brad M. Barber and Terrance Odean, “Boys Will Be Boys: Gender, Overconfidence, and Common Stock Investment,” Quarterly Journal of Economics 116, no. 1 (2001): 261–92.

  33. Interview with Gloria Estefan, Oct. 4, 2018.

  34. Frank Bruni, “Am I Going Blind?,” New York Times, Feb. 23, 2018.

  35. George Palathingal, “Life Not So Sweet for `Sugar Man’ Sixto Rodriguez,” Sydney Morning Herald, May 29, 2014.

  36. Larry Rohter, “A Real-Life Fairy Tale, Long in the Making and Set to Old Tunes,” New York Times. Jul. 20, 2012.

  Chapter 6: THE SHOW MUST GO ON

  1. Figures on U2’s tours are from Bob Grossweiner and Jane Cohen, “Madonna Tour Wraps with $280 Million-Plus Gross,” TicketNews, Dec. 23, 2008, and Brian Boyd, “Bono’s Injury and U2’s Shrinking Tour,” Irish Times, May 8, 2015.

  2. Quoted from the 2018 Pollstar Live! convention in Los Angeles, CA.

  3. This and other quotes in this chapter are from a phone interview with Cliff Burnstein on Jul. 5, 2017.

  4. Author’s calculation based on information from the Pollstar Boxoffice Database.

  5. Thor Christensen, “Gouge-a-Palooza? Rock Artists’ Soaring Ticket Prices Amplify Cries of ‘Sellout,’ ” Dallas Morning News, Jun. 2, 2002.

  6. Donald S. Passman, All You Need to Know About the Music Business (New York: Free Press, 2012).

  7. Ron Howard, dir., The Beatles: Eight Days a Week, Polygram Entertainment, 2016.

  8. Ethan Smith, “Ticketmaster, Live Nation Near Merger,” Wall Street Journal, Feb. 4, 2009.

  9. Deborah Speer, “Pollstar Live! Q&A: Michael Rapino,” Pollstar, Feb. 2, 2018.

  10. Ben Sisario and Graham Bowley, “Live National Rules Music Ticketing, Some Say with Threats,” New York Times, Apr. 1, 2018.

  11. Dave Brooks, “AEG Says It Will Continue to Block-Book the O2 and Staples Center,” Billboard, Sep. 1, 2017.

  12. Jem Aswad, “AEG-MSG Turf Battle Heats Up: Acts That Play L.A. Forum Cannot Play London’s O2 Arena,” Variety, Jun. 30, 2017.

  13. Jem Aswad, “Sharon Osbourne Slams AEG over Staples-O2 Booking Policy, Jay Marciano and Irving Azoff Respond,” Variety, Feb. 7, 2018.

  14. Associated Press, “In Move to Discourage Scalping, Rock Band Won’t Honor Tickets,” New York Times, Jul. 2, 1996.

  15. MTV News Staff, “Box Office Employee Convicted in N.Y. Ticket Scam,” MTV News, June 18, 1998.

  16. Sarah Pittman, “Listen to Michael Rapino’s Pollstar Live! Keynote Q&A: Promoter 101 Podcast,” Pollstar, Feb. 19, 2018.

  17. Neil Irwin, “Why Surge Prices Make Us So Mad: What Springsteen, Home Depot and a Nobel Winner Know,” New York Times, Oct. 14, 2017.

  18. See, for example, Julie Holland Mortimer, Chris Nosko, and Alan Sorensen, “Supply Responses to Digital Distribution: Recorded Music and Live Performances,” Information Economics and Policy 24, no. 1 (2012): 3–14; Alan B. Krueger, “The Economics of Real Superstars: The Market for Rock Concerts in the Material World,” Journal of Labor Economics 23, no. 1 (2005): 1–30.

  19. Quoted from email correspondence with John Eastman on Mar. 5, 2018.

  20. In 2009, Ticketmaster’s then CEO, Irving Azoff, testified before a Senate Judiciary Subcommittee on the Ticketmaster–Live Nation merger, “You know, Ticketmaster was set up as a system where they took the heat for everybody else. Ticketmaster gets a minority percentage of that service charge. In that service charge are credit card fees, the rebates to the buildings, rebates sometimes to artists, and sometimes rebates to promoters.” Stephen Dubner, “Why Is the Live-Event Ticket Market So Screwed Up?,” Freakonomics Radio, WNYC, Dec. 6, 2017.

  21. Irwin, “Why Surge Prices Make Us So Mad.”

  22. Author’s calculations using information from the Pollstar Boxoffice Database.

  23. “What Other Bands Can Learn from Ed Sheeran,” Stage Right Secrets, Jan. 10, 2015.

  24. David Wild, “10 Things That Piss Off Tom Petty,” Rolling Stone, Nov. 14, 2002.

  25. This material is from Garth Brooks’s panel at the Pollstar Live! conference, Los Angeles, CA, Feb. 2, 2018.

  26. Ben Popper, “8 Business Secrets of the Grateful Dead,” Business Insider, Aug. 5, 2010.

  27. Pittman, “Listen to Michael Rapino’s Pollstar Live! Keynote Q&A.”

  28. Gregory Mankiw, “I Paid $2,500 for a `Hamilton’ Ticket. I’m Happy About It,” New York Times, Oct. 21, 2016.

  29. Phillip Leslie and Alan Sorensen, “Resale and Rent-Seeking: An Application to Ticket Markets,” Review of Economic Studies 81, no. 1 (2014): 266–300.

  30. Aditya Bhave and Eric Budish, “Primary-Market Auctions for Event Tickets: Eliminating the Rents of ‘Bob the Broker’?,” NBER Working Paper No. 23770, 2017.

  31. “What Is Ticketmaster Verified Fan?,” Ticketmaster, https://help.ticketmaster.com/​s/article/​What-is-Ticketmaster-Verified-Fan. Accessed Oct. 22, 2018.

  32. Kaitlyn Tiffany, “How Ticketmaster’s Verified Fan Program Toys with the Passions of Fandom,” The Verge, Feb. 7, 2018.

  33. Dave Brooks, “Taylor Swift Has Concert Industry Embracing `Slow Ticketing’ Model,” Billboard, Dec. 14, 2017.

  34. Dave Brooks, “Slow Ticketing Helps Jay-Z Net $48.7M on 2017 Tour,” Billboard, Jan. 11, 2018.

  35. See William J. Baumol and William G. Bowen, Performing Arts, the Economic Dilemma: A Study of Problems Common to Theater, Opera, Music, and Dance (New York: Twentieth Century Fund, 1966).

  36. Quoted from an interview with Rob Levine on Aug. 3, 2017.

  37. Quoted from an interview with Michael Lorick on Apr. 5, 2018.

  38. Material in this section comes from an interview with Peter Lubin on Dec. 5, 2017.

  39. This comes from a lecture Dan Ryan presented at Princeton University on Oct. 11, 2017.

  40. Ethan Smith and Sara Silver, “To Protect Its Box-Office Turf, Ticketmaster Plays Rivals’ Tune,” Wall Street Journal, Sep. 12, 2006.

  41. Barry Ritholtz, “Markets, Music and a Defense on Wall Street: Barry Ritholtz,” Washington Post, Dec. 22, 2017.

  Chapter 7: SCAMS, SWINDLES, AND THE MUSIC BUSINESS

  1. I interviewed John Eastman on Mar. 2 and Apr. 12, 2018.

  2. Richard E. Caves, Creative Industries: Contracts Between Art and Commerce (Cambridge, MA: Harvard University Press, 2000), 65.

  3. Justin M. Jacobsen, “The Artist & Record Label Relationship—A Look at the Standard ‘Record Deal’ [Part 1],” TuneCore, May 11, 2017.

  4. Ray Waddell, “Update: Madonna Confirms Deal with Live Nation,” Billboard, Oct. 16, 2007.

  5. Peter C. DiCola, “Money from Music: Survey Evidence on Musicians’ Revenue and Lessons About Copyright Incentives,” Arizona Law Review 55, no. 2 (2013): 301–70.

  6. Donald S. Passman, All You Need to Know About the Music Business (New York: Free Press, 2012).

  7. Richard Smirke, “Indie Labels Raked in $6 Billion Last Year, Accounting for 38 Percent of Global Market: New Study,” Billboard, Oct. 23, 2017.

  8. Nate Rau, “Lumineers’ Success Hasn’t Changed Label’s Formula,” Tennessean, Apr. 4, 2014.

  9. Dylan Owens, “Four Years Later, the Lumineers Stage a Surprising Second Act,” Denver Post, Mar. 31, 2016.

  10. Bruce Springsteen, Born to Run (New York: Simon & Schuster, 2016), 251.

  11. Colin Stutz, “Lil Pump Signs New Contract with Warner Bros. for Roughly $8M: Sources,” Billboard, Mar. 12, 2018.

  12. Jem Aswad, “It’s Of
ficial: ‘Gucci Gang’ Rapper Lil Pump Re-Signs with Warner Bros. Records,” Variety, Mar. 13, 2018.

  13. Rafa Alvarez, “A Hip-Hop Signing Frenzy Sends New Record Deal Prices Soaring,” Billboard, Mar. 29, 2018.

  14. This is from a conversation and the Q&A session with Tom Corson at the Jun. 26, 2018, MIRA Conference at the Village Studio in Los Angeles.

  15. Fred Goodman, Allen Klein: The Man Who Bailed Out the Beatles, Made the Stones, and Transformed Rock and Roll (New York: Houghton Mifflin Harcourt, 2015), 195.

  16. “Jay Van Dyke, formerly of the Lumineers: Music Biz 101 & More Podcast,” Music Biz 101, Dec. 7, 2017.

  17. This comes from a lecture Dan Ryan presented at Princeton University on Oct. 11, 2017.

  18. Passman, All You Need to Know About the Music Business.

  19. Peter Bogdanovich, dir., Tom Petty and the Heartbreakers: Runnin’ Down a Dream, Warner Bros., 2007.

  20. Fred Goodman, “How Tom Petty Beat the Labels,” Billboard, Oct. 6, 2017.

  21. Richard Harrington, “Billy Joel’s Midlife Confessions,” Washington Post, Oct. 17, 1993.

  22. Nick Paumgarten, “Thirty-Three-Hit Wonder,” New Yorker, Oct. 27, 2014.

  23. Mary Braid, “Sting’s Adviser Jailed for £6m Theft from Star,” Independent, Oct. 18, 1995.

  24. Alison Boshoff, “Why Sting’s Reduced to Singing at Weddings,” Daily Mail, Jul. 20, 2016.

  25. Guy Lynn and George Greenwood, “Musicians Hit by ‘Management Scam,’ ” BBC, Mar. 29, 2018.

  26. John Robinson, “Get Back and Other Setbacks,” Guardian, Nov. 21, 2003.

  27. “Colonel Tom Parker Biography,” Biography.com, Apr. 16, 2018.

  28. Jerry Osborne, Elvis: Word for Word (New York: Harmony Books, 2000).

  29. Dave Brooks, “Kanye West Splits with Longtime Manager Izzy Zivkovic: Exclusive,” Billboard, Mar. 28, 2018.

  30. “How I Became the Fresh Prince of Bel-Air | Storytime,” YouTube, posted by Will Smith, May 10, 2018, https://www.youtube.com/​watch?v=y_WoOYybCro.