Rockonomics and Inequality

Posted in Culture of Lickspittle, Rock 'n' Roll, Why the World Doesn't Need US at 2:32 pm by George Smith

Coming from the White House blog, an excellent essay on how inequality in rock music has mirrored inequality in the country. Actually, it is worse. The growth of the winner-take-all society has made popular music even more unequal than American society, generally.

Chairman of the Council of Economic Advisers, Alan Krueger, writes (in notes for a prepared talk 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.

These same forces are affecting the music industry. Indeed, the music industry is an extreme example of a “super star economy,” in which a small number of artists take home the lion’s share of income …

[Krueger explains that digitization and the Internet have greatly decreased income from music sales. This in turn made artists go to performance as the only way to preserve income. As a consequence, ticket prices have exploded. But only for the benefit of the topmost.]

The top 5 percent [of pop music artists] take home almost 90 percent of all concert revenues.

This is an extreme version of what has happened to the U.S. income distribution as a whole. The top 1% of families doubled their share of income from 1979 to 2011.

Krueger also discusses how luck has an increasingly outsized effect on a society distorted by inequality.

Specifically, he shows a study on popularity, one which tested what numerical counts of downloads meant to success.

Here at DD blog I’ve discussed it before when testing effects of Google AdWords campaigns and how view counts are gamed on YouTube. Ranking, as I’ve long maintained, means a lot.

If you aren’t returned in the top page of findings at Google, if YouTube search doesn’t return your video or display it in “recommends” because it has low numbers, you do not exist.

You need luck, you need someone important to promote it on a site with lots of eyeballs. If such things are not available, and luck again has a lot to do with such fortune, then numbers languish. Their are few magical resurrections, few spontaneous rises to the very top.

And, indeed, YouTube music popularity mirrors the yawning inequality Krueger writes about at the White House blog.

From DD blog, a few months back:

Google and its properties, along with social networking sites, have made an environment in which most value is accrued only by numbers of likes, views, inbound links and increasing [counts] which allegedly measure legitimate followers and friends. With web search, this has instated a winner-take-all digital ecology in which there is always strong incentive to cheat, to purchase rigging.

So I discovered that about two weeks after I’d written the linked piece an anonymous account had ripped “GE and Jeff (Taxavoidination)” and uploaded it under their account.

Subsequently, the user — going under the name Mega Grilled Ham & Cheese, rigged its views.

[Note: Mega Grilled Ham and Cheese’s YouTube account was purely engaged in testing how to artificially boost counts on YouTube. Eventually YouTube pinched him off but the point and techniques had been made.]

But back to Krueger’s piece.

In it he shows a chart in which two songs in a research test are shown, rated by download count.

Those tested were invited to download all songs available in the test for free and the songs ranked by popularity. Halfway through the test, and unknown to those tested, the counts presented to half those tested were flipped, that is — the most popular tune by downloads was given the count of the lowest, and vice versa.

Here is the chart…

Says Krueger:

In the alternative world that began with the true rankings reversed, the least popular song did surprisingly well, and, in fact, held onto its artificially bestowed top ranking. The most popular song rose in the rankings, so fundamental quality did have some effect. But, overall – across all 48 songs – the final ranking from the experiment that began with the reversed popularity ordering bore absolutely no relationship to the final ranking from the experiment that began with the true ordering. This demonstrates that the belief that a song is popular has a profound effect on its popularity, even if it wasn’t truly popular to start with.

A more general lesson is that, in addition to talent, arbitrary factors can lead to success or failure, like whether another band happens to release a more popular song than your band at the same time.

Quality does have an effect, he adds, but the perception of popularity in a winner-take-all society like ours is a big influence.

“The same forces of technology, scale, luck and the erosion of social pressures for fairness that are making rock ‘n roll more of a superstar industry also are causing the U.S. economy to become more of a winner-take-all affair,” continues the economic adviser.

The United States, he explains, has the highest inequality among advanced nations. And the divide is getting bigger. The US now also has the highest level of social immobility than all other advanced countries.

The American Dream is now a myth. It was fast fading into it when I was in grad school.

Eventually he gets around to saying, in a very gentlemanly way, that a lot of the inequality has to do with corporate America screwing over the middle class for the last three decades.

Krueger warns, gently, that there will be increasing consequences.

In returning the country to Great Gatsby/Roaring Twenties levels of disparity, the corporate market economy is creating increasing inefficiencies. These inefficiencies spring from research that seems to conclusively show that workers who perceive unfair treatment by corporations exact a toll in efficiency.


It is not hard to find reasons why the institutions and practices that long enforced norms of fairness in the labor market have been eroded. At a time when market forces were pushing an increasing share of before-tax income toward the wealthiest Americans, the previous administration cut taxes disproportionately for the well off.

Even earlier, in the 1980s when inequality was starting to take off, the nominal value of the minimum wage was left unchanged from 1981 to 1989, causing it to decline in the value by 27 percent after accounting for inflation. The minimum wage serves as an important anchor for other wages, and the whole wage scale was brought down by the decline in the minimum wage.

A lower minimum wage and regressive tax changes sent a clear signal that maintaining fairness was not a priority.

Just coincidentally (ahem), “Taxavoidination” was a rock and roll video on one of the causes of growing economic inequality, corporate tax avoidance, or “profit shifting” to countries which have built finance-sheltering systems for the purposes of tax evasion.

“Rock and Roll, Economics, and Rebuilding the Middle Class,” at the White House blog, is here.

The post title, a not-subtle dig at “Reaganomics” and “trickle down.”

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