Music is a very important commodity in our lives, particularly for those who love and live by music. Few however, have attempted to understand the economics of music. While people do bother about the corporate profitability of the companies that sponsor musical copyrights, not many are interested in analyzing the role of music as a public good, with its zero marginal cost on being broadcasted by free channels. Interestingly, the same economic principle lies behind the popularity of ‘You Tube’ and similar channels providing free access to music and videos. The implications of this principle can be very signficant.
Music as a Public Good
Bollywood music is a great human treasure, perhaps far more valuable than the costliest antiques and other pieces of art that are valued in millions of dollars apiece. Its value as a treasure arises from the entertainment and happiness it is able to bring to the lives of millions of listeners every day. It is difficult to find anything else that can even remotely compete with Bollywood music in making people feel better. For such a valuable ‘economic good’, there has been surprisingly little economic analysis. One would think that either economists do not appreciate music, or if they do, they are so mesmerized in its delightful notes that lose all sense of economics!
What is of greater importance in respect of economics of music, is the fact that when such music is broadcasted across the world on various radio channels, it almost takes the form of a public good !
"Public goods" is a term used by economists for goods with two characteristic features. First, they are not rivaled, meaning thereby that consumption of the public good by one person does not restrict the consumption of the same unit of public good by another. Second, they are not excludable, meaning thereby that no one can be excluded from enjoying them.
Examples of Public Goods
The classical example of a public good is national defense. When national army takes care of the threat of external invasions and provides security to the nation, everyone benefits. The enjoyment of this benefit by one person does not restrict others from enjoying the same benefit. Thus the benefit is not rivaled. Further, no one can be prevented from enjoying this benefit either, making it a benefit that cannot be excluded.
Public goods such as national defense, law and order and public infrastructure such as roads and dams constitute the primary functions of Government and justify its existence in economic terms. Adding music in the list of public goods can have interesting implications.
Popularity & the Value of Free Music
Music is usually not referred to as a public good. However, the Bollywood music, with its widespread popularity among millions of Indians spread across the Indian territories and beyond, takes the shape of public good, when it is broadcasted on various radio channels, particularly the medium wave and short wave channels, that can be accessed almost everywhere in the world. Broadcasted music is there for all to enjoy. Its enjoyment by one does not prevent another from enjoying it too, and once broadcasted, people cannot be prevented from accessing
it if.Broadcasted music, then does satisfy the criteria by which economists identify public goods.
Bollywood Music as a Staple Entertainment
During the fifties to nineties, Bollywood music was the staple entertainment of radio channels in India, which were owned by the public authority, All India Radio. The channels used to be broadcasted on the short wave and medium wave, as FM channels were not made open to radio broadcasting those days.
From young children to the old nannies, anybody who heard radio during those days was familiar and attuned to Bollywood music. It is not that other forms of music were not broadcasted. There used to be the regular dose of classical, semi-classical and folk music of the non-film variety too. Such music must be having its own target audience, but unlike Bollywood music, that audience did not extend to a very large segment. Thus, even when classical and folk music was also available freely, its importance as a public good would be highly limited.
Implications of Music as a Public Good
Public goods have zero marginal cost. In other words, supplying a public good to one more consumer does not cost anything. This does not mean that there are no costs whatsoever. They are, and could be very heavy, as happens in the case of national defense, but the additional costs of supply to one more is zero. When All India Radio paid for an amount to the copyright owner of the song, the cost was born and became a “sunk cost” – it is a cost paid that is gone and cannot be recovered back. After that no further costs are incurred for extending it to more consumers. Interestingly, once the copyright expires, as has already happened in respect of a variety of old songs, even the sunk cost becomes negligible.
The more people want such a public good and consume it, the more the society becomes better off. It is the high demand of Bollywood music that makes it so valuable as a public good. There is virtually no other comparable ‘economic good’ that is so valuable for the society as freely broadcasted music, and in particular, the Bollywood music. This is what makes it a real treasure, far more valuable, than the price that is accorded to it in the free market. The implications could be significant, for public goods must be preserved and distributed by Governments through appropriate policies and laws. There could even be a strong case for their promotion by public financing.
Interestingly, the only other good that is so valuable and has such zero marginal cost, is technology, which has changed the face of human civilization during the last few centuries !!
