THE EXPERT WITNESS: The economics of music for attorneys, musicians, and others (part two)

By John F. Sase with
Gerard J. Senick, general editor
Julie G. Sase, copyeditor

Pleasure and Pain
“Human beings are motivated solely by the desire to gain pleasure and avoid pain ... Happiness is identical with pleasure, unhappiness with pain. Pleasure alone is intrinsically good (good in itself), and pain alone is intrinsically bad. We have a duty to promote the pleasure of every individual equally.”

—Jeremy Bentham, Nineteenth-Century English Economist and Polymath



Some Relevant Background

From the 1960s through the 1980s, I played the bass in a series of Rock n’ Roll, Rhythm and Blues, and Folk groups while matriculating my Undergrad and Masters levels of education. We performed well enough and often enough at college mixers, frat parties, and local bars to defray a sizeable chunk of our educational costs. Note: at that time, necessary Federal Student Loans carried an interest rate approximately equal to the inflation rate.

One of my favorite bands with which I performed included a group of accomplished students. Our lead singer and saxophonist went on to become the Public Defender in New Orleans. Our lead guitarist became an attorney in Metro Detroit and continues to practice. Our keyboardist earned his Doctorate in Computer Science and assisted the US Government and firms in the private sector. Our drummer remains a professional musician. I earned my Doctorate in Economics and continue to play a few instruments for religious services and community events.

Many attorneys are or have been musicians. In addition, a strong relationship exists between the practices of Law and Music. Therefore, we present our readers with the second installment of our series on the Economics of Music. We hope that it will be both enlightening and entertaining.

Music Is the Language of the Universe

In our preceding column, we considered the concept of Labor through the example of a professional musician. This professional sometimes performs as an employee. However, in most situations, s/he practices as an entrepreneur, to some degree. We also explored the concepts of Capital and Technology as the instruments that the musician plays and the audio equipment used for performance-support and recording.

In addition, we explained the idea of Land as the space in which one performs. In the remaining paragraphs, we considered the matter of musical compositions in the commercial world as a form of Intellectual Property.

Based upon this concept of Property and all of its Legal and Non-Legal rights, we followed the track of authors William M. Landes and Richard A. Posner in their book “The Economic Structure of Intellectual Property Law” (The Belknap Press of Harvard University, 2003). We concluded our piece by discussing the Cost of Production and the Expression of Music. This month, we address the economics of producing live performances and recorded copies. In doing so, we consider the example of a large concert that resulted in a million-dollar loss and in dozens of lawsuits (we will get to that example shortly). Referencing our opening quote by Jeremy Bentham, many involved in the Music Industry have experienced great pleasure while others have felt great pain.



Factors in the Cost of Producing Performances and Copies

Regarding several deterministic factors, variances exist between the number of live performances that an artist gives and the number of recorded copies that audiences consume. These factors include the following:

• The amount of enjoyment and pleasure that audiences gain from the created work  

• The price of the work concerning the admission to performances and the amounts that audiences spend for printed or recorded copies

• The amount of time/money that audiences possess and prefer to spend

• The existence of competitive works by other musicians capable of providing substitutes that offer comparable degrees of enjoyment and pleasure

• The price of all replacement works in comparison to one another, relative to the incomes of audience members

• Complementary goods, such as food and beverages sold at a live performance, or the hardware needed to listen to a recording afterward

• The prices of these complements relative to the cost of the created work, a comparable substitute work, and the other complementary items that an audience may desire and seek

These variables remain conditional upon one another. Therefore, let us consider them holistically.

Pleasure, or “It Is Always by Way of Pain [that] One Arrives at Pleasure” – The Marquis de Sade, French Nobleman, Politician, and Philosopher, in his novel “Justine, or The Misfortunes of Virtue” (J. V. Girouard, 1791)

(Continued) ...