Nobody in economics lavished as much loving attention on the field of music as former White House chief economic advisor Alan Krueger, who died March 16 at age 58. For anyone who shares his fascination with the intersection of music and money, he left behind a gift in the form of a final book — “Rockonomics: A Backstage Tour of What the Music Industry Can Teach Us About Economics and Life,” which will be released by Penguin’s Currency Books imprint June 4.
“Rockonomics” is geared for a general interest audience. However, there’s so much in it about the nature and economics of being in a band — from sharing credit and royalties to merchandising and an entire chapter dedicated to the role of luck — that it should almost be required reading for any young aspiring musician.
Unusually for a book of this type, there are also extended interviews with musicians such as the Heartbreakers’ Steve Ferrone, Gloria Estefan and Dan Wilson (formerly of Semisonic), as well as plentiful insight from well-informed insiders such as Q Prime co-founder Cliff Burnstein or Paul McCartney associate John Eastman.
The title term was popularized when Krueger (who, among other roles, served as chair of the Council of Economic Advisors under President Obama from 2011-13) gave a speech at the Rock and Roll Hall of Fame almost six years ago, using “Rockonomics” to describe how the music economy intersects with and foreshadows behavior in the economy at large.
The forthcoming book spends a lot of time looking at what’s known as the Superstar Effect, where the top performers in a field receive a disproportionate share of the income, a term first broached by Sherwin Rosen in a 1981 paper. It’s since been found to prevail widely in fields ranging from CEOs to sports and entertainment stars, explaining the gulf between what Tom Cruise or Bruno Mars makes and say, Kiefer Sutherland.
The concern with a winner-takes-all economy is that the population gets further segmented into winners and losers with little in-between, winnowing the middle class and increasing inequality.
“It’s harder to make a living because the middle ground has been eroded,” Krueger said during a 2017 interview on the subjects animated in the book. “And music is the leading edge of what’s been happening to the economy overall. You see it clearly in the media, where news is now free.”
Krueger’s thoughts stand in contrast to the optimism of technology enthusiasts who believed freeing content from distribution constraints would enable a wider range of choice. This view, epitomized by author Kurt Anderson and his book, “The Long Tail,” has fallen short in practice.
While digital retailers do undoubtedly have more room to carry more varied music, people don’t have the energy or patience to winnow down their choices. (Psychologist Barry Schwartz calls this the Paradox of Choice, which suggests that an abundance of choice creates more anxiety than a more limited menu.)
“I think that is exactly right and that’s what’s happening in music. That’s why the older rock stars have done so extraordinary well,” Krueger said, citing their stature compared to newer artists. “I think that there’s been a flight to quality because there is so much confusion and so much choice.”
While Krueger was a longtime music fan, his passion for football was even greater. Indeed, it was a 2001 column for the New York Times on Super Bowl ticket prices that led to his mid-career fascination with music’s economics.
About a week after the column, the then-head of Pollstar, Gary Bongiovanni, asked him to be the keynote speaker at a concert consortium and offered him access to their concert database. It was the kind of offer a numbers alan nerd couldn’t resist.
“I totally went to town and I had a great time,” Krueger enthused. “I calculated Fisher Ideal Price Index to compare inflation for concert tickets to other goods. I calculated Lorenz Curves and Gini coefficients and the effect of Live Nation on the market. I gave a very erudite presentation to, like, 500 roadies and concert promoters… then afterward the VP of Ticketmaster said, ‘If there’s anything I can do to help you…’”
Krueger’s interest was not just clinical; he wanted to do what he could to help the industry, particularly in finding a more sustainable way of doing business. To this end he founded the Music Industry Research Association (MIRA), which seeks to bring together researchers, academics, and industry professionals to study the issues of the music industry.
“There is a lot of really interesting work that has been done in intellectual property, file-sharing and how that’s been affecting the market,” Krueger said. “Not only by me but other people. I think it is a great field for academic research. Students love it, and you have good data in some places from which you learn a lot.”
On Friday, the MIRA board released a statement saying that Dr. Krueger would be sorely missed, but “as a tribute to Alan, the Board hopes to fulfill his vision of MIRA, and in the coming weeks will be discussing plans to move forward.”
In arguing the Superstar Effect, Rockonomics notes that the top 1 percent of touring artists increased their percentage of total concert revenue from 26 percent in 1982 to 54 percent in 2003 and on up to 60 percent in 2017. It also notes the steep drop-off from the top five streaming artists, who in 2017 each garnered at least 2.6 billion streams (and as many as 6.1 billion), down to the 100th largest, Lost Tigres Nel Norte, with half a billion, and the less precipitous escalator down to the 2500st biggest streamer, Big Smo, with 25 million streams.
“The Superstar Effect is accelerating over the last decade or two,” Krueger said. “The middle class in the economy overall is withering, and I think that is one reason why we’re becoming so polarized in this country.”
Krueger didn’t offer any definitive solutions, though he believed the fate of musicians had a lot of insight for the rest of us, particularly with regard to the “gig economy.” He saw “hustling,” or working more than one job/angle/product, as becoming even more the norm, especially in music.
“The gig economy started in music,” Krueger pointed out. “The term comes from jazz. The idea is you have to be nimble; you have to do multiple things. That is going to be the secret for music. The artists are going to have to find how to use their music to market something else.”