Fair point:-) I think it has to be conceded though that internet advertising is more usually based on trying to direct people to spend money now than trying to either build brand loyalty or getting kids to get their parents to buy them stuff at a later date. Wasn't there recently a story about Google considering changing their ad program so that Google got revenue from click through purchases? This may imply that this is the primary aim of much internet advertising.
Why do these sites run? Presumably for the advertising revenue they generate. But kids at school are very unlikely to do any online shopping. So surely they won't make enough money to be worth it....
Any economist knows that financial markets are special because they suffer from more severe problems of asymmetric information that goods markets. The financial markets have come up with ways of dealing with these information asymmetries (for example intermediation in the form of banks, and the legal and accounting systems).
This sort of loan market will fall down due to the joint effects of moral hazard and averse selection.
Of course you are right, monopoly suppliers consider the elasticity of demand. But just use ceteris paribus. So long as performers are still offering the same number of tickets, then my argument is OK.
Whether they are or not is another matter. I didn't RTFA:-D
The economic (supply and demand) reasoning would actually be this:
Concert tickets generally sell at a price where supply ROUGHLY equals demand. Therefore to sell at a higher price, demand must be higher now than it used to be.
The reason: peeople have a music "budget". They can now get music for free so allocate their budget to concert tickets instead. Demand goes up and so do ticket prices.
Their reasoning is wrong: entertainers can't just charge more to make up for lost sales: they can only charge at a price at which the tickets will sell!
I think it's staggering how many of my frioends can afford £200 plus MP3 players. So it got me thinking: Where did the money come from? Well I figure that people have a fairly fixed budget for spending on music. What has happened is that rather than buy 20 or 30 CDs this year, they will spend their "music money" on the MP3 player, and download the music free.
From an economists point of view, we are witnessing a market failure. Economists would therefore predict that more MP3 players are sold than in a market equilibrium where people act legally, and there is an underproduction of music.
Unfortunately, there doesn't seem to be an easy answer. Usually, the answer to market failure is some sort of intervention. For example: 1. If the above was true IN ALL CASES, then it would seem reasonable for there to be a surcharge on MP3 players that went directly to music industry. However, currently this would penalise legitimate users unfaily. 2. Some way of stopping the illegal users. But in my mind, no attempt at doing so has worked, and I don't see one ever working.
Therefore the music industry needs to maximise profits given the constraint of the market imperfection. Personlly I think that they are doing a terrible job of this at the moment. I think that an immense benefit of the MP3 revolution is that one can be exposed to new artists a lot more easily, and this has yet to be exploited by the music industry. I think that the way in which music is consumed is changing - people want to have access to hundreds, or thousands of CDs easily rather than just a collection of 20 CDs, and be able to "try out" a new artists at very little cost. I now only would by a CD after listening to it once or twice to find out whether I like it. I don't trust artists to be consistent, and so I wouldn't spend £10 in the hope an album was good. I don't mind spending £10 on an album I know I will listen to and enjoy 10 or more times. It seems to me that the solution needs to be a model whereby you are charged for how much you listen to an album or artist, rather than for simply owning their music.
Slashdot Mirror
If this can work in the U.S., presumably it would work even better in the UK with similar internet usage and a much higher population density.
Fair point :-) I think it has to be conceded though that internet advertising is more usually based on trying to direct people to spend money now than trying to either build brand loyalty or getting kids to get their parents to buy them stuff at a later date. Wasn't there recently a story about Google considering changing their ad program so that Google got revenue from click through purchases? This may imply that this is the primary aim of much internet advertising.
Why do these sites run? Presumably for the advertising revenue they generate. But kids at school are very unlikely to do any online shopping. So surely they won't make enough money to be worth it....
Any economist knows that financial markets are special because they suffer from more severe problems of asymmetric information that goods markets. The financial markets have come up with ways of dealing with these information asymmetries (for example intermediation in the form of banks, and the legal and accounting systems). This sort of loan market will fall down due to the joint effects of moral hazard and averse selection.
Of course you are right, monopoly suppliers consider the elasticity of demand. But just use ceteris paribus. So long as performers are still offering the same number of tickets, then my argument is OK. Whether they are or not is another matter. I didn't RTFA :-D
The economic (supply and demand) reasoning would actually be this: Concert tickets generally sell at a price where supply ROUGHLY equals demand. Therefore to sell at a higher price, demand must be higher now than it used to be. The reason: peeople have a music "budget". They can now get music for free so allocate their budget to concert tickets instead. Demand goes up and so do ticket prices. Their reasoning is wrong: entertainers can't just charge more to make up for lost sales: they can only charge at a price at which the tickets will sell!
No it isn't, what you are referring to is the tyranny of the majority.
That means, I guess, in absolute terms there must be quite a lot of females, because there must be an absolute crapload of men playing women.
I think it's staggering how many of my frioends can afford £200 plus MP3 players. So it got me thinking: Where did the money come from? Well I figure that people have a fairly fixed budget for spending on music. What has happened is that rather than buy 20 or 30 CDs this year, they will spend their "music money" on the MP3 player, and download the music free.
From an economists point of view, we are witnessing a market failure. Economists would therefore predict that more MP3 players are sold than in a market equilibrium where people act legally, and there is an underproduction of music.
Unfortunately, there doesn't seem to be an easy answer. Usually, the answer to market failure is some sort of intervention. For example:
1. If the above was true IN ALL CASES, then it would seem reasonable for there to be a surcharge on MP3 players that went directly to music industry. However, currently this would penalise legitimate users unfaily.
2. Some way of stopping the illegal users. But in my mind, no attempt at doing so has worked, and I don't see one ever working.
Therefore the music industry needs to maximise profits given the constraint of the market imperfection. Personlly I think that they are doing a terrible job of this at the moment. I think that an immense benefit of the MP3 revolution is that one can be exposed to new artists a lot more easily, and this has yet to be exploited by the music industry. I think that the way in which music is consumed is changing - people want to have access to hundreds, or thousands of CDs easily rather than just a collection of 20 CDs, and be able to "try out" a new artists at very little cost. I now only would by a CD after listening to it once or twice to find out whether I like it. I don't trust artists to be consistent, and so I wouldn't spend £10 in the hope an album was good. I don't mind spending £10 on an album I know I will listen to and enjoy 10 or more times. It seems to me that the solution needs to be a model whereby you are charged for how much you listen to an album or artist, rather than for simply owning their music.