

Baumol's Cost Disease: Why Artists are Always Poor - mnemonicsloth
http://en.wikipedia.org/wiki/Baumol%27s_cost_disease

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cousin_it
I don't see how the linked article supports your editorializing in the
headline.

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mnemonicsloth
It would have been more precise to say BCD explains why most artists have
trouble finding paying gigs. Wages for artists rise, their output stays more
or less the same [1], so the proportion of artists whose output is good enough
to justify the rising price shrinks.

The artists who aren't "good enough" (whatever that means), or have trouble
convincing buyers that they are "good enough", have to take other jobs, e.g.
as waitstaff, to make ends meet until their careers take off.

[1] Mass production has made some kinds of artists more productive, like
novelists and screenwriters, but the net effect is a similar winner-take-all
situation. Many unknowns compete to be the next Umberto Ecco or Dan Brown.

~~~
tlb
I don't think the BCD effect goes as far as you say. In a nutshell, the effect
is that because artists can make $X working day jobs, you have to pay O($X)
for them to perform. But this effect stops working before artists price
themselves out of the market, because artists actually like performing and
adjust their price to clear the market. This is why you can hire a really good
band to play at your party for only several hundred bucks.

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mnemonicsloth
Apparently I've got this wrong. Baumol's Cost Disease is a theory in dispute.
I just googled "Baumol's Cost Disease Arts" and found:

The first link is to the wp article. The second is an Amazon listing for a
book called _Baumol's Cost Disease: the Arts And Other Victims_.
([http://www.amazon.com/Baumols-Cost-Disease-Other-
Victims/dp/...](http://www.amazon.com/Baumols-Cost-Disease-Other-
Victims/dp/1858985080)). The author is apparently an economics professor at a
University in England. There's also an abstract from the Journal of Cultural
Economics. Baumol apparently developed his claim in the 1960s by looking at
the economics of the performing arts, and then generalized it to education and
health care.

<http://www.springerlink.com/content/k16p700536510057/>

At the top of the second page is a New Yorker article that certainly would
have made a better HN submission:

[http://www.newyorker.com/archive/2003/07/07/030707ta_talk_su...](http://www.newyorker.com/archive/2003/07/07/030707ta_talk_surowiecki)

But apparently, the jury is still out. Google also turns up links to skeptical
papers:

"Has Baumol's Cost Disease disappeared in the performing arts?"

[http://www.sciencedirect.com/science?_ob=ArticleURL&_udi...](http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6WWV-45N44TX-B&_user=10&_rdoc=1&_fmt=&_orig=search&_sort=d&_docanchor=&view=c&_searchStrId=1119612647&_rerunOrigin=google&_acct=C000050221&_version=1&_urlVersion=0&_userid=10&md5=24e19cf9babcb2a23cd7004955670d27)

and

"Why I do not Believe in the Cost Disease"

<http://www.springerlink.com/content/xuegr8k39y17t3nq/>

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Alex3917
The other problem is that the market can't properly value artists by
definition, because if you know what you're paying for then it isn't art.

edit: This is one of the arguments in Seth Godin's next book, which you can
get a review copy of here:

[http://sethgodin.typepad.com/seths_blog/2009/12/preview-
copy...](http://sethgodin.typepad.com/seths_blog/2009/12/preview-copy-of-my-
new-book.html)

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cageface
I'm not sure you can argue, as the article does, that musicians' productivity
hasn't increased either. In the age of digital distribution that same string
quartet can (potentially) generate far, far more revenue than their 18th
century counterparts.

~~~
anigbrowl
Hmm, I'm not so sure about that. The thing is there's nothing unique about
string quartets or orchestras. Prior to the availability of recorded music,
you couldn't listen to music without musicians, and for something complex like
a symphony or an opera that meant you had to go buy a seat.

But nowadays there are lots of orchestras, whereas the number of consumers who
can tell the difference between a good performance and an outstanding
performance is pretty low. This has been good for orchestras in places like
Eastern Europe, who in recent years have made money by playing music for
sample libraries, movies and videogames for much less money than it would cost
to book a similarly skilled orchestra in the USA.

On the other hand, as the number of recordings increase, consumers have less
and less need for new ones. In terms of pure sound quality recording
techniques have largely ceased to improve - the fidelity modern recording gear
far exceeds the resolving power of the human ear, so if you go out and buy a
great surround recording of a Beethoven symphony, that's pretty much as good
as it gets, technically. You won't get a better recording in 5 years; you can
only hope for a better performance.

But very few consumers care so much that that they want to accumulate multiple
different recordings of the same music, deriving pleasure for the individual
interpretations of different conductors and orchestras. Most of them will
either buy 'all the classic hits you'll ever need' (performed by some hack
orchestra, but hey, it's 99 tunes in a box), or else go for what most people
agree is the best (Pavarotti singing Pagliacci or whatever).

And the supply of new orchestral tunes, and the audience for them, is very
small...film soundtracks are probably the main source of orchestral raw
material, and the payments for that are generally a fixed fee.

One issue I do have with the Baumol thesis is that saying that wages of
musicians have risen is sort of meaningless, because so have prices for other
things. It's unclear to me whether the purchasing power of musicians has risen
relative to the cost of goods and services, or whether it has merely kept pace
with inflation...but I blame the summary nature of Wikipedia for that.

~~~
cageface
Elite string quartets like the Emerson or Takacs earn far more than the
average string quartet. Perhaps the market for their music is small compared
to that of pop artists but you can't argue that they're interchangeable.

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chrismealy
For extra credit square Baumol's Cost Disease with the Cambridge capital
controversy.

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pwnstigator
The connection is actually the inverse of "Baumol's Cost Disease". BCD
describes the increase in labor costs when the laborers have other options.

The problem for artists and writers is that they're concentrating on their
artistic work, rather than building a resume and career, just because the
artistic careers require so much energy, and most of what they end up doing is
not transferrable to mainstream work. So they have _fewer_ career options, and
those who patronize them (e.g. publishers, agents) are able to exploit their
weak bargaining position.

For the same reason, academics in the humanities are often paid less than
those in the sciences; science professors have other options. You can say that
BCD is making the science professors rich, or making the humanities professors
poor-- two sides of the same coin.

