It still takes the same number of musicians to play “Hey Jude” now as it did for the Beatles

Found a blog referencing this piece I read last year when it came out.  This quote, in particular, summarizes Baumol’s Cost Disease:

Dr. Baumol and a colleague, William G. Bowen, described the cost disease in a 1966 book on the economics of the performing arts. Their point was that some sectors of the economy are burdened by an inexorable rise in labor costs because they tend not to benefit from increased efficiency. As an example, they used a Mozart string quintet composed in 1787: 223 years later, it still requires five musicians and the same amount of time to play.

Despite all sorts of technological advances, health care, like the performing arts, suffers from the cost disease. So do other public services like education, police work and garbage collection. While some industries enjoy sharp increases in productivity (cars can be built faster than ever, retail inventory can be managed better), endeavors like health care are as labor-intensive as ever.

This is no different for bands, as well, as Matthew Guerrieri explains:

A typical objection is to point out that many popular music groups still make money—a lot of money—from live performance, and that if classical or new music groups are running deficits, it’s their own fault. But Baumol and Bowen don’t say that live performance can’t ever be profitable—if you can convince people to fork over a high enough admission fee to pay the performers, good for you. As time goes by, though, that admission fee is going to have to get more and more expensive compared to the economy as a whole. People may still pay to see the Rolling Stones, but, adjusted for inflation, they’re paying a lot more for the privilege than they did thirty years ago.

Given the NEA data on audience decline in Stadium Rock type concerts, as well as the disparity of money earned by bands at big Music Festivals (i.e. headlining acts demand greater and greater payment with mid-to-low tiered acts getting next to nothing), it shouldn’t be surprising that the cost disease is no less applicable to the non-classical world.

About these ads

6 thoughts on “It still takes the same number of musicians to play “Hey Jude” now as it did for the Beatles

  1. Interesting. I never thought about how things like musical performance, health care, and education scaled relative to the general inflation of overall costs in the economy. Makes perfect sense, though. And of course, there’s very little you can do to stop it if you want to have actual professional-grade musicians involved in creating that experience.

  2. […] The figures (depending on who you ask and which studies you look at) show a steady decline from roughly 7o% or 90% of ticket revenue covering total expenses (back in 1937) to between 35% and 40% of ticket revenues covering expenses today (less for Opera and Ballet).  In other words, the performance income gap is increasing showing us that there are structural deficits built into what is practically a service industry which cannot have an increase in production to offset rising costs due to inflation.  This is known as the Baumol Cost Disease. […]

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s