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Adopting the rights-based model: music multinationals and local music industries since 1945

Bakker, Gerben (2012) Adopting the rights-based model: music multinationals and local music industries since 1945. Economic History Working Papers, 170/12. Department of Economic History, London School of Economics and Political Science, London, UK.

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Identification Number: 170/12

Abstract

This paper identifies four economic tendencies that shaped the development of the international recorded music industry since 1945: the importance of endogenous sunk costs led to a quality race; the fact that marginal revenue equalled marginal profit led to extreme vertical integration; the quasi-public good character of musicits non-diminishability but partial excludabilityled to a sharply unequal income distribution among stars and the pioneering of new business models to transform consumer into producer surplus; and finally, the project-based character of music production led to decentralised agglomeration. What can be characterised as rights-based multinationals emerged as a response to these forces. They married extreme vertical integration and a portfolio of A&R labels having limited economies of scale and scope, with a global distribution and marketing machine. This paper tries to explain how they emerged and how they can explain increasing industrial concentration in the face of sharp growth of the market and of musical diversity.

Item Type: Monograph (Working Paper)
Official URL: http://www2.lse.ac.uk/economicHistory/workingPaper...
Additional Information: © 2012 The Author
Subjects: H Social Sciences > HC Economic History and Conditions
M Music and Books on Music > M Music
JEL classification: L - Industrial Organization > L8 - Industry Studies: Services > L82 - Entertainment; Media (Performing Arts, Visual Arts, Broadcasting, Publishing, etc.)
N - Economic History > N0 - General > N00 - General
Sets: Departments > Accounting
Departments > Economic History
Collections > Economists Online
Date Deposited: 23 Nov 2012 11:32
Last Modified: 23 Nov 2012 11:33
URI: http://eprints.lse.ac.uk/id/eprint/47507

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