Rockonomics

Krueger, a labour economist who chaired the Council of Economic Advisers, applied economics to the music industry, using it as a setting where the mechanisms shaping the wider economy are visible in concentrated form. He worked from industry data, from a survey of musicians and from interviews with artists and executives.

The central mechanism is superstar economics, drawn from Sherwin Rosen. When a performance can be reproduced at near-zero cost and consumers prefer the best available performer to a slightly worse one, a tiny difference in quality produces an enormous difference in income. Krueger documents the resulting concentration: a very small share of artists earns most of the industry's income, and the concentration has increased as reproduction and distribution costs fell. He argues that the same mechanism now operates across the economy as technology extends the reach of top performers in many fields.

The pricing material is the most practical. Concert tickets have historically been priced below the market-clearing level, which transfers value to scalpers and to the secondary market, and Krueger examines why artists accept this, including the effect on fan goodwill and on merchandise and future tour sales. He covers bundling, price discrimination through tiered seating and packages, and the Bowie theory, named after David Bowie's observation that recorded music would become a loss leader for live performance, which is what happened.

Other chapters cover the economics of streaming and how royalties are divided, the role of luck and cumulative advantage in which songs succeed, and Krueger's estimates of what musicians actually earn.

The book was completed before Krueger's death in 2019 and is written for general readers, so the economics is presented without formal apparatus. The industry data on artist income is inherently incomplete, and the streaming economics have continued to shift since publication.