Friday, 19 April 2013

With Zero Marginal Cost, Broadcasted Music becomes a Public Good !

Music is a very important commodity in our lives, particularly for those who love and live by music. Few however, have attempted to understand the economics of music. While people do bother about the corporate profitability of the companies that sponsor musical copyrights, not many are interests in analyzing the role of music as a public good, with its zero marginal cost on being broadcasted…
 
That music of Bollywood is a treasure can never be in doubt. What is of greater importance is the fact that when such music is broadcasted across the world on short wave and medium wave radio channels, it almost takes the form of a public good !

Economists describe certain goods as "public goods". These are goods with two characteristic features. First, they are not rivaled, meaning thereby that consumption of the public good by one person does not restrict the consumption of the same unit of public good by another. Second, they are not excludable, meaning thereby that no one can be excluded from enjoying them.

 
Examples of Public Goods

The classical example of a public good is national defense. When national army takes care of the threat of external invasions and provides security to the nation, everyone benefits. The enjoyment of this benefit by one person does not restrict others from enjoying the same benefit. Thus the benefit is not rivaled. Further, no one can be prevented from enjoying this benefit either, making it a benefit that cannot be excluded.

Popularity & the Value of Free Music
 
Music is usually not referred to as a public good. However, the Bollywood music, with its widespread popularity takes the shape of public good, when it is broadcasted across on short wave and medium wave radio channels that can be accessed almost everywhere in the world. Broadcasted music is there for all to enjoy. Its enjoyment by one does not prevent another from enjoying it too, and once broadcasted, people cannot be prevented from accessing it if they want to do so.

Bollywood Music as a Staple Entertainment
 
During the fifties to nineties, Bollywood music was the staple entertainment of radio channels in India, which were owned by the public authority, All India Radio. The channels used to be broadcasted on the short wave and medium wave, as FM channels were not made open to radio broadcasting those days.

From children to the oldies, anybody who heard radio during those days was familiar and attuned to Bollywood music. It is not that other forms of music were not broadcasted. There used to be the regular dose of classical, semi-classical and folk music of the non-filmi variety too. Such music must be having its own target audience, but that audience did not extend to a very large segment, like the case was with Bollywood music. Thus, even when classical and folk music was also available freely, its importance as a public good would be highly limited.

Public goods have zero marginal cost. The more people demand them, the more the society becomes better off. It is the high demand of Bollywood music that made it so valuable.

The only other good that is so valuable and has such zero marginal cost, is technology, which changed the face of human civilization during the last few centuries !!

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