December 22, 2023 Reading Time: 5 minutes

Music doesn’t have economic value. 

Now, that’s an eye-popping proposition if I ever saw one, so please allow me to flesh it out.

The rhythmical vibrations that move into my ear canal as I write this depend on a combination of incredible technical and economic features before they can successfully reach my brain. Set aside the two devices under my control that make the entire thing happen on my end (phone plus headphones), equally crucial is the streaming service (Spotify) and the hardware in their business that supply these sounds to me at the click of a button. (Let’s also ignore the background conditions of electricity supply and internet connectivity, and the general wealth and division of labor of my society that allows me to do this rather than eke out a subsistence farming a hostile Earth.) 

Without the producers and musicians who created this specific song, I wouldn’t have had anything to listen to and all these other adjacent products and services lose some of their appeal. Below all of this sits an economic relationship between all of us that permits this pleasant and concentration-enhancing consumption to take place. Modern global capitalism truly is astonishing.

There is plenty of economic value going on here, ultimately because I as a consumer value the state of affairs that comes from it enough to hand over other valuable resources to those who provide me with all of this. Hence I purchased the devices that let me do it, and pay the monthly fee to Spotify. In the background, they kick back some money to whoever maintains their servers as well as the artists who made the songs I’m consuming.

But the individual song that currently streams directly into my consciousness (“The Hymn of Nivoria,” by NIVORO) has no economic value, perfectly illustrated at the end of its three minutes and seven seconds: Another song (“Your Gravity,” by Somna) takes its place. After that, another and another and another until the playlist with all my favorite songs repeats — but even if it didn’t, I could keep going until I exhausted Spotify’s 100-million-plus songs (which would apparently take me some 300 years). I run out of patience, energy, or even life before I run out of songs. Ergo, the marginal song has no economic value for me. If I didn’t listen to this one, I’d listen to another. If, for whatever reason, “Hymn of Nivoria” had never been created or its creator had legally withheld it from Spotify’s catalog I would merely have consumed another, similar song. No big deal. 

Yes, not all songs are the same, and I do suffer some marginal loss from never having heard Hymn of Nivoria, just as humanity as a whole would be shortchanged had Mozart never been born. But not really: We would have just listened to and admired something else.

If marginal songs don’t have economic value, then their creators (i.e., musicians) are also disposable, a fact that is quickly dawning on the industry as music creation becomes yet another domain for large language models to conquer. Jeremy Engle for The New York Times asks the same thing: “Will AI Replace Pop Stars?” 

Economically speaking, the pennies the musicians earn per stream land somewhere between donations and rent-seeking. Put in the language of a modern conversation about music, rights, and art, shouldn’t inventors be compensated for their work? Aren’t creators entitled to be paid for their work?

As a matter of economic fact, no, they’re not. Since the retirement of the labor theory of value, labor doesn’t have economic value simply because it was expensed. Economic transactions and the property rights we use to guide them are intrinsically related to scarcity. We don’t price or transact oxygen, words, or the recipe for your grandmother’s meat stew — not because they don’t have value (they’re immensely valuable!), but because they don’t have scarcity or rivalrousness. One person’s use of them doesn’t prevent another person from using them. No human was made worse off because I temporarily hogged the six-something liters of air currently in my lungs. 

On some human level perhaps musicians “deserve” to be paid for it, but that’s a concept too philosophical for this conversation. Economically speaking, the difference between the musician ultimately creating a song and the maker of the phone, headphone and streaming service — all of which provide economic goods with rivalrousness and business moat, and thus get paid — is that the former’s work is endlessly reproducible. With limited world demand for music, the economic value of that creation, like oxygen, falls to zero. The same isn’t true for the earphones I’m using, since they can’t also be used by anybody else. 

Technology has competed away most of the surplus rent that musicians (but let’s be honest, mostly record labels) could acquire from distributing their work in the twentieth century. Instead, musicians have turned to gigs, sponsorships, ads, merchandise, and more recently innovative features like value-for-value streaming

From an economic perspective that comes as no surprise; if the marginal value of the music itself is rapidly approaching zero, the only way a creator of that music can earn an income is by selling ancillary goods and services. But those can only sell if you have the music in the first place. Music, much like books, are arduous and time-consuming business cards

The upside is that the very force that competes away rents in selling music (non-rivalrousness and non-excludability), adds to the value of these ancillary goods and services: When we consider concerts or merchandise the relationship flips entirely. Why can Queen Taylor sell an otherwise ordinary cream-colored hoodie for €84, when the allegedly profit-hungry and exploitative multinational corporation H&M can only achieve €22 for what — to my eyes — looks like pretty much the same thing?

Now, the extra, intangible fluff associated with Taylor magic works in her favor. Her Midas touch turns to gold everything from shirts and merchandise to sold-out concerts. A Taylor concert has economic value because her physical being is the ultimate rivalrous good: Since there’s only one of her, she’s the perfect monopoly. And her time is scarce: She is here right now, and the concert I might be consuming is a non-durable service that I can only have right now. Nobody else but the 72,000 other spectators, all paying handsomely for the privilege, can have this one.

A few years ago, Mike Munger wrote an excellent piece for AIER that stuck with me: “Why Do Basketball Players Make More Than Teachers?” Revealingly, they don’t: 

 The marginal player is the one who has a negative salary, the 40 year-old guy who pays for a membership at the YMCA or college gym to play basketball. Those folks are not being paid more than teachers, because there are tens of thousands of those foul-hacking, can’t shoot with a hand in their face, smaller than baller gym rats. Marginal basketball players are paying $65 a month to play.

The same goes for those who trade in the invaluable expression of human art and creativity that is music. If what you sell no longer has economic value, you must find other ways to monetize that work. Economics and technology help us understand why. 

Joakim Book

Joakim Book

Joakim Book is a writer, researcher and editor on all things money, finance and financial history. He holds a masters degree from the University of Oxford and has been a visiting scholar at the American Institute for Economic Research in 2018 and 2019.

His work has been featured in the Financial Times, FT Alphaville, Neue Zürcher Zeitung, Svenska Dagbladet, Zero Hedge, The Property Chronicle and many other outlets. He is a regular contributor and co-founder of the Swedish liberty site, and a frequent writer at CapXNotesOnLiberty, and

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