Psychic benefit and the economics of content

Pitchfork has an interesting post by a musician complaining about the stingy payments made by companies like Pandora and Spotify, even though in Pandora’s case, at least, those payments are rendering the company borderline unsustainable. Here’s the gist:

When I started making records, the model of economic exchange was exceedingly simple: make something, price it for more than it costs to manufacture, and sell it if you can. It was industrial capitalism, on a 7″ scale. The model now seems closer to financial speculation. Pandora and Spotify are not selling goods; they are selling access, a piece of the action.

He’s right that the two services are in the access business, but I want to make a quick but important point about the economics of content. Put simply: if you do something that people generally like to do just for fun, you’re in a lot of trouble.

The economic term here is psychic cost/benefit, which is a sort of catch-all for non-monetary changes to your quality of life. If you’re in an industry where workers mostly receive psychic benefits from your work, and if the transaction costs for amateurs to get in on the game are low, that’s a bad combination. This is especially true in areas where amateurs are only a bit worse than professionals, including areas like music and writing. People like to play music, they like to write, and lots of amateurs are pretty darn good at it. Now that it costs very little to produce music and writing and share it, the price paid to professionals naturally decreases.

I’m keenly aware of this as I’m paid to write. I’d prefer to make a lucrative career out of it, but I don’t pretend that what’s best for my career is necessarily best for consumers of news and opinion. A world in which terrific commentary is produced for free (as I’m doing in the case of this post) might be better for readers than one where the content is marginally better but significantly more expensive.

So if you have a job where you reap psychic rewards, and if the barriers to entry are low, consider whether the internet might significantly lower the market rate for your labor. If it hasn’t already.