Economics 101 with Professor Hoge
“It’s foolish to try to fight digital music,†exclaims Hoge, “it’s like horse carriages versus cars – quit trying to stop it!†Like Radiohead and Nine Inch Nails among others, Hoge has been experimenting with music downloads as a means of exposing his music to new listeners. He wants people to hear his music and sees digital music as a means to an end.
There are two types of listeners – casual and true, describes Hoge as he outlines his economic argument for a new digital music outlook. The casual listener will download tracks for free and never buy the album, although Hoge sees this as a marketing investment to build his audience. Digital music just makes it easier to get the music to them.
Contrast that with true fans that enjoy the music but also appreciate what goes into its creation. These fans will also download complimentary tracks but will still buy the album upon its release. They’ll buy t-shirts and attend shows. Do the math and it will eventually add up.
A compact disc retails for $15 or more yet costs approximately $6-7 to manufacture and market, describes Hoge. That provides a margin of about $8 of which the artist gets a measly $1.50. If you take that $1.50 and weigh it against the proceeds from concerts, t-shirts and other merchandise – items for which the artist retains most of the control and proceeds – and you get a new musical economics.
Hoge doesn’t worry much about cannibalizing his core fan base with limited complimentary downloads. True fans enjoy the music but appreciate what goes into its creation. They’ll buy the album upon release, attend shows and buy t-shirts and other merchandise. Do the math and it eventually adds up.
November 10th, 1996
November 10th is an important day to Hoge: it’s the day that he decided to become a full-time musician. He describes the time leading up to that day as a gradual build-up, working the day job less and less until he came to the revelation that music was his calling. At 7am on a Sunday morning he called his boss to say that he wouldn’t be coming in, that day or forever.
The road from there has been a long but rewarding one. “The music business is a battle of attrition,†he says. In a world caught up in the artificial glamour and immediate gratification of shows like American Idol, Hoge keeps himself grounded. “I’m better today than I was ten years ago and hope to be better in ten years than I am today,†he says.
About the author: Mild-mannered corporate executive by day, excitable Twangville denizen by night.