Tuesday, October 16, 2007

The missing mechanism

The award of the Nobel Prize in Economics this year, to Messrs. Hurwicz, Maskin, and Myerson, is yet another opportunity to reflect on the curious economics of new music composition. The latest Nobel trio are specialists in Mechanism Design, which is all about agents with private information selling and bidding for goods, and how specific outcomes can be achieved by designing structures or rules through which each participant has an incentive to behave as the designer has intended.

Such mechanisms are seldom at play in Newmusicland. Here, a commissioner usually wants a work by one composer in particular and the amount of the commission is fixed by external circumstances and is usually non-negotiable. Typically, a patron will simply give a composer a call or meet over lunch (Russian Tea Room, anyone?) and say something like: "I've got 5000 Sheboygans burning a hole in my pocket, why don't ya' write me a nice little piece."

Imagine, however, designing an alternative environment for commissioning music incorporating more market-like mechanisms, specifically auctions. We want our design to bring composers and commissioners together with optimal matches of pieces and commision fees. Composers (or groups of composers, working as a consortium) could propose the composition of works with specific forces and dimensions, setting a (private) reserve selling price for the proposed work. (In an auction, a reserve price is the minimum price that must be bid for a sale to take place, or, conversely, the maximum price for a purchase to take place). Commissioners would approach the auction with their unique private lists of preferred composers, types of works, and commissioning budget, including their own reserve purchase prices. In the best scenario, a composer and a patron would eventually be matched in the auction at a price optimally somewhere in-between the two reserves.

The greatest advantage of such a marketplace, however, is simply that it would be one in which any potential composer or commissioner could enter and compete. The present commissioning environment is largely one of small networks of familiars and typically does not allow for an unestablished composer to enter, let alone compete on an even footing with an established composer, even though a patron may well be attracted to the idea that for the price of one piece at reserve price by the established figure, she or he might purchase an entire album of pieces by the less-established composer (or even a group of them).

I have written positively before about the eBay commissioning projects of composers Dennis Báthóry-Kitsz and Celeste Hutchins, but I've more-or-less convinced myself that they really won't fly until both the supply and demand sides of the market have reach a critical mass.


Matthew said...

I think the wild card in commissioning is the actual performers. Most large organizations don't commission out of their operating funds, but out of donated funds, which means that the people willing to spend money on commissioning have to have a preexisting relationship with the performance organization. And "Meet the Composer"-type commission grants require a preexisting relationship between performers and composer. In a way, the current set-up is rather like the middleman also functioning as either the provider or receiver of services, which is, to put it mildly, a funky dynamic.

I think that an auction-style clearinghouse would actually be a beneficial development—it would certainly benefit both smaller organizations and composers who aren't particularly interested in, say, orchestral or operatic projects. But that would require some extra-institutional body to function as the market—Meet The Composer, say, or the American Symphony Orchestra League (or whatever they're calling themselves lately) or Chamber Music America or what have you. And then the question becomes: is there a sufficient market there to make hosting such a market via membership fees economically viable, as it is for the NYSE or the CBOT? Or, alternatively, does the sponsor of such clearinghouses get a cut of the deal, as an auction house would?

It's a fascinating idea, really—but I'm with you: my gut tells me there's not enough of a critical mass to support it yet. So the next question: how do you develop a critical mass in that area?

Daniel Wolf said...

Matthew --

A "funky dynamic" is right; performers are as often associated with the commissionee as the commissioner. In many cases, a composer works through a partner performer to negotiate or even broker a commission.

I think Dennis and Celeste have it right in that the institutional presence has got to be one more like eBay than Meet the Composer. The specialized expertise in auctioning and settlement mechanisms is more essential than any specific knowledge about music and traditional commissions and it would probably be easier to adapt eBay to the unique hybrid of good and service that composes a commission than for MTC to learn auctioning. Moreover, it would probably be prohibitively expensive to organize such an auction framework from the ground up; ASOL cannot compete with eBay on fees.

Les said...

I agree with this and had a similar idea several weeks ago when I purchased the domain youCommission.com and then I went on holiday and moved and let the project slip from my mind.

Anyway, my plan was to set up the beta version for free and then charge a a flat fee for every listed item.

I want to partner with somebody bigger, like Meet the Composer, to get some legitimacy, but I need some working prototypes first, I think. In future version, I'd like to see this integrated with social networking sites. People don't consume music like they consume Great Art, so I think it's reasonable to treat commissioned music as a commodity similar to CDs or other recorded music. Folks can get very sentimental over pop tunes. I see commissioning not just as a business model, but as a way to encourage that kind of emotional connection with my music.

Heh, thanks for reminding me about this project! I'll go look for some open source auction software to use tomorrow.

In other news, I hope to be running a banner ad soon (for my own music only) on a non-music-related website.

The biggest obstacle I see for commissioning projects is not technical - it's not setting up a site and making it work - it's reaching a mass market audience. There may be a partnership out there which could help with marketing, but I can't think of who yet.

Herb Levy said...

As someone who has produced and presented a lot of new music concerts over the years (I'm starting up again after moving to Fort Worth Texas 8 years ago), let me state the general economic principle for new music:

you really CAN make a small fortune in new music whether as a composer, ensemble/performer, promoter/presenter, or any other function, but only if you start with a large fortune.