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Patreonomics: Public goods pedagogy for economics principles
Accepted Manuscript Title: Patreonomics: Public Goods Pedagogy for Economics Principles Authors: Franklin G. Mixon Jr., Carlos J. Asarta, Steven B. Caudill PII: DOI: Reference:
S1477-3880(16)30043-3 http://dx.doi.org/doi:10.1016/j.iree.2017.02.001 IREE 106
To appear in: Received date: Revised date: Accepted date:
20-7-2016 19-1-2017 2-2-2017
Please cite this article as: Mixon Jr., Franklin G., Asarta, Carlos J., Caudill, Steven B., Patreonomics: Public Goods Pedagogy for Economics Principles.International Review of Economics Education http://dx.doi.org/10.1016/j.iree.2017.02.001 This is a PDF file of an unedited manuscript that has been accepted for publication. As a service to our customers we are providing this early version of the manuscript. The manuscript will undergo copyediting, typesetting, and review of the resulting proof before it is published in its final form. Please note that during the production process errors may be discovered which could affect the content, and all legal disclaimers that apply to the journal pertain.
Patreonomics: Public Goods Pedagogy for Economics Principles by Franklin G. Mixon, Jr.a, Carlos J. Asartab and Steven B. Caudillc
a
Center for Economic Education, Columbus State University, Columbus, GA 31907 – USA. [email protected] b Corresponding author. 102 Alfred Lerner Hall, Department of Economics, University of Delaware, Newark, DE 19716 – USA. [email protected] c Department of Economics, Florida Atlantic University, Boca Raton, FL 33431 – USA. [email protected]
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Patreonomics: Public Goods Pedagogy for Economics Principles
Abstract. A principles of economics course presents educators with an opportunity to connect with large numbers of students from diverse educational backgrounds and majors. This diversity, however, often makes it challenging for instructors to identify pedagogical examples that are relatable to the majority of their students. In this study, we present a timely and engaging example of a public good: Patreon music creations. Patreon is an Internet music company that offers an outlet for musicians to share their YouTube-based music creations with their fans. We define and illustrate the characteristics that make these musical creations public goods, explaining also how fans willingly support these creations from a financial standpoint. This study provides educators with a unique real-world example that principles of economics students will find interesting, relatable, and educational.
Keywords: open source music; public goods; free riding; independent artists; Patreon; YouTube JEL Codes: H41; L17; L82; Z11; A22
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“Be a patron of the arts. Support and engage with the creators you love.” Patreon, 2016 “While I love making videos, what really fuels me is making music. Your support [through Patreon] will allow me the freedom to take the time to write songs, experiment, record, and ultimately be able to share new music with you . . .” Kina Grannis, 2016
1. INTRODUCTION Whether due to size limitations or to inflexible publication schedules, traditional economics texts often fail to provide timely and unique examples for pedagogy that involve the use of platforms providing both discovery and delivery. Fortunately, economic educators have done tremendous work in publishing features that provide engaging and compelling teaching tools for economics principles (and beyond). One branch of this literature takes an “economics of popular culture” approach, as described in foundational studies by Mateer (2004 and 2009), Sexton (2006), and Mateer and Li (2008). Recent applications of these studies include Mixon (2010), which describes how scenes from the World War II-based movies Conspiracy and Valkyrie can be used by instructors to invigorate classroom presentations of the modern theory of bureaucracy to public choice students, and Crisp and Mixon (2012), which offers various scenes from ESPN’s acclaimed 30FOR30 documentary Pony Excess, about systemic violation of NCAA rules during the 1980s by the football program at Southern Methodist University, to complement textbook and classroom presentation of cartel theory to industrial organization students. Mateer and Stephenson (2011 and 2015) provide an extensive template for using film clips to teach a lengthy list of public choice topics/principles, while Al-Bahrani and Patel (2015) catalogue how each entry in the ESPN 30FOR30 documentary series offers insights into the topics covered in the traditional economics principles course. Over the past several years, the “economics in popular culture” approach to instruction has encompassed television (Sexton, 2006; Ghent, Grant and Lessica, 2010; Luccasson and Thomas, 2010; Mateer, Ghent and Stone, 2011; Hall, 2014), music (Hall and Lawson, 2008; Lawson, Hall and Mateer,
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2008), literature (Watts, 2003; Ruder, 2010 and 2014; Hammock and Carden, 2014; Skwire, 2014; Vachris, 2014), comics (Lawson, 2006), video games (Kjar, 2009) and social media (Burgess, Mixon and Ressler, 2010; Mateer, 2011). The examples of popular culture drawn upon in these and other studies provide economic educators with a bounty of effective teaching tools for economics principles courses. It is in that spirit that the current study offers a unique real-world example for public goods pedagogy that principles students are certain to find both interesting and enlightening. Our story draws upon modern-day students’ affinity for the types of musical expressions (and other software applications) made available via digital download (Chiang and Assane, 2009; Ghose and Han, 2014) or through an open-access format by the popular Internet service known as YouTube. Our study also draws upon students’ familiarity with the growing pay-what-you-want pricing economy (Gneezy, Gneezy, Nelson and Brown, 2010; Gneezy, Gneezy, Reiner and Nelson, 2012). In the sections of the study that follow, we provide background information on an Internet company known as Patreon, which offers its musician-clients an outlet for connecting with fans and others who appreciate their YouTube-based musical creations. In doing so, those same fans are able to provide, as in the epigraph above, financial support for the YouTube-based music, and, thus, the musicians they favor.
2. PATREONS OF THE ARTS: AN ILLUSTRATION FOR PUBLIC GOODS PEDAGOGY Our public goods pedagogical illustration begins with Patreon, a San Francisco-based crowdfunding Internet site co-founded in 2013 by Jeff Conte and Sam Yam, in part, as an antidote to what they viewed as a disparity between the economic power held by popular YouTube content providers and that of the national product brands that employ YouTube pages as an avenue for advertising (Levitz, 2013; Rubenstein, 2014).1 The site’s mission is to facilitate compensation for artists (e.g., musicians,
1
As Levitz (2013) explains, Jack Conte had (in 2013) upwards of 160,000 subscribers to his YouTube page, who, among others, generated 1,000,000 monthly views of his uploaded music videos. Despite these staggering statistics, advertising revenue from Conte’s YouTube brand earned Conte only $50 per month (Levitz, 2013).
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authors, photographers) as a reward for their creations and to encourage future creativity (Levitz, 2013).2 Once produced, artistic creations (e.g., music videos, short stories, photography) funded through Patreon are “free for the world to see,” although Patreon creators often provide their patrons (also known as “patreons”) exclusive perquisites, such as live chats or behind-the-scenes content. Through Patreon, Conte’s own band, Pomplamoose, is currently earning more than $5,000 per music video (Rubenstein, 2014).
2.1 How Patreon Works: A Brief Overview and Vignette A brief overview of how Patreon works is perhaps best provided by examining the Patreon account, depicted in Figure 1, established by independent singer-songwriter Tyler Ward. As Ward explains on his Patreon page, he creates about three or four “pieces of art” per month, which include videos featuring both original songs and song covers, video logs and collaborations of various sorts with other artists.3 Each of Ward’s artistic creations is uploaded to his YouTube page, which viewers can access at no explicit charge.4 For potential patrons who are unfamiliar with Ward’s music, his Patreon page offers the following personal description of his dedication to music: “I put my heart and soul into these projects and although some creations appear to be quite simple, each one takes up a lot of time and energy. My goal is to create ART WITH PURPOSE. There is a lot of preparation, conversation, journaling, writing, recording, editing, mixing . . . AND . . . [t]hrow [in] an extra 10/30 hours due to my overly obsessive perfectionist nature . . . [that goes into each creation]. A[lso] . . . as much as I love creating, I’m not a fan o[f] finding the resources to do so [,] and that can make things a little difficult . . . BUT thanks to Patreon we have a solution! YOU are the solution! Without you, I’m back home, living in my dad's basement, folding mom’s laundry. S[o,] I need your support, your patronage, YOU, so that I can continue to share more art with you. When I’m inspired, I like to create, and you guys make it possible! You guys keep me doing what I love to do! I am SO fortunate to have you!”
As with other creators, Ward’s Patreon page provides potential patrons with patronage options usually referred to as tiers, with the lowest tier set at $1 per creation. By selecting this tier, a patron’s
2
As Rubenstein (2014) points out, unlike the crowdfunding company Kickstarter, where people donate toward a one-time project, Patreon provides an outlet for ongoing support for continued work. Stated differently, it is essentially crowdfunded patronage. In return for its services, Patreon collects five percent of all donations made through the site. 3 Ward’s Patreon page can be viewed at www.patreon.com/TylerWard?ty=h. 4 The creations on Ward’s YouTube page can be found by visiting www.youtube.com/TylerWardMusic.
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credit card is charged $1 per new artistic creation. Ward currently has 98 patrons offering this level of support, generating $294 to $392 in financial support per new creation.5 Next, Ward’s $2 per new artistic creation tier currently has 57 patrons, yielding an additional $342 to $456.6 Ward’s $3 per new artistic creation tier currently has 66 patrons, generating $594 to $792 of additional income, bringing his overall total thus far to well over $1,000 per new creation.7 The next three tiers – $6, $8, and $15 – currently have 87, 37, and 40 patrons, respectively.8 Ward’s Patreon page also offers several higher tiers – $25, $50, $75, $125, $250, $500, $1,000 – with memberships ranging in size from zero to six patrons.9 In all, Ward has 357 patrons who, collectively, provide $2,593 per new creation. This sum yields as much as $10,372 per month in financial support for Ward’s musical endeavors. Moreover, Ward’s per-new creation total of about $2,600 has, by now, exceeded his first two Patreon “milestone goals” of $1,000 and $2,000 per new creation. When the former was reached, each of his patrons received a Tyler Ward poster, and when the latter was achieved each of his patrons received a digital version of his self-produced extended play (EP) recording titled “Hello. Love. Heartbreak.”10 Ward’s next two currently-unmet milestone goals of $3,000 and $4,000 per creation will entitle patrons to, respectively, an invitation to the “Tyler Ward Family Dinner,” and a music video collaboration with the artist.
5
Each level of patronage comes with unique ancillary benefits. For example, the $1 level accompanies what Ward refers to as membership in the “Tyler Ward Music Family,” which entitles patrons to exclusive access to a “Patrons Only Feed” whereby Ward can communicate with his fans. 6 Ward’s Patreon page tells potential patrons that he is still developing the ancillary benefits for this tier, but that they do include membership in the “Tyler Ward Music Family.” 7 The ancillary benefits for this tier include those from the lower tiers plus access to Ward’s video diary, which, as he explains, offers a “candid and raw” look at him when he is “feeling inspired or emotional.” 8 The incremental ancillary benefit for the $6 tier is membership on the “Tyler Ward Board of Directors,” which entitles patrons to make suggestions as to which songs Tyler should cover in upcoming creations. Incremental ancillary benefits for the latter two of these three tiers are, respectively, access to unpublished Instagrams and personal mentions at the end of Ward’s forthcoming music videos. 9 The incremental ancillary benefits associated with these tiers include having the patron’s name used in an original song, a personal “thank you” via phone or e-mail, birthday cards, Christmas presents, musical collaborations, and a one-on-one coffee klatch. 10 As Ward’s Patreon page indicates, this recording was made during his high school years.
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A particularly compelling vignette through which the impact of Patreon is best illustrated involves singer-songwriter Kina Grannis. Grannis, a California-based artist who was born in 1985 and studied music at the University of Southern California, self-released two albums by the age of 21 – One More in the Attic and In Memory of the Singing Bridge. Shortly thereafter, she set up her own YouTube page and began producing and uploading music videos consisting of both original music and musical covers.11 That same year, Grannis entered and ultimately won the Doritos-sponsored “Crash the Super Bowl” music video contest with the entry of her original song, “Message from Your Heart.”12 As the winner, she was offered a recording contract with Interscope Records, which she rejected in order to pursue a career as an independent artist.13 Since the early successes detailed above, Grannis has self-released four additional original albums – Stairwells in 2010, Elements in 2014, and Jakarta and The Living Room Sessions. Vol. 2 in 2016 – and her music has appeared as soundtrack material for several television series, including Gossip Girl (The CW), Pretty Little Liars (ABC Family), General Hospital (ABC), Samurai Girl (ABC), The Real World (MTV) and Wallander (BBC).14 Grannis now has more than 1.1 million YouTube subscribers, and the 334 videos she has uploaded there have been viewed 187.6 million times. In addition, her website (kinagrannis.com) provides fans with the opportunity to purchase merchandise and albums, obtain information about concert tour dates, and access links to her YouTube videos and original song lyrics thumbnails.15
11
Grannis’ YouTube videos garnered more than 1 million views in their first year (2007) alone (Berg, 2008). In winning the contest, the music video for Grannis’ “Message from Your Heart” was played at halftime during Super Bowl XLII, which garnered a worldwide television audience of 90 million (Berg, 2008). Berg (2008) adds that after the airing of Super Bowl XLII, Grannis’ song was featured atop an iTunes banner also featuring Grammy Award-winner Missy Elliott. 13 As Berg (2010) explains, Interscope wanted Grannis to work with its writers in creating her first company album, while her YouTube fans, known collectively as “Kination,” and individually as “Kinerds,” wished to hear her original music. 14 Grannis’ third self-produced album, Stairwells, debuted at one hundred thirty ninth on Billboard’s Top 200, and rose to twenty fifth on iTunes within days of its release in 2010 (Berg, 2010). 15 Grannis’ first concert tour occurred during the fall of 2011 and included four stops in Europe and a finale in Los Angeles. The most recent occurred during September of 2015 and included six stops in southern Asia (www.kinagrannis.com). 12
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During her career, Grannis established a Patreon account in order to support her music endeavors. She currently has 346 patrons who provide her with $1,822 in financial support for each new creation she provides. This sum potentially provides, using Grannis’ monthly creation figures, around $7,300 in monthly income. This is quite remarkable, particularly given that Grannis’ Patreon page offers only six separate tiers of support, unlike Ward’s 13, with the highest tier being only $30. For comparison, Figure 2 provides patronage frequency distributions for both Ward and Grannis. As shown in that particular figure, Grannis’ larger patron count is more right skewed than Ward’s – with 86, 161, and 67 patrons falling, respectively, in the $1, $2, and $5 tiers.16
2.2 Patreon as an Avenue to Public Goods Provision: A Template for Pedagogy In constructing a pedagogical template for using the functioning of Patreon as a lesson in public goods provision for economics principles, we follow the presentation included in Asarta and Butters (2016: 239-241). These authors explain that a public good is, in terms of consumption, both non-rival and non-excludable. As they further explain (Asarta and Butters, 2016: 239), rivalry in consumption exists when, for the good or service in question, one person’s consumption reduces the quantity available for consumption by others. Music videos, such as those produced and uploaded to YouTube by artists like Grannis, are non-rival in consumption given that multiple users – even millions of users – can enjoy the benefits that come from “consuming” the videos without impeding the ability of other potential consumers to consume them.17 Additionally, the idea of excludability means that individuals can be prevented, or excluded, from consuming a particular good or service (Asarta and Butters, 2016: 239). Given YouTube’s business model, wherein the content is “free” to consumers (and paid for by advertisers), music videos provided by artists such as
16
These frequency distributions also serve to show that break points for Patreon’s tier-based system of patronage are somewhat customizable by the individual artist. 17 Of course, it is possible that millions of viewers attempting to “simultaneously” consume one of Grannis’ videos could, perhaps, present YouTube with stability and other Internet-related issues. Our simplification assumes that YouTube can handle such Internet traffic, otherwise students are cautioned to consider the analysis from the usual “up to the point of overcrowding” vantage point.
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Grannis are non-excludable. Thus, music videos and other creations uploaded to YouTube meet the textbook criteria for classification as public goods.18 The public goods criteria discussed above leads to a determination of the demand for the public good that differs from that of the more common private good. Given their non-rivalrous nature, once uploaded to YouTube, each of Grannis’ music videos is available for all potential consumers to enjoy. As stated earlier, YouTube’s business model leads to non-excludability. Thus, to arrive at a demand curve for Grannis’ next music video, the price that each potential consumer (fan) is willing to pay is added to those of the other potential consumers (fans), thus representing the collective dollar amount that all potential consumers would, as a group, be willing to pay for Grannis’ next music video. This is where Patreon enters our illustration, as it provides these potential consumers with a mechanism for translating their willingness to pay for the next Grannis music video into an actual tier-based system of patronage. A representation of this process is depicted in Figure 3. According to McConnell, Brue, and Flynn (2015: 92) the demand for a public good is somewhat unusual because it is calculated by summing the prices individuals are willing to pay for each potential unit of a public good. This “vertical summation” differs from the traditional “horizontal summation” used to calculate the collective demand for private goods. To illustrate this point, Figure 3 assumes only two patrons for a hypothetical singer-songwriter’s creations. One of these patrons opts for the P1 tier of patronage, while the other patron opts for the higher P2 tier. Together their willingness to pay, P1 + P2, translates into a particular level of support for the hypothetical musician. This level (i.e., P1 + P2) is shown by adding the aforementioned P1 chosen by the first patron to the tier of support, P2, chosen by the second patron. In this way, the collective willingness to pay for the artist’s next 18
Prior reference to the ancillary benefits provided to patrons (depending upon tier level), which may be of debatable value to many (most) potential consumers (fans) and, thus, would not affect our analysis, can be used to support a more detailed instructor-led discussion about how public goods can become club goods. In this case, making the non-excludable good (i.e., music video) excludible in some way, as indicated by the ancillary benefits, corrects the under-provision (and inefficiency) of markets for public goods.
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music video is the vertical sum of the two patrons’ willingness to pay curves.19 In terms of our vignette involving Patreon and Kina Grannis, the P1 and P2 in Figure 3 represent the many tiers available to Grannis’ fans, while their sum (P1 + P2) represents Grannis’ current overall level of patronage per new creation of about $7,300. The non-excludability aspect of the music videos’ availability via YouTube creates an incentive on the part of potential fans of Grannis to free ride, or to consume her YouTube videos without providing any compensation, or financial benefit/incentive to Grannis. The potential of such free-riding behavior would suggest that patronage through a facilitator such as Patreon would yield little in the way of financial support for artists/creators. In more traditional examples of public goods, such as national defense, this aspect of the story typically leads to a discussion about government provision, given that private providers, being motivated by profits, would be unwilling to provide the public good. Clearly, however, this is not the case when it comes to music video creations by Grannis and other Patreon artists. As shown above, Patreon’s artists are currently earning as much as $10,000 per month making their music videos available to fans through the openaccess platform provided by YouTube. As such, our pedagogical template provides an avenue for the instructor to initiate a discussion about the potential, at least in some cases, for private provision of public goods. Instructors could use Patreon in a variety of ways. For example, Patreon can be used as a case study to illustrate and discuss public goods, becoming the vehicle by which a chunk of reality is brought into the classroom (Christensen, 1981). Another application involves the use of Patreon as a homework assignment where, after having received in-class instruction, students are required to visit the website, explain the characteristics that make these musical creations public goods, and
19
The dots on the willingness to pay curves in Figure 3 are emphasized in order to facilitate instructor presentation indicating that the individual curves represented there are plots of each patron’s “willingness to pay” for the Patreon artist’s marginal (next) video.
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even attempt to draw individual and collective “willingness to pay” curves.20 Then, students would submit their homework assignments to the instructor and proceed to have an in-class discussion on free-riding. This homework/discussion approach could also be used to facilitate learning in blended or hybrid environments, which by definition reduce the amount of in-class seat time by combining inclass and online learning (Parsad, Lewis, and Tice, 2008). After receiving basic online instruction on the characteristics associated with public goods, students would come to class, join groups, and work on the links that make Patreon music creations similar to public goods.
These group
discussions can be followed by a class discussion on free-riding and a further presentation by the instructor of how the optimal amount of a public good is determined. Ultimately, and regardless of the pedagogical approach followed by instructors, we believe that Patreon is a relevant and relatable example that will help students grasp the non-rival and non-excludable characteristics associated with public goods, as well as the somewhat unusual concept of demand for those types of goods.
3. CONCLUDING COMMENTS Instructors are always looking for examples that they can use in their classrooms to illustrate economics principles and engage their students. Many educators rely heavily on the examples presented in traditional textbooks, which are often outdated due to the inflexible publication schedules followed by most publishers. Additionally, given that principles of economics courses are offered to students coming from a variety of educational backgrounds and majors, finding examples that are relatable to most students is challenging. Fortunately, several economic educators, and some new digital offerings in principles of economics have provided a variety of timely, engaging,
20
To allay concerns that instructors may have regarding recognition of the artists students will encounter while perusing Patreon’s webpages, it is worth noting that not only do Ward and Grannis collectively have more than three million YouTube subscribers, they have both toured domestically and internationally on multiple occasions. Additionally, Pentatonix, a music band students will likely encounter while perusing Patreon, has almost 13 million YouTube subscribers, and they recently performed during NBC’s New Year’s Eve Special hosted by Carson Daly, the host of the widely-viewed NBC talent show, The Voice. These are but a few of the recognizable artists students will find on Patreon.
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and relatable examples (i.e., television, music, and social media) that can be used to illustrate economic principles and spark interest amongst most students. In this study, we contribute to the literature by providing a real-world example of a public good that is grounded in the music industry. We focus our attention on Patreon, an Internet music company that connects artists with potential patrons willing to financially support their YouTubebased musical creations. Once created, the music is made available worldwide and in an open-access format. As such, these creations are both non-rival and non-excludable since the “consumption” of the music by one individual does not reduce the quantity available for consumption by others, and consumers cannot be excluded from enjoying the artists’ musical creations via a mechanism of prices. Ultimately, our hope is that the illustration presented in this study provides instructors with an additional tool they can use in the classroom to further solidify the presentation of public goods.
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Parsad, B., Lewis, L., and P. Tice (2008). “Distance education at degree-granting postsecondary institutions: 2006–07.” National Center for Education Statistics, U.S. Department of Education, http://nces.ed.gov/pubs2009/2009044.pdf
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Figure 1. Tyler Ward’s Patreon Page
Figure 2. Patreon Patronage Frequency Distributions: Ward vs. Grannis 180 160 140 120 100 80 60 40 20 0
Ward
Grannis
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Figure 3. Online Music Patronage: A Graphical Model P($)
P1 + P 2
●
P2
●
P1
●
Collective willingness to pay (Dc) Patron 2’s willingness to pay Patron 1’s willingness to pay
Q1
Quantity (of artist’s musical creations)
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To appear in: Received date: Revised date: Accepted date:
20-7-2016 19-1-2017 2-2-2017
Please cite this article as: Mixon Jr., Franklin G., Asarta, Carlos J., Caudill, Steven B., Patreonomics: Public Goods Pedagogy for Economics Principles.International Review of Economics Education http://dx.doi.org/10.1016/j.iree.2017.02.001 This is a PDF file of an unedited manuscript that has been accepted for publication. As a service to our customers we are providing this early version of the manuscript. The manuscript will undergo copyediting, typesetting, and review of the resulting proof before it is published in its final form. Please note that during the production process errors may be discovered which could affect the content, and all legal disclaimers that apply to the journal pertain.
Patreonomics: Public Goods Pedagogy for Economics Principles by Franklin G. Mixon, Jr.a, Carlos J. Asartab and Steven B. Caudillc
a
Center for Economic Education, Columbus State University, Columbus, GA 31907 – USA. [email protected] b Corresponding author. 102 Alfred Lerner Hall, Department of Economics, University of Delaware, Newark, DE 19716 – USA. [email protected] c Department of Economics, Florida Atlantic University, Boca Raton, FL 33431 – USA. [email protected]
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Patreonomics: Public Goods Pedagogy for Economics Principles
Abstract. A principles of economics course presents educators with an opportunity to connect with large numbers of students from diverse educational backgrounds and majors. This diversity, however, often makes it challenging for instructors to identify pedagogical examples that are relatable to the majority of their students. In this study, we present a timely and engaging example of a public good: Patreon music creations. Patreon is an Internet music company that offers an outlet for musicians to share their YouTube-based music creations with their fans. We define and illustrate the characteristics that make these musical creations public goods, explaining also how fans willingly support these creations from a financial standpoint. This study provides educators with a unique real-world example that principles of economics students will find interesting, relatable, and educational.
Keywords: open source music; public goods; free riding; independent artists; Patreon; YouTube JEL Codes: H41; L17; L82; Z11; A22
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“Be a patron of the arts. Support and engage with the creators you love.” Patreon, 2016 “While I love making videos, what really fuels me is making music. Your support [through Patreon] will allow me the freedom to take the time to write songs, experiment, record, and ultimately be able to share new music with you . . .” Kina Grannis, 2016
1. INTRODUCTION Whether due to size limitations or to inflexible publication schedules, traditional economics texts often fail to provide timely and unique examples for pedagogy that involve the use of platforms providing both discovery and delivery. Fortunately, economic educators have done tremendous work in publishing features that provide engaging and compelling teaching tools for economics principles (and beyond). One branch of this literature takes an “economics of popular culture” approach, as described in foundational studies by Mateer (2004 and 2009), Sexton (2006), and Mateer and Li (2008). Recent applications of these studies include Mixon (2010), which describes how scenes from the World War II-based movies Conspiracy and Valkyrie can be used by instructors to invigorate classroom presentations of the modern theory of bureaucracy to public choice students, and Crisp and Mixon (2012), which offers various scenes from ESPN’s acclaimed 30FOR30 documentary Pony Excess, about systemic violation of NCAA rules during the 1980s by the football program at Southern Methodist University, to complement textbook and classroom presentation of cartel theory to industrial organization students. Mateer and Stephenson (2011 and 2015) provide an extensive template for using film clips to teach a lengthy list of public choice topics/principles, while Al-Bahrani and Patel (2015) catalogue how each entry in the ESPN 30FOR30 documentary series offers insights into the topics covered in the traditional economics principles course. Over the past several years, the “economics in popular culture” approach to instruction has encompassed television (Sexton, 2006; Ghent, Grant and Lessica, 2010; Luccasson and Thomas, 2010; Mateer, Ghent and Stone, 2011; Hall, 2014), music (Hall and Lawson, 2008; Lawson, Hall and Mateer,
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2008), literature (Watts, 2003; Ruder, 2010 and 2014; Hammock and Carden, 2014; Skwire, 2014; Vachris, 2014), comics (Lawson, 2006), video games (Kjar, 2009) and social media (Burgess, Mixon and Ressler, 2010; Mateer, 2011). The examples of popular culture drawn upon in these and other studies provide economic educators with a bounty of effective teaching tools for economics principles courses. It is in that spirit that the current study offers a unique real-world example for public goods pedagogy that principles students are certain to find both interesting and enlightening. Our story draws upon modern-day students’ affinity for the types of musical expressions (and other software applications) made available via digital download (Chiang and Assane, 2009; Ghose and Han, 2014) or through an open-access format by the popular Internet service known as YouTube. Our study also draws upon students’ familiarity with the growing pay-what-you-want pricing economy (Gneezy, Gneezy, Nelson and Brown, 2010; Gneezy, Gneezy, Reiner and Nelson, 2012). In the sections of the study that follow, we provide background information on an Internet company known as Patreon, which offers its musician-clients an outlet for connecting with fans and others who appreciate their YouTube-based musical creations. In doing so, those same fans are able to provide, as in the epigraph above, financial support for the YouTube-based music, and, thus, the musicians they favor.
2. PATREONS OF THE ARTS: AN ILLUSTRATION FOR PUBLIC GOODS PEDAGOGY Our public goods pedagogical illustration begins with Patreon, a San Francisco-based crowdfunding Internet site co-founded in 2013 by Jeff Conte and Sam Yam, in part, as an antidote to what they viewed as a disparity between the economic power held by popular YouTube content providers and that of the national product brands that employ YouTube pages as an avenue for advertising (Levitz, 2013; Rubenstein, 2014).1 The site’s mission is to facilitate compensation for artists (e.g., musicians,
1
As Levitz (2013) explains, Jack Conte had (in 2013) upwards of 160,000 subscribers to his YouTube page, who, among others, generated 1,000,000 monthly views of his uploaded music videos. Despite these staggering statistics, advertising revenue from Conte’s YouTube brand earned Conte only $50 per month (Levitz, 2013).
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authors, photographers) as a reward for their creations and to encourage future creativity (Levitz, 2013).2 Once produced, artistic creations (e.g., music videos, short stories, photography) funded through Patreon are “free for the world to see,” although Patreon creators often provide their patrons (also known as “patreons”) exclusive perquisites, such as live chats or behind-the-scenes content. Through Patreon, Conte’s own band, Pomplamoose, is currently earning more than $5,000 per music video (Rubenstein, 2014).
2.1 How Patreon Works: A Brief Overview and Vignette A brief overview of how Patreon works is perhaps best provided by examining the Patreon account, depicted in Figure 1, established by independent singer-songwriter Tyler Ward. As Ward explains on his Patreon page, he creates about three or four “pieces of art” per month, which include videos featuring both original songs and song covers, video logs and collaborations of various sorts with other artists.3 Each of Ward’s artistic creations is uploaded to his YouTube page, which viewers can access at no explicit charge.4 For potential patrons who are unfamiliar with Ward’s music, his Patreon page offers the following personal description of his dedication to music: “I put my heart and soul into these projects and although some creations appear to be quite simple, each one takes up a lot of time and energy. My goal is to create ART WITH PURPOSE. There is a lot of preparation, conversation, journaling, writing, recording, editing, mixing . . . AND . . . [t]hrow [in] an extra 10/30 hours due to my overly obsessive perfectionist nature . . . [that goes into each creation]. A[lso] . . . as much as I love creating, I’m not a fan o[f] finding the resources to do so [,] and that can make things a little difficult . . . BUT thanks to Patreon we have a solution! YOU are the solution! Without you, I’m back home, living in my dad's basement, folding mom’s laundry. S[o,] I need your support, your patronage, YOU, so that I can continue to share more art with you. When I’m inspired, I like to create, and you guys make it possible! You guys keep me doing what I love to do! I am SO fortunate to have you!”
As with other creators, Ward’s Patreon page provides potential patrons with patronage options usually referred to as tiers, with the lowest tier set at $1 per creation. By selecting this tier, a patron’s
2
As Rubenstein (2014) points out, unlike the crowdfunding company Kickstarter, where people donate toward a one-time project, Patreon provides an outlet for ongoing support for continued work. Stated differently, it is essentially crowdfunded patronage. In return for its services, Patreon collects five percent of all donations made through the site. 3 Ward’s Patreon page can be viewed at www.patreon.com/TylerWard?ty=h. 4 The creations on Ward’s YouTube page can be found by visiting www.youtube.com/TylerWardMusic.
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credit card is charged $1 per new artistic creation. Ward currently has 98 patrons offering this level of support, generating $294 to $392 in financial support per new creation.5 Next, Ward’s $2 per new artistic creation tier currently has 57 patrons, yielding an additional $342 to $456.6 Ward’s $3 per new artistic creation tier currently has 66 patrons, generating $594 to $792 of additional income, bringing his overall total thus far to well over $1,000 per new creation.7 The next three tiers – $6, $8, and $15 – currently have 87, 37, and 40 patrons, respectively.8 Ward’s Patreon page also offers several higher tiers – $25, $50, $75, $125, $250, $500, $1,000 – with memberships ranging in size from zero to six patrons.9 In all, Ward has 357 patrons who, collectively, provide $2,593 per new creation. This sum yields as much as $10,372 per month in financial support for Ward’s musical endeavors. Moreover, Ward’s per-new creation total of about $2,600 has, by now, exceeded his first two Patreon “milestone goals” of $1,000 and $2,000 per new creation. When the former was reached, each of his patrons received a Tyler Ward poster, and when the latter was achieved each of his patrons received a digital version of his self-produced extended play (EP) recording titled “Hello. Love. Heartbreak.”10 Ward’s next two currently-unmet milestone goals of $3,000 and $4,000 per creation will entitle patrons to, respectively, an invitation to the “Tyler Ward Family Dinner,” and a music video collaboration with the artist.
5
Each level of patronage comes with unique ancillary benefits. For example, the $1 level accompanies what Ward refers to as membership in the “Tyler Ward Music Family,” which entitles patrons to exclusive access to a “Patrons Only Feed” whereby Ward can communicate with his fans. 6 Ward’s Patreon page tells potential patrons that he is still developing the ancillary benefits for this tier, but that they do include membership in the “Tyler Ward Music Family.” 7 The ancillary benefits for this tier include those from the lower tiers plus access to Ward’s video diary, which, as he explains, offers a “candid and raw” look at him when he is “feeling inspired or emotional.” 8 The incremental ancillary benefit for the $6 tier is membership on the “Tyler Ward Board of Directors,” which entitles patrons to make suggestions as to which songs Tyler should cover in upcoming creations. Incremental ancillary benefits for the latter two of these three tiers are, respectively, access to unpublished Instagrams and personal mentions at the end of Ward’s forthcoming music videos. 9 The incremental ancillary benefits associated with these tiers include having the patron’s name used in an original song, a personal “thank you” via phone or e-mail, birthday cards, Christmas presents, musical collaborations, and a one-on-one coffee klatch. 10 As Ward’s Patreon page indicates, this recording was made during his high school years.
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A particularly compelling vignette through which the impact of Patreon is best illustrated involves singer-songwriter Kina Grannis. Grannis, a California-based artist who was born in 1985 and studied music at the University of Southern California, self-released two albums by the age of 21 – One More in the Attic and In Memory of the Singing Bridge. Shortly thereafter, she set up her own YouTube page and began producing and uploading music videos consisting of both original music and musical covers.11 That same year, Grannis entered and ultimately won the Doritos-sponsored “Crash the Super Bowl” music video contest with the entry of her original song, “Message from Your Heart.”12 As the winner, she was offered a recording contract with Interscope Records, which she rejected in order to pursue a career as an independent artist.13 Since the early successes detailed above, Grannis has self-released four additional original albums – Stairwells in 2010, Elements in 2014, and Jakarta and The Living Room Sessions. Vol. 2 in 2016 – and her music has appeared as soundtrack material for several television series, including Gossip Girl (The CW), Pretty Little Liars (ABC Family), General Hospital (ABC), Samurai Girl (ABC), The Real World (MTV) and Wallander (BBC).14 Grannis now has more than 1.1 million YouTube subscribers, and the 334 videos she has uploaded there have been viewed 187.6 million times. In addition, her website (kinagrannis.com) provides fans with the opportunity to purchase merchandise and albums, obtain information about concert tour dates, and access links to her YouTube videos and original song lyrics thumbnails.15
11
Grannis’ YouTube videos garnered more than 1 million views in their first year (2007) alone (Berg, 2008). In winning the contest, the music video for Grannis’ “Message from Your Heart” was played at halftime during Super Bowl XLII, which garnered a worldwide television audience of 90 million (Berg, 2008). Berg (2008) adds that after the airing of Super Bowl XLII, Grannis’ song was featured atop an iTunes banner also featuring Grammy Award-winner Missy Elliott. 13 As Berg (2010) explains, Interscope wanted Grannis to work with its writers in creating her first company album, while her YouTube fans, known collectively as “Kination,” and individually as “Kinerds,” wished to hear her original music. 14 Grannis’ third self-produced album, Stairwells, debuted at one hundred thirty ninth on Billboard’s Top 200, and rose to twenty fifth on iTunes within days of its release in 2010 (Berg, 2010). 15 Grannis’ first concert tour occurred during the fall of 2011 and included four stops in Europe and a finale in Los Angeles. The most recent occurred during September of 2015 and included six stops in southern Asia (www.kinagrannis.com). 12
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During her career, Grannis established a Patreon account in order to support her music endeavors. She currently has 346 patrons who provide her with $1,822 in financial support for each new creation she provides. This sum potentially provides, using Grannis’ monthly creation figures, around $7,300 in monthly income. This is quite remarkable, particularly given that Grannis’ Patreon page offers only six separate tiers of support, unlike Ward’s 13, with the highest tier being only $30. For comparison, Figure 2 provides patronage frequency distributions for both Ward and Grannis. As shown in that particular figure, Grannis’ larger patron count is more right skewed than Ward’s – with 86, 161, and 67 patrons falling, respectively, in the $1, $2, and $5 tiers.16
2.2 Patreon as an Avenue to Public Goods Provision: A Template for Pedagogy In constructing a pedagogical template for using the functioning of Patreon as a lesson in public goods provision for economics principles, we follow the presentation included in Asarta and Butters (2016: 239-241). These authors explain that a public good is, in terms of consumption, both non-rival and non-excludable. As they further explain (Asarta and Butters, 2016: 239), rivalry in consumption exists when, for the good or service in question, one person’s consumption reduces the quantity available for consumption by others. Music videos, such as those produced and uploaded to YouTube by artists like Grannis, are non-rival in consumption given that multiple users – even millions of users – can enjoy the benefits that come from “consuming” the videos without impeding the ability of other potential consumers to consume them.17 Additionally, the idea of excludability means that individuals can be prevented, or excluded, from consuming a particular good or service (Asarta and Butters, 2016: 239). Given YouTube’s business model, wherein the content is “free” to consumers (and paid for by advertisers), music videos provided by artists such as
16
These frequency distributions also serve to show that break points for Patreon’s tier-based system of patronage are somewhat customizable by the individual artist. 17 Of course, it is possible that millions of viewers attempting to “simultaneously” consume one of Grannis’ videos could, perhaps, present YouTube with stability and other Internet-related issues. Our simplification assumes that YouTube can handle such Internet traffic, otherwise students are cautioned to consider the analysis from the usual “up to the point of overcrowding” vantage point.
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Grannis are non-excludable. Thus, music videos and other creations uploaded to YouTube meet the textbook criteria for classification as public goods.18 The public goods criteria discussed above leads to a determination of the demand for the public good that differs from that of the more common private good. Given their non-rivalrous nature, once uploaded to YouTube, each of Grannis’ music videos is available for all potential consumers to enjoy. As stated earlier, YouTube’s business model leads to non-excludability. Thus, to arrive at a demand curve for Grannis’ next music video, the price that each potential consumer (fan) is willing to pay is added to those of the other potential consumers (fans), thus representing the collective dollar amount that all potential consumers would, as a group, be willing to pay for Grannis’ next music video. This is where Patreon enters our illustration, as it provides these potential consumers with a mechanism for translating their willingness to pay for the next Grannis music video into an actual tier-based system of patronage. A representation of this process is depicted in Figure 3. According to McConnell, Brue, and Flynn (2015: 92) the demand for a public good is somewhat unusual because it is calculated by summing the prices individuals are willing to pay for each potential unit of a public good. This “vertical summation” differs from the traditional “horizontal summation” used to calculate the collective demand for private goods. To illustrate this point, Figure 3 assumes only two patrons for a hypothetical singer-songwriter’s creations. One of these patrons opts for the P1 tier of patronage, while the other patron opts for the higher P2 tier. Together their willingness to pay, P1 + P2, translates into a particular level of support for the hypothetical musician. This level (i.e., P1 + P2) is shown by adding the aforementioned P1 chosen by the first patron to the tier of support, P2, chosen by the second patron. In this way, the collective willingness to pay for the artist’s next 18
Prior reference to the ancillary benefits provided to patrons (depending upon tier level), which may be of debatable value to many (most) potential consumers (fans) and, thus, would not affect our analysis, can be used to support a more detailed instructor-led discussion about how public goods can become club goods. In this case, making the non-excludable good (i.e., music video) excludible in some way, as indicated by the ancillary benefits, corrects the under-provision (and inefficiency) of markets for public goods.
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music video is the vertical sum of the two patrons’ willingness to pay curves.19 In terms of our vignette involving Patreon and Kina Grannis, the P1 and P2 in Figure 3 represent the many tiers available to Grannis’ fans, while their sum (P1 + P2) represents Grannis’ current overall level of patronage per new creation of about $7,300. The non-excludability aspect of the music videos’ availability via YouTube creates an incentive on the part of potential fans of Grannis to free ride, or to consume her YouTube videos without providing any compensation, or financial benefit/incentive to Grannis. The potential of such free-riding behavior would suggest that patronage through a facilitator such as Patreon would yield little in the way of financial support for artists/creators. In more traditional examples of public goods, such as national defense, this aspect of the story typically leads to a discussion about government provision, given that private providers, being motivated by profits, would be unwilling to provide the public good. Clearly, however, this is not the case when it comes to music video creations by Grannis and other Patreon artists. As shown above, Patreon’s artists are currently earning as much as $10,000 per month making their music videos available to fans through the openaccess platform provided by YouTube. As such, our pedagogical template provides an avenue for the instructor to initiate a discussion about the potential, at least in some cases, for private provision of public goods. Instructors could use Patreon in a variety of ways. For example, Patreon can be used as a case study to illustrate and discuss public goods, becoming the vehicle by which a chunk of reality is brought into the classroom (Christensen, 1981). Another application involves the use of Patreon as a homework assignment where, after having received in-class instruction, students are required to visit the website, explain the characteristics that make these musical creations public goods, and
19
The dots on the willingness to pay curves in Figure 3 are emphasized in order to facilitate instructor presentation indicating that the individual curves represented there are plots of each patron’s “willingness to pay” for the Patreon artist’s marginal (next) video.
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even attempt to draw individual and collective “willingness to pay” curves.20 Then, students would submit their homework assignments to the instructor and proceed to have an in-class discussion on free-riding. This homework/discussion approach could also be used to facilitate learning in blended or hybrid environments, which by definition reduce the amount of in-class seat time by combining inclass and online learning (Parsad, Lewis, and Tice, 2008). After receiving basic online instruction on the characteristics associated with public goods, students would come to class, join groups, and work on the links that make Patreon music creations similar to public goods.
These group
discussions can be followed by a class discussion on free-riding and a further presentation by the instructor of how the optimal amount of a public good is determined. Ultimately, and regardless of the pedagogical approach followed by instructors, we believe that Patreon is a relevant and relatable example that will help students grasp the non-rival and non-excludable characteristics associated with public goods, as well as the somewhat unusual concept of demand for those types of goods.
3. CONCLUDING COMMENTS Instructors are always looking for examples that they can use in their classrooms to illustrate economics principles and engage their students. Many educators rely heavily on the examples presented in traditional textbooks, which are often outdated due to the inflexible publication schedules followed by most publishers. Additionally, given that principles of economics courses are offered to students coming from a variety of educational backgrounds and majors, finding examples that are relatable to most students is challenging. Fortunately, several economic educators, and some new digital offerings in principles of economics have provided a variety of timely, engaging,
20
To allay concerns that instructors may have regarding recognition of the artists students will encounter while perusing Patreon’s webpages, it is worth noting that not only do Ward and Grannis collectively have more than three million YouTube subscribers, they have both toured domestically and internationally on multiple occasions. Additionally, Pentatonix, a music band students will likely encounter while perusing Patreon, has almost 13 million YouTube subscribers, and they recently performed during NBC’s New Year’s Eve Special hosted by Carson Daly, the host of the widely-viewed NBC talent show, The Voice. These are but a few of the recognizable artists students will find on Patreon.
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and relatable examples (i.e., television, music, and social media) that can be used to illustrate economic principles and spark interest amongst most students. In this study, we contribute to the literature by providing a real-world example of a public good that is grounded in the music industry. We focus our attention on Patreon, an Internet music company that connects artists with potential patrons willing to financially support their YouTubebased musical creations. Once created, the music is made available worldwide and in an open-access format. As such, these creations are both non-rival and non-excludable since the “consumption” of the music by one individual does not reduce the quantity available for consumption by others, and consumers cannot be excluded from enjoying the artists’ musical creations via a mechanism of prices. Ultimately, our hope is that the illustration presented in this study provides instructors with an additional tool they can use in the classroom to further solidify the presentation of public goods.
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Figure 1. Tyler Ward’s Patreon Page
Figure 2. Patreon Patronage Frequency Distributions: Ward vs. Grannis 180 160 140 120 100 80 60 40 20 0
Ward
Grannis
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Figure 3. Online Music Patronage: A Graphical Model P($)
P1 + P 2
●
P2
●
P1
●
Collective willingness to pay (Dc) Patron 2’s willingness to pay Patron 1’s willingness to pay
Q1
Quantity (of artist’s musical creations)