RS 10 Manufacturing the Song of the Summer

This blog post is my take on the podcast “Manufacturing the Song of the Summer” by Planet Money. This podcast was released July 8, 2011.

This podcast described the work and money that goes into producing a top song. This podcast looks at the song “Man Down” and explains all the work and money spent to make it the “song of the summer.” At first we learn that the music is written and produced before Rihanna even gets to the studio. The producers fly in the best song writers into what they describe as a “writing camp”, or studio in a major city. Renting these studios a day costs around $25,000 a day in this particular case. These writers and producers team up to come up with a hit song or songs for an album in very short time. In the case of Man Down, it only took thirteen minutes.

The next major step is having Rihanna come in as well as a vocal specialist to coach her in how to sing to this particular song. Finally, after the song is mastered the total cost is somewhere around $78,000 to produce this song that no one besides the people in the studio has heard. This is where the real cost comes into play, marketing the manufactured product. As one producer states, to make a record might take up to one million dollars to market. The producers need to create a “craze” of the song by having it show up everywhere and have it playing out of every music device at the same time.

This includes getting the song on iTunes top charts, artists going on live interviews, radio plays, and even billboards and banners. This whole marketing part is very costly and this is where some conflict comes into play. A radio host, Paul Porter, describes how he gets the “royal treatment” by some producers sending him Knicks tickets (I don’t know who would even want those), weekend getaways, and even one time when he received an envelope of $5,000 cash. This type of bribery called payola; and is in some terms “illegal” to the government and there are some laws against it.

This is because people want to hear the real top song today and not just the most paid for or must bribed for song of today. I feel like this is a very important point, but I see nothing wrong with payola. Yes, people should not be lied to what the top song right now is, but the top song is their own opinion. Most of the time if a song that I cannot stand comes on, I turn the radio it off; I do not have to listen to it and neither does anyone else. One producer explains that the radio host is like a girl and you got to “treat her right.” If the producer wants to use payola as a way to influence the playing of their song, I think it is perfectly legal because the radio host knows in the back of their mind if they play a terrible song all the time(Any Nicki Minaj music) there will be fewer and fewer listeners.

In the end, the podcast explains that the song Man Down in the end cost around $1.25 million. Rihanna sold over 1.3 million albums which that song was featured on as well as other songs that were produced at that writing camp. This was a smart investment in the long run, but if it was not for the album, the song as a single would not have been worth it because the profit margin was unsure.

RS 9 Where the Dollar Bill Comes From

This blog post is my take on the podcast “Where the Dollar Bill Comes From” by Planet Money. This podcast was released May 5, 2012.

I found this article very fascinating as well as educational in the field of economics. It was interesting to find out where the materials for bills are made and that it comes from a not very large family mill in Massachusetts. The material for the all bills sounds like materials of a particular T-shirt, 75% cotton and 25% linen. This factory undergoes critical tests to see if it fits the two biggest factors for currency; which are must be durable and hard to counterfeit. The factory tests the durability by a folding test seeing how much folding the individual bill can withstand. Also to make the money hard to counterfeit they must put many secretive messages and plastic strips on the materials. This company does an outstanding job because due to a study at the University of Chicago, only .01% of money is counterfeited.

One of the most educational topics of this podcast was learning the benefit of competition. The mill is owned by the Crane family that goes generations back until President Rutherford Hayes. The US Treasury needed to make a deal to find out from whom they were going to buy the material from, so they began a bidding process with many different companies. At first the price was .75 a pound and was bid all the way down to about.61 a pound. Through this process the US government saved a lot of money in buying this material at the lowest bid, instead of going with the first deal they saw. It is remarkable that this mill has been doing business with the government since about 1877 and maintained fair prices.

Since this mill is the only “game in town” the owner Doug Crane says, there is much responsibility they must maintain by providing quality products and service to hold this deal, and they must be audited intensely to make sure that the deal is fair since they have a monopoly on this market.

Another major point made that I have also seen in my daily life is the use of cash. I know that even from the way I pay for things, such as gasoline or big purchases, I don’t use cash and neither do a lot of people. A major issue for this company is that they are in charge of one major distribution and that is making material for bills. However, the use of bills is thought that it will not always be around. Unlike Doug Crane believed, in the future I think that bills will be used less and less with all the alternative ways of paying for products today. As we see on NPR’s blog, the use of cash has decreased nearly 9% in the last ten years and is predicted to go even lower for future years to come.

I know that Doug Crane does not want to believe that his business will eventually take a drastic loss, but many people are putting their money into stocks and different accounts so they get some sort of return; as well as use alternative payment methods instead of keeping the physical cash “under the pillow.”

RS 8 Why K Pop is Taking Over the World

This blog post is my take on the podcast “Why K Pop is Taking Over the World” by Planet Money. This podcast was released October 16, 2012.

This article really made me think about the music industry in a totally new perspective. As the hosts of the podcast stated, we have taken the music industry today for granted; although we have come a long way, the hit song “Gang am Style” is a lesson for us to learn from. As the podcast points out, we are and have been the number one for exports of music and it has taken over 150 years to get where it is today. Korea observed and learned from our music industry, three lessons that made their industry a major success in not even half the time it took for America’s to get where it is today.

The lessons were; that music can be industrialized, distributed in many different ways, and by putting it all nicely together, you have a recipe for musical success. Our music has come a long way through many wars, the depression, and has seen nearly failure. Korea learned from our mistakes and although we are still number one, they have presented that they are a major threat.

To industrialize their music, the Korean’s started with training kids from when they were young how to sing and act. This is the manufacturing of the product. Their genius way in distributing is with an image, showing the songs debut on TV and YouTube, so they can learn where people are viewing the videos and how many people, so everyone sees it. I agree with this move because when I listen to a song on the radio is not as great most of the time compared to if I hear a song and watch a great music video that goes along with it. In this case I am more likely to be a fan of the song and play it more often. Also the this way Korean producers can see where most people are viewing the product, and this helps when one decides where the artist should go on tour.

Lastly, the lesson they showed is “wrapping the package” up nicely. By creating this quality product people associate where it came from with a quality country that produces quality goods. I agree here as well when you hear disgraceful rap music, it tends to create a negative image and although teens who like it do not see it, other countries do.

The President of the World Bank, Dr. Jim Kim, was another that pointed that this song is more than just fun music and that it was an “economic strategy” and that it was “a cultural product that showed the countries aspirations.” This article was very fascinating learning about the music industry and how there is so much more than to meet the eye, and that if we want to keep being the top export in the music industry; we must take notes from what others learned from our mistakes in creating quality music products.

RS 7 An Economist Gets Stoned

This blog post is my take on the podcast “An Economist Gets Stoned” by Planet Money. This podcast was released January 27, 2010.

After hearing this podcast it even changed my view on drugs and their effect on the economy. Obviously being a teenager you hear a lot of “stoners” and drug abusers that have their own take on drugs and feel the need to share it wherever they go. As the article points out, many people create fallacies as to why they think marijuana and other drugs should be legalized; because it will help the economy. Jeffrey Miron, a Harvard Economist writes and publishes a genius article looking at if we legalize drugs, the price of those drugs will not be as cheap as many people say, nor will it help the economy as much as they say.

Right now many drugs are expensive because of the risk people who make these drugs must take. Clever means of transportation and finding the right people to trust and make these drugs are just some of the factors. It is true that if drugs were legalized the price would go down, but not as much as people say. This is because many of the drug dealers now, do not have to complywith any of the legal restrictions such as child labor and taxes; whereas if it were legal, they would have to, so the price won’t be as low as people say. These drugs now are only two to 3 times more expensive now than if they were legal because of these laws you have to comply with.

Also this Economist states that it will not help the economy if we legalize drugs, and compares this to the prohibition back to the 1930’s. People stated that during prohibition, alcohol should be legal because it will guarantee prosperity and the extra taxing will help the economy. This was led to be proved false because it did not help the economy because when alcohol was legal people showing up to work drunk slowed production and accidents were worse.

This relates to today with the marijuana issue today. If the drug was legal, Miron points out that it would bring in $75 billion. Now $75 billion is not to be taken granted for, but compared to the economies deficit, it really is not worth all the negatives it would bring by legalizing drugs.

This article points out that there is much more that goes into a product and must be taken into consideration before people that don’t have an economic background to make incorrect fallacies. I personally think that drugs should not be legal and that is why when people use the argument, “our economy will be fixed,” it is pure stupidity because the price of the drugs would not be as low as people say it would be and would not help the economy as much as many people claim looking at all the negative side effects such as more open use of these drugs.

RS 6 Sharks Ain’t Cheap

This blog post is my take on the podcast “Why A Dead Shark Costs $12 Million” by Planet Money. This podcast was released Friday June 25, 2010.

I found this article to be very intriguing and it related very closely to what we are learning in class. I have always wondered why some art costs millions of dollars when to me it looks stupid and others would pay so much for it. This leads to the underlying fundamental economic principle that values are subjective; and this is where art has the advantage that there is no set price. We learn that there is in fact a minimum price to sell the art and this is only to cover the price the artist must pay for the rent of the gallery and other basic necessities to make it.

From this podcast we learn that there is a small system to get an idea of the price of the art. The scale which is the bigger it is the more it costs, the intensity of how much time was put into it, and the medium which includes what it was made of and if there are any other copies of it.

This is all true in finding out the price, but there truly is no set price because in economic terms it relies on supply and demand and also consumer surplus. As the podcast mentions in the book, Economics of Art, it is shown that the more people that want your art, the more you can charge because there is a high demand and not a large quantity. That is why if the medium you only have one copy, it makes the art much more valuable and the price goes up.

Also as we learned in class, consumer surplus is the difference between what you are willing to pay, and the market price. The piece of art, “The Physical Impossibility of Death in the Mind of Someone Living" or the shark in formaldehyde went for $12 million. This is because since it was really one of a kind, rich people who like art where willing to pay more than the artist’s price because they wanted this one-of-a-kind work of art. This bid war made the price to go up very high showing the consumer surplus in this item.

I think art is a great thing but the podcast proves its point that art isn’t the best investment. It is more pretty to look at than a piece of paper that shows you have a bond or a stock, but there is no guarantee to what the art will be worth someday because it is totally subjective.