Megan McArdle misinforms her readers

Megan McArdle has a new article in The Atlantic about how "the freeloaders" are ruining music. You see, the revenues from album sales have been falling for the past 10 years. McArdle attributes this mainly to 2 factors: illegal downloading, and a high baseline in the 80s and 90s, as people replaced their collections with CDs. She doesn't mention the boy-band boom that caused a massive surge in CD sales at the end of the 90s. And then she hits upon the reason why her thesis is fatally flawed: the concert industry.

The concert industry is indeed booming despite the downturn. And people who admit to downloading music illegally may actually spend more money on recorded music than people who don’t. One assumes they plump up concert revenues as well.

She then argues that this is wrong:

Moreover, spending less on recorded music doesn’t necessarily mean you spend more on shows; the savings could just as easily go toward beer. And even avid music lovers in urban areas can see only a few shows a week. To raise revenue, you have to get new customers in the door or raise ticket prices.

This is classic McArdle. Argue from Econ 101 first principles, while ignoring the real-life data that might invalidate some of the assumptions in your model. Like the data, here and here, showing revenue from concerts and album sales. Essentially, concert revenue has risen at about the same rate that album revenue has decreased. And this is actually a very good thing for musicians, as they see a far greater percentage of concert revenue than they see from album sales.