Should Artists Be Paid More?
Austin Pace

Feedback VS Free-riders

I recommended your story but didn’t even give you a penny. Either I’m virtue signalling… or I’m a free-rider.

Then again, it’s not like it’s easy to give you a penny. In all cases it should be easier, rather than harder, to give each other money.

Let’s say that you spend $10 dollars to buy a ticket for a movie. Does this money count as your feedback on the movie? It can’t be very accurate feedback… given that you provided it before you even saw the movie. We generally don’t give much weight to reviews where the reviewer hasn’t even seen the movie.

But the $10 dollars can count as feedback in the sense that the idea of the movie was relevant enough to your interests that you were willing to pay $10 dollars to see it.

If you see the movie and derive $20 dollars of enjoyment from it then your consumer surplus was $10 dollars. The true intensity of your preference (aka “Love”) for the movie was $20 dollars…. but you only paid $10 dollars to see it. So do you give another $10 dollars to the theater? Or do you paypal the producer $10 dollars? Probably not.

Let’s say that you only derive $5 dollars of enjoyment from the movie. In this case your consumer shortage would be $5 dollars. Except, you probably don’t ask for a partial refund. Because… there’s no way that the theater can tell if you’re being honest. Then again I’m sure plenty of people have hated a movie so much that they asked for a full refund.

Here’s where it gets intellectually delicious. Let’s say Netflix gave you the option to spend your fees on your favorite shows/movies. Obviously you’re not going to spend your fees on a movie before you watch it. First you’re going to watch the movie and then you’re going to decide how much money to spend on it. You’ll actually be able to make an informed spending decision!

After you watch the movie you’ll know how much you valued it. The question is… how much money should you spend on the movie?!

A. more than your valuation
B. your valuation
C. less than your valuation

I think the correct answer is B.

Personally, I think that Netflix has a severe scarcity of shows about economics. How’s that for irony!

So if Netflix did provide a decent show about economics… then I’d want to spend an amount of money on it that would help to accurately convey my perception of the size of the scarcity.

Except there’s a bit of a catch 22 here.

It’s hard for me to give positive feedback to content that doesn’t, but should, exist.

There’s no reason that subscribers shouldn’t be able to rollover their unspent fees. Then ideally subscribers would be able to earmark their unspent fees to specific categories… such as economics shows. The more unspent fees that are earmarked to economics shows, the greater the incentive for Netflix to create/supply a show about economics. Of course I’d still be able to decide how many of my earmarked fees I spent on the show.

Netflix would essentially be able to see the shape of the unmet demand for economics shows. Ideally, everybody in the world would be able to see the same thing.

Artists should be paid what their work is worth. But it’s important to recognize that… if the free-rider problem wasn’t real… then taxation could be voluntary rather than compulsory.