Barry Ritholtz posts a rebuttal to Kevin Laws' most recent description of the real music monopolists. Kevin replies in the comments. I'm with him: Ritholtz' argument fails because music is not fungible. Maybe a casual listener might say (for instance), one bluegrass act is as good or bad as another, but no real fan would agree. In one of my favorite genre, no one's going to confuse the Chieftains for Clannad or the Afro-Celts, nor feel they're equivalent in setting a mood.
I do have my own issue with Kevin's post, where he equates monopoly/oligopoly to high margins. That needn't be the case, if the market in question is elastic, and the good sold is substitutable (as versus fungible). In that case, putting up prices to improve margins will drive down sales and send the customers away to another market. If the business has high fixed costs (think promotion), the net margin position won't improve, and the top line may fall. Sorta like what's actually happening....
Update: Kevin replies in e-mail:
To take in consideration as you post -- Bruce Springsteen's substitutability isn't huge. Mine (as a musician, anyway) is -- I have no fan base, but you might try me if I were cheap enough and somebody told you to try it out. So implied elasticity for established superstars is small, while for new artists it is quite large.
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Thus the goods are only highly substitutable outside the established end of the market...
My comment: I think we've gotten into a language problem around the context of substitutability. One music act is not the equivalent of another - though the degree may differ by artist and genre - but the entire media experience of music may well be substitutable - as entertainment - with another media option, e.g., DVD, online. Put up the prices, reduce the apparent value for money to the customers, and they will find another use for their dollars and time. If they feel they are being 'cheated' in some sense, compared to options they already know are available, they're just that more likely to substitute.
Update 2: And Kevin sez:
Oh, yes, I agree with you there. Thus the conundrum the industry's gotten itself into -- by gouging (perhaps appropriately) on each individual basis, they've priced themselves out of the market as a form of entertainment in aggregate.�The interesting point there is the extent to which it is against each individual's artists (or release's) interests to be the one to go lower in price. Oddly, only an industry with significant monopoly power could force prices down in aggregate ;-)