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June 29, 2009

Harvard Business: Michael Jackson and the Zombieconomy...

Lefsetz letter | Read Full Story >

If the world’s biggest pop star only made $12 million a year from his recordings, why would anyone make serious music? Where did the rest of the money go? Why, straight into record labels’ pockets. Did they make better music with it? Nope — they made Britney and Lady GaGa. And that’s how they killed themselves: by underinvesting in quality, to rake in the take.

Wait a second — that sounds familiar. You can add back in the endorsements, etc. now — they only double the figure: to about $25 million.

If the world’s biggest pop star only made $25 million a year in total, something’s very, very wrong. Where’s the rest of the money? Why can’t a resource as scarce as the King of Pop capture more value?



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