Wednesday, February 06, 2013

How capitalism works, plus a catchy new song!

I'm a big fan of capitalism - real capitalism - not the corporatist/statist crony construct that passes for and is assumed to be capitalism under present day memes.

In the last day, I found a great example of how capitalism works. It starts with a cup of coffee.

I get coffee at Starbucks a few times a week. I'm normally a grande or venti Pike Place with room for cream, but I've been known to grab a latte every now and then. As a "thanks" to their customers, Starbucks hands out cards for music, video, or app downloads from iTunes as part of their partnership/marketing agreement with Apple's store. They also offer downloads from iTunes via their own app.

So yesterday, I download a "free" song thanks to Starbucks offering it to me. I say "free" because somebody somewhere along the way paid for it, embedded in the cost of other things. It's a great song. If I had known about it, I'd have gladly paid for it as I really like it.

I thought, "Wow, great song! I wonder what else this group has done?"

Off to Spotify I go, and while I'm not a paid subscriber there, the ads I get interspersed in between songs generate revenue that they use to compensate artists for their music being played. I haven't gotten to the point where the value I get from Spotify is worth more than having to listen to ads, but maybe that will change.

I listened to the rest of the album the song came from (as well as a bunch more of their music) and really like all but two of the songs. So, I could continue to listen to them via Spotify paying nothing, or I could directly reward the artist for giving me value. Free hooks into a product are great, but can you really value something that didn't cost you?

It costs people to produce; it should cost to consume as well. I'd rather reward folks for a good product that I'm enjoying, so I bought the deluxe version of the album off iTunes. It's a win all around:

  1. I'm going to get more than the $12.99 I paid for the album in enjoyment value. (If I didn't think it was worth more than what I paid, I wouldn't have bought it.)
  2. The artists are going to get their cut of my purchase, and I'm more likely to buy more of their product, which will just put more in their pockets.
  3. Spotify, even though I'm not currently paying them directly, is going to continue to get revenue out of my listening via ads. Add to that the potential of my future subscription when it becomes a value proposition for me and that this very post could point more users there, and they have real upside.
  4. Apple is going to get profit off the sale. They can also track the downloads by code that come via Starbucks, so they're encouraged to keep that program going as it helps grow sales and profits.
  5. Starbucks is going to get me to go back for more coffee and to pick up more of their download cards or just do it through their app.

Everybody in the chain of the transaction has profited. That's capitalism. That's how it's supposed to work: everybody benefits, everybody wins.

And for the record, here's the song that started this journey in capitalism: "Closer" by Tegan and Sara. Their latest album is entitled "Heartthrob". Fair warning: some of the video's imagery could offend some people's sensibilities, as I suppose the song's lyrics could, but are workplace safe. Deal. Not my fault if you don't like it. :)

Finally, as an FYI, the "free" download of "Closer" via Starbucks' iOS app expires April 23, 2013. I hope you don't stop there though with the freebie and instead choose to reward these talented twins with some coin! They have a great sound.

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