Projects

Expressions of willingness to pay essentially measure satisfaction, and should not be confused with a desire on the part of consumers to pay more. In terms of value, increasing prices would result in a zero sum for current live music patrons, as the consumers’ surplus would be converted into producers’ surplus for no net gain.

Even though it is also known that ticket prices of live events are relatively inelastic; anecdotally, at least, non-consumers are highly price sensitive. Therefore, non-users would be alienated by price rises that were not linked to new value, and this would reflect in their adjusted WTP. As it is assumed that the greatest community benefit can be realised by converting non-consumers of live music into patrons, deliberating exploiting the presently high levels of the community’s WTP—by either increasing prices or withdrawing subsidies—is likely to be counter-productive.

Non-use value

To this point, the methods described have exclusively considered the value that purchasers or consumers of live music might ascribe to their use. It is also recognised, however, that non-users (the other 70 per cent) might value live music, even if they do not purchase or otherwise engage with it.

The concept of non-use value is often used in economics as means of locating the benefits of environmental resources which are difficult to quantify through the market (Hanemann, 1993). In terms of this project, the non-use value of live music making comes from individuals who do not directly engage with the activity, but who recognise its benefits against possible alternatives.

Why, then, might someone place a value on something they never use? There are four alternative responses to this conundrum recognised in the academic literature:

  • Option value—reservation of the right to use the resource at some time in the future (Brookshire, Eubanks, & Randall, 1983; Weisbrod, 1964)
  • Bequest value—maintenance of a resource for future generations (McConnell, 1983; Walsh, Loomis, & Gillman, 1984)
  • Existence value—the satisfaction people receive from knowing that something exists (Edwards, 1992; Larson, 1993), and
  • Altruistic value—appreciation of the right of others to use the resource (McConnell, 1997; Milgrom, 1993).

To this, a fifth category of non-use value can be added that is an intuitive extension of how people assign value to public goods. This is the value placed on individual willingness to pay for maintaining an asset or resource that is used exclusively by others to create a benefit that is enjoyed by the whole community. In this study it is designated as shared value.

To illustrate shared value: I may be willing to pay to enable a live music festival in my home town—even though I have no intention of attending it—because I know it will create trade and employment opportunities for others, promote social inclusion, and beautify the streetscape.

This is distinct from option value, as I may have no intention of ever attending the festival; and bequest value, as the festival may only be a one-off event. To some extent shared value may clarify existence value; although, the satisfaction that people get from seeing an endangered species preserved in the wild may not be a shared value at all, as the species is designated to never be a consumable resource. In the same way, altruism implies no benefit to the donor; whereas, shared value recognises the internalising of a real (albeit indirect) welfare return.

It is beyond the scope of this research to quantify the non-use value of live-music making in Australia. Nevertheless, numerous studies in this space suggest that the non-use value of otherwise valuable public goods is anywhere between 5-50 per cent of its use value for individuals. This would suggest a theoretical minimum in the live music context of 600 million dollars of non-use value; although, we stop short of asserting that here.