More on Cultural Finance

I received an interesting response to my posting on SellaBand from someone who works for a related service, Slicethepie. Turns out Slicethepie has implemented some of the ideas I mentioned in my previous post.

Slicethepie “is a financing platform for the music industry that enables new and established Artists to raise money directly from Music Fans and Investors.” Shares in a band purchased through Slicethepie are transferrable — via their “Music Trading Exchange” — which makes this system functionally equivalent to a stock market, as far as I can tell, with all its attendant strengths and weaknesses.

Of course, SellaBand and Slicethepie are not the only places where what we could call Aspiring Celebrity Finance is happening. Way back in Jan. 2008, Josh Levin reported in Slate that Randy Newsom was holding a “self-IPO,” in which he sold shares of his future earnings to interested investors. Newsom explained that he would use his capitalization to improve himself as an athlete, but he could also have used it to position himself in the media and grow his reputation. And Newsom was, of course, only the first athlete in the U.S. to self-IPO. As Levin explains:

Football Players Funds Management, a Portugal-based hedge fund, helps pro soccer teams buy the contracts of promising youngsters in exchange for a percentage of the players’ future transfer fees. Top poker pros are often staked for tournaments by investors, and a golfer might get his start on tour with backing from a consortium of investors. There’s already a popular fantasy site, ProTrade, where fans can buy and sell virtual shares in their favorite players. And last May, Michael Lewis wrote a convincing piece for Portfolio arguing that it won’t be long before Americans will be able to invest in their favorite athletes.

Newsom’s experiment ended in failure, as Levin reported in an update:

Update, Feb. 2, 2008: I no longer own a professional baseball player. In an interview in Friday’s New York Times, Randy Newsom said he’ll return the $36,000 he earned from selling 1,800 shares—six to a Slate investment group—in his future major-league earnings. Newsom and his company, Real Sports Investments, neither registered their offering with the Securities and Exchange Commission nor sought approval from Major League Baseball before issuing the first-ever baseball player IPO. “We want to pause to hear everyone’s concerns,” Newsom told the Times. “This idea is not going away. This is assured by the amount of fan support, and the amount of players we talked to, that the support is there. The spirit of this idea will go on.”

The spirit of this idea will go on, I suspect. I’ve been meaning to read the science fiction novel, The Unincorporated Man by Dani and Eytan Kollin, which projects a future in which everyone owns shares in everyone else, and the greatest freedom one can aspire to is a controlling stake in one’s own stock issue, the ultimate logical extension of the spirit of this idea. Pop Apocalypse stands somewhere on the middle ground, and posits a world where only reputations are associated with finance, and only celebrity or wannabe celebrity reputations at that.

The key difference between current real-world cultural financing schemes and the New York Reputations Exchange in Pop Apocalypse is that celebrities and wannabe celebrities who list their names in my novel are not linked to a particular industry or to a particular set of talents and abilities. This describes Eliot’s situation quite well: he has no particular talents, no special virtues. He is a celebrity who is famous for being famous in a world that is experiencing what could be described as an asset bubble in celebrity reputations.

In our world, I suspect that investors in a band or an athlete still have a mental attachment to the performance of persons or groups w/r/t their stated domains of expertise (music, athletics, etc.). But in fact, there’s no particular reason Paris Hilton couldn’t float an IPO on her name. What’s she talented at other than at being famous? Whatever innate talent you have, you can always also be turned into a brand. After all, you may be talented, but you won’t ever find people to recognize your talent if you can’t draw people to you in the first place.

Moreover, there is evidence that “objective” talent is sort of overrated when it comes to predicting the popularity of artists (though not so much in the case of athletes); seeing aggregate consumer behavior apparently substantially shapes how “good” people perceive a particular aesthetic experience to be (as does price). That is, people don’t just mindlessly agree with what the masses say but rather are more careful in giving attention to art that is prejudged to be good, and genuinely perceive this positively prejudged art to be better. Which means that in the competitive race to the top of the billboard charts, your media game can be as important as whatever you put on the page or on your CD.

Perversely, then, celebrity reputations markets will only achieve their full maturity when they detach themselves from this or that industry, this or that output, and find a way of allowing anyone who thinks they have the potential to hit it big in the mediasphere to connect with investors.