Read theEYE on Song downloads and streamingbelow

You might say that you're willing to pay only 99 for a song, but that's not the answer of the average consumer. And it is probably not really your answer either. It is also not what the answer would have been just a few years ago. We can work out what people are willing to pay for a song by finding the demand curve for songs and then finding the consumer surplus. To find the demand curve, we need to look at the prices and quantities in the market for songs

In 2015, Americans spent $6.3 billion on all forms of recorded music, down from $14 billion in 2000. But the combined quantity of discs and downloads bought increased from 1 billion in 2000 to 1.5 billion in 2015. And the average price of a unit of recorded music fell from $14 to $4.28. The average price fell because the mix of formats changed dramatically. In 2000, we bought 900 million CDs; in 2015, we bought only 98 million CDs and downloaded 1.3 billion music files and paid 16 million streaming subscriptions.

The music that we buy isn't just one goodit is several different goods. We'll distinguish singles from albums and focus on the demand for singles. In 2000, we bought 100 million singles and paid an average price of $5.00. In 2015, we downloaded 1,500 million singles files and paid an average price of $1.20 each.

Figure 2 shows the demand curve for singles. In 2000, 100 million singles were bought at an average price of $5.00. In 2015, 1,200 million singles were download at an average price of $1.20. The green area shows the increase in consumer surplus, which is $2 billion or $1.40 per single.

Answer the questions

1. Which concept in economics can we use to measure how much consumers benefit from the price decline?

2. What happens to the producer surplus of song writers as the price of a song declines? (Is streaming a stick or a carrot)?