One thing that I love about music is the story of its’ timeline. I love how different genres and styles emerge one after another. What I find most interesting about these styles and movements is how they gather momentum. For example, after Ed Sheeran enjoyed such incredible success record labels began looking for more guitarist singer-songwriters to try and piggyback onto the success of this new movement.
And to be fair to those record labels, they found them. After Sheeran we also saw the rise of George Ezra, James Bay, James McArthur, Dermot Kennedy, Gavin James, Jake Bugg, and Sean Mendez. This isn’t an unusual phenomenon either. Record labels (and other businesses) are constantly trying to squeeze every bit of success they can out of each new trend. It happened with hippies, punks, disco, new wave, grunge, Brit-Pop, Hip Hop, and it’ll continue to happen.
And that’s not actually all that bad. Often the reason firms try to engage in this type of behavior is because they are just trying to cater their product toward the changing preferences of consumers. In the economics of entrepreneurship this type of behavior is referred to as the signalling effect and is used to try and explain why firms are set up in certain industries.
The basic idea is that when a firm is set up this signals that there is a value and demand for that type of firm. This may incentivize individuals to set up more of these firms. The only issue is that if enough of these firms are set up then the market can become overpopulated and because there are only so many people and so many goods and services demanded by those people, some of the businesses will fail because there isn’t sufficient demand for them. Unfortunately the same thing can happen in the music industry.
By Daragh O’Leary