Are Maestros Like Bankers?

Any reader of this obscure blog will most probably have read the Freakonomics weblog too and knows that one of the principal authors there argues that high-priced wine is largely indistinguishable from moderate or even cheaper ones. My conclusion from this demonstrated fact is that expensive wine is largely a matter of choice and communication of the ability to pay. So while I am not a connoisseur of wines in any way, I am in possession of a modest though diverse collection of classical music CDs and therefore find her questions relevant.

I have it in mind to one day attend a live opera performance or one of the major philharmonic orchestral performances. Reading this piece by Philippa Ibbotson of the Guardian just led to me to consider the economics of orchestra music. Judging from the story, there are two really important things to note. The first is that the most acclaimed orchestras pay their conductors extremely well. The second is that there's a substantial gap between the instrument players and the maestros. This leads Philippa to question whether these conductors add sufficient value to the performance to justify their pay. Indeed, she seems to conclude that there would probably be very little difference in performances if the conductors were not physically present.

I am new to the economics underlying orchestras but I think that what the most acclaimed conductors earn is explained by scarcity. Because there are much more regular players than there are conductors, the pay differential would be expected though I am unsure that it ought to be that large. Secondly, conductors like Lorin Maazel are themselves among the best composers and players and so bring to an orchestra a rare knowledge and ability that enables them to recruit and perhaps shape other musicians. The combination of the two points above would lead to recognition of the name and this has the added benefit of attracting music lovers to a particular orchestra.

Clearly labouring to explain the reason that orchestra conductors earn sums equivalent to top bankers, I still am not sure that these are sufficient to explain their income levels. It is not obvious to me that if we took separate recordings of orchestras playing with conductors and another without, the music lovers would notice that difference. The maestros themselves would then be asked in a blind test to judge the quality performance and guess which had a conductor. The results of that test would then allow me to state with confidence whether Philippa is right to ask my favourite conductor to take a pay cut.