In 1997, when the Smashing Pumpkins were arguably the world’s top alternative-rock band, they released a promotional single, “The Beginning Is the End Is the Beginning,” in conjunction with one of the year’s bestselling films, Batman & Robin.
The stars seemed aligned for a hit. Joel Schumacher’s movie had an A-list cast — George Clooney, Arnold Schwarzenegger, and Uma Thurman — and it was a financial success, taking home an estimated $240 million at the box office worldwide. Yet the song bombed.
“It was a disaster,” Pumpkins frontman Billy Corgan said in a recent appearance on the podcast And the Writer Is. “Nobody cared. No fans said they loved the song, nothing.”
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If the story ended there, it wouldn’t be much of a story. Many bands have written songs for movies that crash and burn. Yet something remarkable happened. About 15 years later, the song appeared in another comic book adaptation. This time around, the movie was Zack Snyder’s 2009 dystopian drama The Watchmen, which featured the tune in its trailer.
Snyder’s film was less financially successful than Schumacher’s dreadful Batman, the first movie I ever walked out of, but it was a much better movie. Roger Ebert gave it 4/4 stars, calling it “a compelling visceral film … that evokes the feel of a graphic novel.” Suddenly, “The Beginning Is the End Is the Beginning” was a hit. After a decade and a half of irrelevance, it was on the Top 100 on iTunes.
Corgan explained that the visuals of Snyder’s film seemed to connect people to the music, turning the song from a “nothing, nobody gave a s***, to an instant classic.” The rediscovered gem taught the Pumpkins frontman something important.
“It’s not up to us to assess value,” Corgan said.
He’s right, and the insight carries a deeper economic lesson. Whether you’re a musician, craftsman, or vacuum salesman, you don’t determine the value of your product. Consumers do, through the marketplace. Whether he realized it or not, Corgan is describing one of the most important ideas in economics.
Subjective value is an idea as old as humanity, but it was named during the Marginal Revolution of the 1870s by three economists working independently — Carl Menger of Austria, William Stanley Jevons of England, and Leon Walras of Switzerland. What Menger, Jevons, and Walras knew is what Corgan discovered: The worth of a good or service is not inherent in the object itself. Nor is value determined by how hard its maker worked or how much labor was put into it, though some Marxists have trouble giving up on that idea.
Many people, including economists, struggle to fully grasp the idea that value doesn’t reside in things themselves. Instead, value comes from how individuals perceive and prioritize goods in a particular time and place. The idea sits at the center of economics, and it helps us understand why exchange makes the world prosperous.
Subjective value is implicit in trade itself. Voluntary trades only happen because one person values what he’s getting more than he values what he’s giving up — and the same must be true for the other person.
People value different things. Many people are happy to pay $10,000 for Taylor Swift concert tickets. I, on the other hand, wouldn’t pay $100 to see her perform because I’m not a fan of her music. Prices help us determine how other people value the goods and services in a marketplace, but the value isn’t inherent. And it isn’t determined by how hard somebody worked on something. It’s determined by consumers.
Corgan’s experience shows this. In 1997, audiences of Batman didn’t value “The Beginning Is the End Is the Beginning.” The song was a dud. Even fans of the band didn’t want to hear or buy it.
In 2009, that changed. Viewers of The Watchmen began to enjoy it and purchase the song, and radio stations began to play it. The intrinsic value of the song didn’t change. Nor did the labor Corgan and his bandmates put into it — whether Corgan spent three minutes or three months writing the song didn’t matter. What mattered was that in 2009, consumers began to place much more value on the song than they did in 1997 and became willing to pay for it.
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Consumers are ultimately the real masters in a free-market economy. Their power over “The Beginning Is the End Is the Beginning” and every other consumption good hinges on the reality of subjective value. It may not be any easier to understand why someone would pay $12 million for a baseball card or $6 million for a banana duct-taped to a wall, but we can explain why water is cheap in most circumstances, even though it’s essential to human life.
Many people think there’s something wrong or immoral about subjective value. Economists know better, and it’s good to know some musicians do, too.