Causes and Consequences Superstars Causes and Consequences

The First Superstar? http://www.youtube.com/watch?v=uQyQ4NprVA0 http://tsort.info/music/yr1931.htm

Cab Calloway Replaced Duke Ellington as the resident band at the Cotton Club in January 1931. Inherited Ellington’s nightly live broadcast from the club Recorded approximately once a month First person of color to have a number one song Recorded more frequently in the 1930’s than any jazz band except Duke Ellington Appeared in a number of film shorts that led to spots in full length films later in the decade Dance moves anticipated Elvis Presley and Michael Jackson

Economics of Superstars What is the Superstar Phenomenon? concentration of output among a few individuals marked skew-ness in the associated distributions of income very large rewards at the top. (Rosen) This derives from Imperfect substitutability among “goods” Some sellers (“performers”) are preferred to others Differentiated products Economies of scale in production Costs of production do not rise in proportion to a seller’s market Access to a market of large or increasing scope Often due to technological change

Technological Change Technical changes have increased the extent of scale economies over time in many activities Motion pictures, radio, television, audio reproduction equipment, and other changes in transportation and/or communications have decreased the real price of entertainment services but also increased the scope of each performer's audience. The result is increasing concentration of income at the top as well as greater rents for all sellers as these changes proceed over time Rosen cites popular singers, news reporters, and professional athletes as examples

Superstars in History 1800’s: Performers were limited to a few thousand people for a single live performance Riverboats and railroads increased audience access by cutting travel time between shows 1900’s: Performers gained access to mass audiences through technological change First through radio and audio recordings Followed by motion pictures (the “talkies”) Then television, VCRs and DVDs Then computers, the Internet, and mobile devices A single performance can now reach millions of people simultaneously

Superstars in the Digital Age From 2000 to 2005, sales fell by 25%, but hit albums decreased by 50%. In 2000, the top 5 albums sold 38 million copies total. In 2005, the top 5 sold only 19.7 million copies. The top-selling album of 2000, N’SYNC’s “No Strings Attached,” accounted for 1.3% of industry sales. The top-seller for 2009, Taylor Swift’s “Fearless,” accounted for only 0.86%.

Turnover on Billboard 200 Album Chart

Digital Decline? Easy access to mass audience for all performers Reduction in costs of Recording Distribution Increased entry Increased access of consumers to a wider range of titles and performers Resulting in less skewing of sales toward the top sellers And a weakening of the Superstar Phenomenon

References Anderson, Chris. 2006. The Long Tail. Hyperion: New York. Rosen, Sherwin. 1981. “The Economics of Superstars,” American Economic Review, 71(5), 845-858. Shipton, Alyn. 2001. A New History of Jazz. Continuum: New York. Pp. 287-289.