Superstars

1. Superstars Causes and Consequences

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

3. 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

4. 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

5. 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

6. 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

7. 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%.

8. 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

9. 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.