Opinion | The Economics of Rihanna’s Superstardom

How does the music industry compare with the rest of the econ­omy? Since 1980, the entire United States economy has moved in the di­rection of a superstar market. The distribution of income in the country over all is not as skewed as it is in the music industry, where the top 1 percent of performers take in about 60 percent of all income, but the United States is now back to the same level of inequality that existed during the Roaring Twenties.

At the very top of the income scale, technological changes that increased scalability have intensified superstar effects. The wealthiest Americans increasingly come from the tech­nology, finance and mass-retail sectors, which are the most scalable industries.

One related part of the inequality story involves the rise of “superstar” companies. Google, Apple and Amazon have successfully deployed technologi­cal innovations to take advantage of enormous scale economies. But there is also a concern that such companies use their dominant position to stifle competition. They tend to employ higher-paid and more highly educated workers, and they often outsource jobs for lower-paid workers, such as those in janitorial, cafeteria and security positions.

Over the past decade the four largest American airlines increased their share of in­dustry revenue to 65 percent from 41 percent. Larger hospitals have gobbled up smaller ones, and even in the beer business, despite the proliferation of craft breweries, the four largest breweries produce 90 percent of the beer consumed.

It is easy to see the hand of supply and demand in the rise of inequality, but the reverberations of political, corporate and social choices are also important. For example, cities and states that have raised their minimum wages have boosted earnings for low‑paid workers and reduced inequality.

Is there anything else we can learn from the music industry? When I saw the multitalented Questlove, leader of the Roots, in Miami Beach recently, he lamented the highly skewed nature of the business. “In my world I’d just like to see a balance,” he told me. “It’s like just one person and no one else. And whoever is the most digestible gets that spotlight and that attention. Meanwhile, there are zillions and jillions of artists who are just as worthy of getting these things. My position is, more or less, while the spotlight is still warm, to show people options.”

Alan Krueger was a professor of economics at Princeton University and the author of “Rockonomics: A Backstage Tour of What the Music Industry Can Teach Us About Economics and Life,” from which this essay is adapted.

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