The distribution of artists’ earnings is heavily skewed, much more unequal than in the population as a whole, between some who earn very, very much and those whose earnings are negligible (if not zero, in their search for free exposure). The economic analysis of ‘superstars’, pioneered by Sherwin Rosen, finds that when given a choice audiences will, by a great majority, buy from what is considered to be the very best, and so the very best capture the lion’s share of the earnings.
When are earnings likely to be most skewed? There are two main factors. One is that there is a general consensus as to what is the very best. And the other is that it is possible to sell to millions. Earnings from recordings are likely to be more skewed than earnings from, say, modern dance, which does not have a significant market for videos or simulcasts, and can only be performed in small venues (unlike, say, U2 being able to perform in stadiums).
Sport gives an interesting perspective on superstars. How is it like the arts? First, there is a consensus as to what is ‘best': major league baseball has better players than the minor leagues, premier league football has better teams than 3rd division, and so on. Second, broadcasts of games can reach millions. This generates a very large amount of advertising revenue, and players are able to capture a good portion of those revenues.
But the reach of sports is relatively recent – world-wide audiences, increased popularity, are things that have grown rapidly in the past few decades, but were not always in place.
All this came to mind from a (to me) fascinating photo gallery in The Guardian, of English football players, in the 1970s, at home. The photo above is of Alun Evans of Aston Villa, and, while it looks like a lovely family home, it is not what we associate today with the lifestyles of premier league athletes. Pitcher Jim Bouton, author of the brilliant memoir Ball Four, was on NPR the other day, and he pointed out his average salary (in the 1960s), playing for the Yankees, was $19,000. I did a bit of checking: the average major league baseball player’s salary in 1974 was $40,839, which is equal to $197,000 in 2014 inflation-adjusted dollars. That’s a high income, but not out of line with successful professionals in other fields like law, medicine, or business. The average MLB salary in 2014 is just under $4 million. Now some of that is due to players’ abilities to capture a higher share of the rents generated from attendance and broadcasts – of course free agency has made a difference. But most of it is due to the increased ability to capture wider audiences through broadcasts and internet, with the associated advertising revenues.
What to expect in the performing arts? I would predict that earnings of performing artists will become more skewed the more that they can reach wider audiences (e.g. with simulcasts). It is not just a matter of more people being able to see opera performances on screen. It is that the Met will dominate the wider market, in the same way that the top leagues dominate televised sports (nobody watches AA baseball on TV; nobody is going to go to a movie theatre to watch an opera performance by a good, but not top-rate, company). I think the same is true in pop music. The technology to produce an exciting experience at a stadium-sized concert has improved markedly – I remember in 1976 or so going to see Supertramp (younger readers: the Coldplay of the time) at Empire Stadium in Vancouver, with poor sound quality, no big screens, indifferent lighting, etc, nothing compared to what bands can produce today – but it is only the biggest acts that will draw people to such shows (and command three-digit ticket prices). In the genres of performance where only live will do, and a small venue is required, earnings differentials between the best and the very good will not be so large; the best do not have ways to fully exploit their top ranking in terms of audiences of millions.