The Connection between Superstardom and Information Cascades
This link connects to the concepts of power law and information cascades to explain the phenomenon of superstardom in the music industry during the 21st century. The article states that the evolution of technology, like online streaming, coupled with the fact that most superstars have unique voices result in a heavily skewed power law distribution where the top artists gain increasingly more income while the rest end up losing or having stagnant incomes. The article states that in 2017, “the top 0.1 percent of artists accounted for more than half of all album sales…” This outcome describes the power law distribution that we learned in class which is when a small number of items is clustered at the top and takes up a large majority of the resources. In this case, there are a few superstars who end up taking most of the income from the music industry market. This stems from the evolution of technology that I referenced before and also the concept of information cascades. We learned in class that an information cascade is a phenomenon where people tend to follow other people in a sequential fashion. This occurs because people tend to follow the decisions of those they are connected with. In this case, people tend to listen to the songs that their friends listen to or what is advertised to them. An example of the second case is the playlists that Spotify creates and advertise which are made up of the most popular songs that are predominantly made up of the same few artists. Because of this, the same popular songs will increasingly become more popular as it spreads between “connected” people. As the same artists spread, the more money they will make while those who are not popular tend to stay hidden as their songs would not get enough attention. The article reveals that this superstardom phenomenon has only occurred recently in the music industry because of platforms like Spotify and the Internet where a larger audience could easily be reached. This power law distribution along with the information cascade effect can also be seen in the superstars’ Twitter followers, YouTube subscribers, and Facebook likes where people tend to follow and like those who their friends follow and like.
This link also briefly talks about the comparison between the music industry and the entire U.S. economy. It reveals that the entire U.S. economy has moved towards the same state as that of the superstar market which is that of a power law distribution. “Superstar” companies like Google, Apple, and Amazon have dominated the market due to the same concepts, power law distribution and information cascades, that impacts superstars in the music industry.
Link: https://www.nytimes.com/2019/06/01/opinion/sunday/music-economics-alan-krueger.html