The Superstar Phenomenon Within a Digitized Economy: Theories, Causes, and Case Studies Surrounding the Entertainment Industry and Beyond

Abstract

The primary focus of this writing is to examine a structural wage distribution approach across several entertainment industries and within the corporate structure – in the fields of sports and music and top executives in businesses. Given the digitization of the modern economy – an ongoing transition drastically changing purchasing and consuming behaviors – viewership has become more accessible to a broader audience. Nonetheless, this form of convenience and publicity also exacerbates a more profound economic scenario that televised celebrities, especially entertainers like athletes, artists, and musicians, experience: the superstar phenomenon, or the concentration of high wages attributed to a small group of earners when compared to others within the same business. This condition alludes to the notions of opportunity cost, willingness to compete, incentives and disincentives, marginal costs, scarcity rent, imperfect substitution, and the extreme value theory that assesses how different professions may be experiencing elements of the phenomenon that affect the outcome of industry structures and economic well-being. From these observations, a question arises: what economic factors contribute to the magnification of pay disparity to create the superstar phenomenon, and how does this effect permeate and reflect different industries' pay structure gaps? Upon analysis, the cause seems to deter from the metric of pure skill or talent evaluation but instead focuses on individuals' marketability, attractiveness, irreplaceability, and influence, offsetting the direct correlation of statistical performance to payroll.

Furthermore, the ability to mass replicate performances and scarcity in handling top managerial responsibilities for entertainers and executives, respectively, exaggerates consumers' biases in focusing on the victor or leader. In other cases, one's ability to acquire superstardom derives from obtaining endorsements and sponsorships in the case of athletes and musicians and

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reputability within businesses to form superstar firms. Lastly, it is integral to note that beyond reputation and its structural advantages in pay, a psychological advantage also emerges, particularly within individual athletics, where opponents facing a superstar feel intimidation and showcase sub-par performances. In turn, superstars experience more favorable outcomes, a cyclical advantage that yields more award money, attention, and brand deals. Thus, the trends within the phenomenon, both in group and singular, entertainment and corporate settings will play an analytical role when stakeholders assess an individual or a firm's profitability. The phenomenon also draws on financial distribution shifts as the economy digitizes and concentrates on the elite percentage of income earners. This, however, creates a widening margin between the superstars and the rest while having side effects of pushing workers positioned lower in the industry's ladder out of the market, exacerbating inequality, particularly within entertainment industries (Koenig, 2017). By looking at statistics in pay distributions and using the aforementioned economic principles, this paper will provide a comprehensive theoretical analysis exploring the origins and justifications of the superstar phenomenon.