Several thoughts: 1) Might we be looking at the wrong profits when we see that a pop star is making millions and wonder why more don't enter the market? For the most part, it is the record campany (as you say) doing the hype for the star, they really make the performer (this is a phenomena most true in pop music, where many performers hardly have a career before they are big and they tend to have to be young and so don't have much time for experience or creating there own rep). Maybe the record industry has profits that much more closely mirror a competitive market? Paying the performer so much could be to make the image of that performer and be part of the marketing costs for selling records- sure Vanilla Ice only had one hit and has millions, but maybe by giving him millions, the record company thought they would increase sales- would most teenagers want to listen to a guy who lives in a trailer or the guy whose house in on "Cribs" (or whatever the MTV show is named)? 2) Pop music (and the same for actors in pop movies) is almost like what happens in a network- the more widely used, the bigger the benefits. A pop star could be like a snow ball- it is hard to break into the industry (indeed, I think many do try- think about the number of bands that play that only have a local following- the chance that you are an international success like Britany is miniscule), but once you get going, you can really do well. I mean, would most people listen to this music if no one else did? I just don't think this is likely- and it can be seen from the rapid drop off in record sales after a pop musician's "15 minutes". Another example (on the movie side) seen on the back of a Blockbuster rental- when is recommends other movies you might like if you rented this one, it usually does not tell you movies with a similar plot or, albeit less commonly, movies of the same genera- it tells you the other movies that the star was in.
I think the barriers to entry from the marketing involved in creating the pop star image and the network effect can explain the reason pop music stars make so much. Obviously, in other parts of the music and film industry, there are many who do not make an income even equal to that of the average American. Jason
