Power Laws in Action
These are some recent observable examples of power laws across multiple disciplines:
Fast Earners: South Korea’s millionaire, Celebrity Schoolteachers
This is one that shocked me. There aren’t many, if any, celebrity school teachers in the U.S., but one day that could change. The major impediment is the inherent localization of schooling. With in-person schooling, there’s a limit to the amount of students per class. Even if there’s competition for a specific teacher or school’s services, the teacher is unlikely to capture that value. With the rise in online education, especially cohort-based online learning, the best educators will capture more of the value they’re creating.
The Economics of Music Festivals
“When Jimi Hendrix played his iconic set at Woodstock in 1969, he was paid the equivalent of $125,000 in today's money. Fifty years later, Ariana Grande was paid more than $8 million to headline the Coachella Valley Music & Arts Festival.” This is incredible. Music revenue is now incredibly power law distributed. Even compared to a few years ago, nobody is buying individual songs or albums anymore. Everything is now streaming and, as a result, the top few artists are capturing all the revenue. The effects keep trickling down. Concerts are now held at football stadiums and everyone wants to see the biggest artists who are touring worldwide.
This reminds me of a story when music was first recorded. A long time ago, you could only hear music live. If you lived in Italy, your options included the local opera singers. Then everything changed when music could be listened to on-demand. It became a winner-take-all competition.
College Football Playoff National Championship:
Just days ago, Alabama beat Ohio State in a fairly one-sided championship game. These were the top two teams in the country, and the outcome was never in question after halftime. If we were to plot all 130 FBS teams on a graph for a single power ranking, the result would not be linear.
The result would be closer to exponential. The separation between the #1 team and the #130 team is not much greater than the difference between the #1 and #25 teams.
This power law distribution is getting to be everywhere we look.