Nathan Smith explains increasing income disparity by contrasting The Restaurant Economy and the iPod Economy:
[L]ots of pretty good musicians will never get into my iPod at all. I would happily eat food cooked by a second-tier or third-tier chef. But there’s no reason for me to listen to a second-tier singer, because I can afford the best. The Billy Joels and Bruce Springsteens of gourmet cookery will always be out of my price range, but the Billy Joel and Bruce Springsteen of rock-n-roll are accessible to any teenager earning minimum wage.And this has implications for the pay structure of the respective professions. The best chefs earn $100K–$150K, less than 10 times more than a minimum-wage McDonald’s worker. Meanwhile, Paul McCartney’s net worth is $1.5 billion, in a profession that is home to thousands of the proverbial “starving artists.”
Why the difference? It’s because of the costs of reproduction. There is no way to cheaply mass-produce the art of a master chef. As a result, one of his meals is only worth as much as one affluent customer is willing to pay for it. And since the master chefs can only satisfy a tiny share of total demand, there’s plenty of room for chefs of lesser talents. But since Billy Joel’s music can be reproduced ad infinitum at almost zero cost, he gets his royalties from thousands or millions of listeners, and makes a fortune. And since a handful of rock stars can make enough music for everyone, lesser musicians — even some of considerable talent — are left out in the cold. And even for the rock-n-roll greats, success is precarious.