There is a famous phenomenon that emerges across a whole host of domains called Price’s Law. Put simply, the square root of all inputs provide 50% of the outputs.
This can be seen everywhere; a small number of artists on Spotify make up most of the listens, a small number of Premier League players score most of the goals, a small number of universities produce most of the breakthroughs. A handful of stars produce most of the light in the universe, a handful of rivers hold most of the water. The list goes on, and on, and on.
In small groups, it is hard to recognise Price’s Law. In a legal firm of 25, it makes sense that the 5 partners generate most of the money and output; the other 20 associates, paralegals, and HR just support them. But when it scales to global outcomes, like music or literature, it becomes brutal.
Take Spotify. There are almost 10 million artists on the platform.
- Of those, 81% have less than 1000 monthly streams.
- Around 200k have 10k+ streams, earning them “professional” status and activating royalties (you don’t get paid at all before then, something I just learned).
- Under 1% of all artists have over 100k streams per month.
- Taylor Swift has over 120 MILLION streams per month.
A single person, Taylor Swift, probably has more streams per month than the bottom 40% of artists on the platform. Price’s Law says that 50% of all streams are driven by the square root of 10 million, which is a bit over 3000 artists, or 0.03% of the platform.
Price’s Law isn’t just a fun quirk to bring up at trivia night. I have been thinking how it might impact market based economies, where a small number of hyper industrious, innovative, intelligent, and capable people can produce the majority of economic output, leaving a huge majority of people fighting over the scraps. I think this idea, combined with Tomas Piketty’s famous r > g statement, deserves some further thought.
A great potential effort post.
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