Trust the artist versus trust the tale: performance implications of talent and self-marketing in folk music

Based on a unique dataset of artists that are active in the German market for folk music—the third largest music genre in terms of popularity and sales—I study what factors determine the artists’ success. Following Rosen (Am Econ Rev 71(5):845–858, 1981 ), I test if differences in artistic performance have a direct effect on financial rewards as regards physical and digital record sales (“direct superstar effect”). Following Adler (Handbook on the economics of art and culture. Elsevier, Amsterdam, 1985 ), I also study sales effects of a media presence of artists (“classical superstar effect”). Controlling for various contingency factors (e.g., record labels’ support, artists’ socio-demographics), I deal with an economic issue of general interest: Does it pay more to develop your skills in your core business to perfection or to maintain the current level of skills and invest in self-marketing; and do these effects apply to all folk artists alike? Rather contrary to studies on pop and rock genres, I find that higher ability increases artists’ revenues disproportionately, but simultaneously, openly competing for the recognition of one’s talent holds substantial economic risk. I also observe a positive effect of various types of media presence on financial rewards. However, these income determinants have different impacts on sales in physical versus in digital markets, and their effects vary across the success distribution from low- to top-selling artists as well. Copyright Springer Science+Business Media New York 2014