Originally posted as a comment on Fred Wilson's blog.
One important thing to note about our shift to a long tail world is that it doesn't necessarily change the demand side of the supply and demand equation that much.
I am a huge fan of the user-generated content and perhaps more importantly, the user-centric filtering revolutions. Rather than rely on corrupt systems like network television, Hollywood studios, newspapers or the music industry to link creators and consumers of content, we now have the technology to being them together directly.
This breaks down many silly and unfair barriers, such as the requirement to move to Los Angeles or New York to be discovered in the entertainment industry. The American distrust of this sort of elitism can be seen by the wild success of American Idol, where anyone can succeed or fail on their own merits, rather than their "connections."
But let's not overstate the case here.
There are fundamental limits to the amount of filmed entertainment that can be demanded, such as the total population of the market and the average waking hours of those individuals. At most, I can only consume about 16 hours of media per day (and with Americans watching TV 7 hours per day, there isn't much upside).
In the long run, artists can only be paid the amount of money that their patrons and customers spend.
It's unclear to me that there are any vast increases to this pot in the offing. If I'm right, then one of two things will happen:
1) The number of "stars" will stay constant, but our means for discovering them will shift from centralized and autocratic to decentralized and democratic.
2) The number of "stars" will dramatically increase, but the average economic benefits of being a star will nosedive as the pot is split between a much larger number of players.
The same holds true of Web 2.0--anyone can start a company, but doesn't that just mean more people splitting the same pot at the end of the rainbow?
This is not to say that what's happening isn't real, or isn't important. It's just that "anyone can be a star" doesn't mean that it's easier to become a star, or that being a star will be as profitable as it was in the past.
Anyone can be a star, but everyone can't be a star.