When learning to recognize a good business, you quickly realize that the sheer amount of money coming in the door is only the beginning of the analysis. What also matters is who you have to share the money with—employees, lenders, vendors, etc.—before it gets paid to you the shareholder. Very often, being forced to share with others can turn a high-revenue business bad, and not having to share can turn a low-revenue business good. The ideal business tends to be a goldilocks situation: a large enough “team” of people and capital to make something that a lot of people want, but not so large that the resulting revenues are spread too thin.
You can see this dynamic at work in the world of celebrities. TV Guide just released its list of the highest paid TV personalities, and Judge Judy was number one—somewhat improbably until you realize she’s popular enough to attract viewers and advertisers at high scale, with no obligation to share with co-stars or fancy technicians or famous directors. For a similar reason I’ve always admired the business acumen of Merv Griffin: Surrounded by would-be Hollywood moguls chasing after the biggest movie or the most popular hit TV shows, he became a billionaire largely by creating two game shows, Jeopardy! and Wheel of Fortune, that combined “popular enough” and low expenses.
The same idea applies to a new category of entertainers: DJs, the biggest of whom who can fill arenas with few expenses beyond their laptops—no cantankerous bandmates, no roadies. You may not prefer their music, but they have the better business model.