J.K. Rowling is the first author in the history of the world to earn a billion dollars. I do not disparage Rowling when I say that talent is not the explanation for her monetary success. Homer, Shakespeare and Tolkien all earned much less. Why? Consider Homer, he told great stories but he could earn no more in a night than say 50 people might pay for an evening's entertainment. Shakespeare did a little better. The Globe theater could hold 3000 and unlike Homer, Shakespeare didn't have to be at the theater to earn. Shakespeare's words were leveraged.But it's possible to look at these examples in an entirely different way.
Tolkien's words were leveraged further. By selling books Tolkien could sell to hundreds of thousands, even millions of buyers in a year - more than have ever seen a Shakespeare play in 400 years. And books were cheaper to produce than actors which meant that Tolkien could earn a greater share of the revenues than did Shakespeare (Shakespeare incidentally also owned shares in the Globe.)
Rowling has the leverage of the book but also the movie, the video game, and the toy. And globalization, both economic and cultural, means that Rowling's words, images, and products are translated, transmitted and transported everywhere - this is the real magic of Ha-li Bo-te.
There's no question that technology and the ability to leverage creative works has a tremendous effect on the economics (and therefore the content) of popular culture, but how well does this particular account support that conclusion?
Homer is a bad example partially because he probably never existed, but mainly because the model Prof. Tabarrok describes, traveling performers working small venues, didn't really apply to writers at all. These minstrels were simply repeating stories that they had accumulated. The closest analogy today would be a cover band working bars and small clubs. (Hesiod throws in a bit of a monkey wrench here, but that's a topic for another day.)
If you skip ahead two or three hundred years you do have successful writers like Sophocles having their works performed in large venues. Though it's difficult to draw an analogy between forms of compensation then and now, they were certainly well rewarded for their work. Go on to the Roman era you have successful writers producing book length poems and even novels despite the lack of printing presses.
As for Shakespeare sticking to the stage, this had little to do with the relative cost of books and actors. There were the equivalent of cheap paperback versions of Shakespeare's plays published during his lifetime. There were also productions of his plays away from the Globe. Shakespeare's words were widely leveraged. The problem wasn't technology or venue; it was the lack of modern copyright laws. The revenue went to other people.
Tolkien is a bad example for other reasons. His body of work is small. His books were difficult to translate into other media. Significant sales didn't start until years after the books were written (prompted, in part, by the mistaken belief that the copyright was limited to Britain).
A better example would be Erle Stanley Gardner who had a large body of work, sold more books than Tolkien and was, during his lifetime, adapted into movies, TV, radio, comic books and probably a few other media. Was Rowling better leveraged than Gardner? Sure, but not by as much as you might think.
There is obviously more behind the rise of the superstar author than technology and the ability to leverage words, more than I have time to address now, but if I were to pursue it, I think I'd make the case for this being a story of lobbying and government regulation of the market in the form of copyrights. Technology has changed, but so has the law.
And now, just in case any of the above might be read as a slight against Rowling, I'll let Stephen King have the last word with his comparison of Harry Potter and the Twilight books:
Both Rowling and Meyer, they’re speaking directly to young people… The real difference is that Jo Rowling is a terrific writer and Stephenie Meyer can’t write worth a darn. She’s not very good.