In creative industries such as art, music, fashion, and design, innovation is often followed by widespread imitation. Contrary to the conventional view, imitation may enhance, rather than erode, the innovator’s payoff by generating positive demand externalities that expand market size and legitimacy. A defining feature of artistic and creative labor markets, witnessed by a large number of historical examples, is the coexistence of strong leadership and widespread imitation.This paper develops a simple leader–follower model with both exogenous and endogenous entry to characterize these dynamics. We show that imitation is beneficial only when entry is bounded—due to skill requirements, reputational constraints, or institutional mechanisms. Beyond a critical threshold, excessive entry leads to congestion, reduces differentiation, and erodes the innovator’s advantage. The results suggest that neither unrestricted imitation nor strict monopoly is optimal, but that efficient outcomes require maintaining a finite number of imitators.