Celebrity, Inc.: How Famous People Make Money

Celebrity, Inc.: How Famous People Make Money

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by Jo Piazza

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From $10,000 tweets to making money in the afterlife, a recovering gossip columnist explores the business lessons that power the Hollywood Industrial Complex

Why do celebrities get paid so much more than regular people to do a job that seems to afford them the same amount of leisure time as most retirees? What do Bush-era economics have to do

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From $10,000 tweets to making money in the afterlife, a recovering gossip columnist explores the business lessons that power the Hollywood Industrial Complex

Why do celebrities get paid so much more than regular people to do a job that seems to afford them the same amount of leisure time as most retirees? What do Bush-era economics have to do with the rise of Kim Kardashian? How do the laws of supply and demand explain why the stars of Teen Mom are on the cover of Us Weekly? And how was the sale of Brad Pitt and Angelina Jolie’s baby pictures a little like a street drug deal? After a decade spent toiling as an entertainment journalist and gossip columnist, Jo Piazza asks the hard questions about the business behind celebrity.
Make no mistake: Celebrity is an industry. Never in the course of human history has the market for celebrities been as saturated as it is today. Nearly every day most Americans will consume something a celebrity is selling—a fragrance, a sneaker, a song, a movie, a show, a tweet, or a photo in a magazine.
With the benefits of Piazza’s unique access to the celebrity market, Celebrity, Inc. explains in detail what generates cash for the industry and what drains value faster than a starlet downs champagne—in twelve fascinating case studies that tackle celebrities the way industry analysts would dissect any consumer brand.

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Editorial Reviews

From the Publisher
“An economist at heart, Jo Piazza has consistently dug deeper to try to figure out why celebrities behave the way they do and what the consequences of their behavior will be. This book puts celebrities in context, but it also puts the consumer of celebrity in context. No one should feel bad about enjoying pop culture, but they should understand how it is being marketed to them. [Celebrity, Inc.] gives the reader the tools to do exactly that.”
—Bonnie Fuller, President of HollywoodLife.com
Kirkus Reviews
Entertainment journalist Piazza dissects the industrialization of fame in the age of celebrity. A celebrity may be a person, but celebrity is a product, a commodity bought and sold, writes the author in this rangy analysis of the celebrity business. Like it or not, our culture has invested its celebrities with extraordinary power, and Piazza presents all the players involved, including managers, agents, publicists and producers. A dozen vignettes explore the ways in which celebrity is created and revenue streams are activated, whether it is celebrity in the long run, as in an Oscar win (there is a terrific chapter on how to buy an Oscar), or the short-term celebrity through association (Tiger Woods' lovers going public: "Their investment was just their dignity, and the payoff was substantial"). Since she has been intimately involved in the business, Piazza's chapter on celebrity magazines, from copy to newsstand placement, is particularly revealing, and she is willing to call a spade a spade when it comes to the cheesier aspects of celebritydom, from the selling of baby photos to the "leaked" sex tapes that launched Paris Hilton and Kim Kardashian. She also takes on the evolution of various branding styles and the ways in which notoriety in one sphere can be parlayed into licensing deals in another. In perhaps the most enlightening chapter, Piazza explains why some celebrities survive and others fizzle. You have to be fun and relatable, inclusive and aspirational, but most of all likable and consistent, which is why Lindsay Lohan tanked (inconsistent) and Charlie Sheen shines on (consistent in his craziness). It's rarely pretty, but Piazza ably demonstrates the celebrity machine's remarkable efficiency in getting us to give it our money.

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Celebrity, Inc.

How Famous People Make Money

By Jo Piazza


Copyright © 2011 Johanna Piazza
All rights reserved.
ISBN: 978-1-4532-0551-8


Shiloh Jolie-Pitt: The Magazine Market and the Bull Run for Celebrity Baby Pictures

Very little is precious in Hollywood. Even less is immune from the machinations of moneymaking. As the tabloid magazine market reached a tipping point and Internet gossip began to gain legs, the tiniest stars in Hollywood—celebrity babies—became the focus of multimillion-dollar bidding wars. Celebrity spawn became hot commodities, leading to the most expensive baby picture sale of all time.

Editors of celebrity weekly magazines would later say it was a little like a drug deal—the day they were led into a dark office and shown the first pictures of Shiloh Jolie-Pitt, premiere biological spawn of movie stars Brad Pitt and Angelina Jolie, and asked to place bids. The question posed to the editors was deceptively simple and impossible to answer with any confidence: How much were these photos worth?

It was the spring of 2006, but the perfect tabloid storm had begun twelve months earlier. Brad Pitt, two-time winner of People magazine's Sexiest Man Alive award, ditched wife Jennifer Aniston, America's sweetheart, for the sultry and slightly off-key Angelina Jolie. The daughter of actor Jon Voight and model Marcheline Bertrand, Jolie was the anti-Aniston. She had attended her first wedding, to British actor Jonny Lee Miller, in black rubber boots and a white T-shirt decorated with the groom's name written in her blood, while thousands of women across the United States were asking their hairdressers to give them layers like their favorite Friend's. Jolie and Pitt met while filming Mr. & Mrs. Smith, and rumors of their on-set affair proved true when Aniston filed for divorce from Pitt in March of 2005. One month later, Us Weekly reportedly paid $500,000 for paparazzi pictures of Pitt and Jolie frolicking on a beach in Kenya with Jolie's young son Maddox. In January 2006, Jolie announced that she was pregnant with Pitt's child, and everyone in the industry knew what that meant. The paychecks for pictures would only get bigger.

This was by far the most intriguing story of the modern celebrity journalist's career. It was the Liz Taylor, Eddie Fisher, and Debbie Reynolds love triangle of our time. Peter Grossman looked at his editor in chief, Janice Min, the moment the pregnancy was announced.

"This is it, we should just quit," he said.

Their counterparts at the newly launched American edition of British tabloid OK! magazine and at longtime celebrity stalwart People had similar thoughts. The birth of one of the most genetically advantaged children of all time was manna from heaven for celebrity magazines battling to stay relevant in a crowded magazine marketplace amid outside competition from the 24/7 cycle of television and Internet news.

That threat was real. Magazines' share of total ad spend was projected to decline to 10.7 percent by 2012, down from 14 percent in 2011. Their online ad spend was growing but not sufficiently to continue supporting international editorial staffs and outrageous photo budgets. Online they had to compete with low-overhead, high-risk blogs like PerezHilton.com (launched in 2004) that titillated readers with nasty commentary, and also with online news organizations like TMZ.com that broke celebrity news around the clock with a team of seasoned journalists and sources ranging from paparazzi to police officers. Where Perez brought the bitchy, TMZ brought a sense of journalistic integrity to celebrity exploitation on the web. The magazines had no online niche.

While access to the biggest stars in Hollywood traditionally helped celebrity outlets maintain their bottom line, the battle in the war for twenty-first-century relevance was about to be fought over access to the littlest stars in Tinseltown—and it was fought with a checkbook. Celebrity babies were about to be worth millions. Shiloh Nouvel Jolie-Pitt was born via scheduled Caesarian section on May 27, 2006, heralding the start of a bull market in celebrity baby pictures, at the ideal time for her ambitious parents to capitalize on unprecedented competition in the tabloid journalism market.

A Brief History of the Celebrity Magazine Market

Since its founding in 1974 as a spin-off of the "People" pages of Time magazine, People magazine has been the household name in celebrity and entertainment news. Its editors have never been averse to paying to get the pictures they want. The magazine's founding editor, Dick Stolley, once bought Abraham Zapruder's film of the Kennedy assassination for Time, Inc. for $150,000. But as a magazine that covered Hollywood happenings, People built its name on cooperation with celebrities. It did not trade in gossip. Its stories were never salacious or mean. Perhaps it was too nice. People was so kind to celebrities it became a punch line. In the 1983 movie The Big Chill, actor Jeff Goldblum's character's vacuity is underscored by his job with the magazine.

People could laugh all the way to the bank, because for years it had a monopoly on the celebrity news market in glossy print. Every once in a while some ambitious magazine editor would get it into their head to launch a competitor, but he or she would eventually be dissuaded by the hefty entry fee&mdsh;approximately $100 million in sunk costs&mdsh;from trying to compete at People's level.

That level meant an upstart magazine would need between sixty and a hundred people on editorial staff and stringers absolutely everywhere to report a story on a moment's notice. The office space alone would take up a floor of a building occupying an entire city block. It would cost between ten and fifteen million dollars for the newsstand real estate to live next to People magazine at checkout counters, and an additional fifty million dollars in market research and new hires.

But People's singular time in the marketplace would come to an end in 2000, when Wenner Media's Us magazine transformed from a movie industry trade rag into a celebrity weekly. According to former Wenner Media executive Kent Brownridge, the idea to go weekly was first floated at a boozy lunch meeting at tony Manhattan restaurant Le Bernardin between Brownridge and the magazine's advertisers.

"The client said, 'Have you guys ever thought about going weekly?' And I said, 'You guys are fucking nuts! We're losing two million dollars a year and you think we should go weekly?'" Brownridge told me. "But on the way to the office I thought maybe it could work. It was the timeliness factor of celebrity news that really mattered, and ten years ago you couldn't be much more timely than a weekly."

Brownridge says he suggested the idea to the magazine's publisher, Jann Wenner, who agreed that it was indeed nuts to try to enter People magazine's market. But before Brownridge could make it back to his office, Wenner phoned him to say that going weekly might be the last thing that could save Us from going under. Trouble with the plan began right away, when they couldn't find an investor. "Everyone thought we were fucking crazy," Brownridge said.

Initial evidence suggested they were. They appointed Terry McDonell, who would later become a successful editor in chief of Sports Illustrated, to the mag's helm.

McDonell's wheelhouse was more touchdowns and RBIs than red carpets and celebrity weddings. McDonell, Brownridge, and Wenner were three men in their fifties and sixties writing for women in their twenties and thirties. The product just wasn't right, and the consumer wasn't buying it. Wenner lost about $50 million in the magazine's first year. Then in February of 2002, they found their golden ticket in the form of Glamour magazine editor Bonnie Fuller, a Canadian-born magazine veteran who was a bit of an outsider and who knew what Americans outside the tristate bubble wanted to read. Despite Wenner and Brownridge's early misgivings, she was exactly what the magazine needed.

"With just three issues she blew the doors off," Brownridge said.

The paparazzi photo took on a new meaning under Fuller's reign. She turned the magazine into a celebrity photo album with titillating headlines meant to entice and engage the reader. Us Weekly differentiated itself from People by removing the fawning obsequiousness and providing intimate details of celebrities' lives as if they were personal friends. Late July of 2002 marked Fuller's first big success, when Us Weekly scooped other gossip outlets with Angelina Jolie's exclusive confession of "Why I Left Billy Bob." That issue sold more than 800,000 copies. During the second half of 2002, newsstand sales rose 55 percent, averaging 505,002 copies an issue. By the end of the year, Wenner had raised Us Weekly's ad rate base from 800,000 to 1,050,000, and the magazine's finances were in the black.

"What was the reward we got?" Brownridge recalled. "We got three new competitors."

That competition was Star magazine, In Touch, and Life & Style. Star was originally launched by media mogul Rupert Murdoch in 1974 as a paper-thin supermarket tabloid competing with the National Enquirer for Wolf-Man and Alien-Baby headlines. In 1990, Murdoch sold the magazine to the Enquirer's parent company, American Media, and in order to differentiate this new acquisition from the Enquirer, American Media converted Star to the glossy Us Weekly format in 2004, upgrading its paper quality and staffing the magazine with People and Us Weekly refugees—and in the ultimate confirmation of their quest to emulate Us Weekly's success, wooing Fuller away from Wenner Media and installing her as their editorial director.

The American celebrity market appeared so wide open that foreign publishing houses raised capital to get in on the market too. In Touch Weekly and Life & Style Weekly were both launched by German publisher Bauer and landed on American shores in 2002 and 2005 respectively. And the competition would only get fiercer. OK! magazine, the largest circulation celebrity magazine outside the United States, with editions published in the United Kingdom and Australia, launched in the United States in 2005.

The pressure was on People to maintain its premiere position. The chosen weapon was not price or poaching top editors, but photographs. Early on in their war with Us Weekly, People spent a reported $75,000 to buy pictures of Jennifer Lopez reading Us Weekly, just so that the competition couldn't buy and publish them to enjoy the publicity. Us Weekly editor in chief Janice Min saw that sale as a watershed moment in outrageous photo pricing.

"I had never seen anything like it. But they saw a competitor come along, and responded. It was a business move, and probably a smart one," Min said.

The moment also portended that things were about to get ugly in celebrity media. "I think it's one of the most competitive, nasty areas to work in," former OK! editor in chief Sarah Ivens told me. The stately blonde with a big personality and bigger Rolodex was offered the top job at the American edition of the magazine after spending only eight months at the British version of OK!. She was twenty-nine years old, had spent nine years working in British media at the Daily Mail, the Daily Mirror, Tatler, and Marie Claire, and was given only two weeks to decide whether to uproot her busy life in London and move to America. Once she arrived, she realized just how different the American press was from the British. "In London there's a sense of camaraderie among journalists and publications. They're journalists and they love other journalists. Here in America everyone was just out to get each other."

By 2006 the six players in the celebrity magazine market brought in a combined ad revenue of more than $2.6 billion and sold more than 9.8 million issues yearly.

America's appetite for celebrity gossip seemed insatiable. Circulation at celebrity magazines soared in the first half of 2005, at the same time more serious-minded magazines like Time and Newsweek were struggling.

The Economics of the Celebrity Magazine Market

Magazines command two major streams of revenue: revenue from the sale of the actual magazines (be it at the newsstand or through subscriptions) and revenue from the sale of advertising within the magazines.

For most magazines, the marginal profit on the advertising side is high, and low on the issue sales side. But the two revenue streams play off each other. By increasing circulation, a magazine can sell more ads, because it can honestly claim that it's reaching a bigger audience. Increasing circulation and acquiring new subscribers and newsstand purchasers costs money. Back in the day, magazine subscribers tended to be loyal consumers, but the rise of the Internet swelled the ranks of consumers who realized that they did not need to buy the magazine, as they could just as easily get their celebrity fix of Jennifer Aniston walking her dog on the beach in Malibu and "Who Wore it Best?" showdowns online. Magazine editors resorted to tricks like getting "must-see" photos before the competition, to get the public's attention and then, with any luck at all, turn that attention into affection, and with that, have a shot at consumer loyalty.

Every new cover presented a challenge. The magazine industry on the whole has high fixed costs due to high editorial costs (the purchase of photographs among them), high manufacturing costs, and the high cost of outreach to new subscribers. In its entirety, a typical issue of a celebrity weekly costs between $200,000 and $400,000 to produce. Of that amount, 40 percent is editorial and 60 percent pays staff salaries and overhead. Of the $80,000 to $160,000 in single-issue editorial costs, 75 percent will pay for pictures. On average, the marginal cost to produce a single copy of a magazine is around 78¢. Distributing that single copy costs another 35–45¢.


Excerpted from Celebrity, Inc. by Jo Piazza. Copyright © 2011 Johanna Piazza. Excerpted by permission of OPEN ROAD INTEGRATED MEDIA.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.

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What People are saying about this

From the Publisher
“An economist at heart, Jo Piazza has consistently dug deeper to try to figure out why celebrities behave the way they do and what the consequences of their behavior will be. This book puts celebrities in context, but it also puts the consumer of celebrity in context. No one should feel bad about enjoying pop culture, but they should understand how it is being marketed to them. [Celebrity, Inc.] gives the reader the tools to do exactly that.”
—Bonnie Fuller, President of HollywoodLife.com

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