The economics of presence

Or why movie stars and singers decrease in value if they are too present in the media and why Angelina Jolie is overvalued.

Within the field of economics in general, I have two passions: One is for everything that is related to finance, the other is macroeconomics. This post, even though it might not seem obvious at first, is about the latter.

Today I want to talk about fame as a derivative. Imagine that the worth of fame would increase or decrease in relation to the demand for the underlying, the actor or singer, by the respective audience. Now imagine that when a studio hires a star, they pay a portion for the performance of the person but in fact the majority is being paid for derivative value, the actors fame. Hence the higher the demand for the actor, the bigger his fame and therefore the bigger the current market price of the actor.

If offer exists in the market and keeps on being existing than naturally there also has to be demand, the question is what do the consumers demand – the actors fame or his persona? This question is quite interesting and can be discussed on different layers; this blog author however believes that there is no demand for the persona but in fact only for the public image of the actor represented in his fame. Every consumer has a certain demand for other peoples fame but more importantly every consumer has a demand for the fame of a specific person (e.g. fandom). The consumption of fame can happen through various medias, it is not mandatory that fame is consumed through the key media of the famous person (for an actor – movies; for a singer – music). Now let us come to my controversial theory:

The more an actor will appear in the media for instance due to gossip that surrounds him or her, the higher will be the extent the consumer will be exposed to the actors or singers fame (his public image). That will result in a saturation of consumers demand for the celebrity, decrease of the marginal value of another unit of output of the actor which will inevitably lead to an unwillingness to spend 9 € for a movie ticket to consume the actor once more. Consumption of an actor, or rather his fame, doesn’t necessarily have to happen through movies, the more he is present in every day medias such as the internet or news, the stronger the shift in consumption from movies to the mentioned media, the weaker the sales for a movie. Why should you pay to see an actor in a movie if you can also consume him on the news, or gossip pages on the web?

Examples? Jennifer Lopez and Ben Affleck – during their relationship a media shift happened from their core businesses, music and acting, to gossip pages and news coverage. A result was that the need for both of them was saturated. Their careers have yet to recover. Other examples: Tom Cruise and very soon Angelina Jolie too (however her value has now become a derivative of Brad Pitts value and Brad Pitt is not going anywhere in the near future), David Beckham, Collin Farrell.

More to come very soon.

FJF

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