What is a celebrity worth?

How celebrities terms themselves connected Cameo

“THE WRITER of this portion deserves a large raise,” says Bret “The Hitman” Hart, a nonrecreational wrestler from the 1990s. “He is the champion determination is, the champion determination was, the champion determination ever volition be,” helium adds, echoing his aged catchphrase. Your analogous paid Mr Hart $150 to sing his praises.

Mr Hart is 1 of implicit 10,000 celebrities connected Cameo, an online work wherever anyone tin committee celebrated radical to movie abbreviated messages. Its popularity has surged arsenic celebrities question caller sources of income and confined consumers look for ways to walk money. Last twelvemonth they paid immoderate $100m for 1.3m videos, much than successful the erstwhile 3 years combined. Talent connected the tract ranges from Jack Nicklaus, a golfer ($1,000 per clip), and Vicente Fox, a erstwhile president of Mexico ($300), to Barkley the Dog, a canine ($5).

Cameo, similar Uber, is simply a two-sided market. But astir Uber users don’t attraction what car shows up, arsenic agelong arsenic it is clean, harmless and gets them to their destination. On Cameo, the affectional transportation betwixt a instrumentality and a prima matters. “The terms that a marketplace volition carnivore depends connected the worth being created for a imaginable customer,” says Jill Avery, a prof astatine Harvard Business School who has studied however online influencers terms themselves. But “value” is hard to measurement erstwhile it comes down to emotion.

How bash celebrities fig retired their fees? One mode is done a elemental opportunity-cost calculation. Steven Galanis, Cameo’s boss, recalls speaking to a hoops subordinate connected an yearly $25m contract. For a 40-hour work-week with a fortnight of holiday, that is $208 per minute. “If helium charged $100 and did 2 oregon 3 a minute, helium could marque much wealth connected Cameo,” says Mr Galanis.

Most celebrities are freelance, though. They tin effort 1 of 2 strategies, says Ms Avery. One is “price skimming”—starting precocious and past lowering the terms arsenic request ebbs. The 2nd is “price penetration”, pricing debased to maximise volume. Celebrities often usage both, depending connected however overmuch clip they have.

Another method is to trial the market. This is amazingly underused. Though celebrities tin alteration their prices arsenic often arsenic they like, lone astir 30% person done truthful astatine slightest once, and little than 10% person done truthful much than 5 times.

Less rational reasons are astatine play, too. Snoop Dogg, a rapper celebrated for smoking copious amounts of weed, insisted connected charging $420, a fig associated with cookware culture. He could not support up with request and yet raised his interest to $1,000. Others complaint a premium implicit perceived rivals or, led by ego, overprice themselves. But world yet intervenes. Mr Galanis remembers a TV property who started astatine $60 and recovered that request was inelastic each the mode up to $99. But erstwhile she raised her terms to $125, request dropped by half. Value, similar fame, is yet decided by the fans.

This nonfiction appeared successful the Finance & economics conception of the people variation nether the header "The terms of fame"