The economics of Pop Idol

From the people who gave us this comes this fine analysis of the economics of Pop Idol and manufactured celebrities. It's a great read, especially by the standards of German economics. Some highlights:

Why do we experience this shift from "self-made" stars to "manufactured" celebrities?...Whereas self-made stars become endowed with market power through the very mechanisms which create them, celebrities have inferior opportunities to capture the value created by their appearance. Therefore the media companies are able to capture the bulk of the profits from "manufacturing" celebrities.

Superstars may be replaced by fabricated celebrities who draw large audiences without having substantial bargaining power to get the created value.

Simon Fuller described his manager-client relationships with the Pop Idol contestants as "partnerships" in which he recieves between 25% and 50% of their earnings.

Reality shows like Pop Idol cost about half as much to produce as typical new drama or sit-coms.

And here's an older classic paper (pdf) on how companies cope with the market power of key workers.

Comments

[matt]

It's very appropriate for you to have quoted a highlight concerning Simon Fuller. The article notes that Fuller created the Spice Girls and S Club 7, but there's more to it than that. The Spice Girls had already formed when they hired Fuller as manager in 1994. They fired him after 3 years. Fuller created S Club 7 from scratch specifically so that he'd have complete control over them. Pop Idol just televises the creation of S Club-type acts. So, yes, it's definitely about the money, but for Fuller, the key player behind Pop Idol, it probably started off as about control / job security.

[james higham]

The Monkeys were possibly the first of this ilk.

[M]

Daniel Finkelstein has linked to this post:

http://timesonline.typepad.com/comment/2006/11/i_share_with_my_1.html

[Folkert]

I really enjoy your site, i have bookmarked your site in the hope you will bring more of this great reading

F

[James]

So, yes, it's definitely about the money, but for Fuller, the key player behind Pop Idol, it probably started off as about control / job security