Examine why superstars get paid so much and the effects on the industry involved.

Essay by michael23jUniversity, Bachelor'sC+, March 2006

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The film industry today is priceless in terms of movie production costs and salaries. The production of 'Superman's Return' has just finished beating the world record for the most expensive movie ever to be made, with a production cost of $250 million. But why do film companies like Columbia Pictures invest so much money in one movie and pay enormous salaries to film stars? What effect does this have on the film industry? Is it just because Johnny Depp is making an appearance?

To answer this, we have do look at some factors and theories, and consider the correlation between demand and supply within the market. This should help us see and understand the theories behind why film-stars get paid so much and the effects it has on the industry.

These factors can help explain why film-stars get paid so much. How much they can earn depends on where the money is coming from and essentially, "who they are".

If they are a "big enough" star then they can demand a Marginal Revenue Product (MRP). This is because by being involved in the film, they are bringing extra value to it due to their own status. People often go to the cinema, just to see their favourite stars. Many people went to see 'Barbed-wire' just because Pamela Anderson made her debut on the cinema screens for instance.

An MRP is a set figure that the film-star can demand no matter how successful or unsuccessful the movie becomes. "Julia Roberts is being paid $12 million for a film that does not even have a title yet" (Sean French, 1995).This is just because she is unique. According to Tom Long (2002) "We have to consider what they mean in terms of viewer-ship and the company as a whole".

These "superstars" get their...