the unusual economics of the film industry part II

Another aspect of the economics of the film business that I don't believe is common elsewhere is that you often find vast price difference for the same commodity.  In fact, if I'm not mistaken in most industries it's illegal to sell the same product at different prices to different buyers.  Yet actor salaries can vary drastically between productions, and I'm talking about prices for the same actor.  For example Jim Carrey routinely gets paid $20M to act in a big studio comedy, but will take a fraction of that amount for a edgy, thoughtful, smaller indie like "The Eternal Sunshine of the Spotless Mind".  I use Carrey as one example, but almost all of the major film stars routinely engage in the same practice.

What has always surprised me about this is not that motivation of the stars which I completely understand.  They want to stretch, do something more daring, take creative risks, put themselves in a film that could be an award winner, etc.  They don't need the money, so they are motivated by other factors.  What surprises me is that the studios accept the price differential so easily.  I have never heard of a studio executive saying, 'Wait a minute Mr Sandler, you say you want $20M for 'You Don't Mess with the Zohan' yet the entire budget of 'Spanglish' was less than that, how does that work?"  To be sure, there are constant negotiations between the studios and agents over star salaries, and this current recession has shown that even the top stars as are susceptible to the general economy as the rest of us.  However those negotiations are aways centered around how big the star's last picture 'opened', and previous pay scale precedents do not come into play.  A star taking a much reduced payday to appear in a smaller indie production doesn't seem to weaken their bargaining power.  There appears to be no risk to their next 8 figure pay check by very publicily taking a huge pay cut in the interim.  I think this is a good thing, especially for the indie filmmaker community, but it's curiosity to me nontheless.


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