Celebrity entertainers are a compelling example of how modern winner-take-all markets exaggerate perceived differences in talent. Audiences are more interested in watching superstars than also-rans, and technology nowadays allows superstar performers to reach a worldwide audience through movies, television, recordings, and the Internet, and to reap the outsized benefits of this global market.
The most sought-after movie actors are paid a guaranteed salary of $15 million to $30 million to be in a movie, plus bonuses based on how much revenue the movie brings in. A movie’s success, however, is largely unpredictable and certainly not guaranteed by the cast.
Keanu Reeves was paid $10 million plus 10 percent of the gross revenue for the first Matrix movie and $15 million plus 15 percent of the gross for the next two movies in the Matrix trilogy. His total compensation for these three movies was an astonishing $262 million. The producers were surely surprised by the success of Matrix, or they wouldn’t have agreed to such a generous contract, especially for an actor who, at the time, was not a top box office draw.
Matrix is hardly the only surprise success—or failure. William Goldman, a best-selling novelist who won two academy awards for his screenwriting, wrote in his memoir, Adventures in the Screen Trade:
The single most important fact, perhaps, of the entire movie industry:
NOBODY KNOWS ANYTHING
