Why do actors get paid tens of millions for their movies instead of a normal salary?
In: Culture
Most don’t. Popular/skilled actors have more people that want to watch them, and movies make money from more people watching them. Actors with low popularity in small roles get paid small amounts of money.
Just like the costs of goods, labor costs are subject to the laws of supply and demand. There might be millions who could work stocking shelves at Wal-Mart, or hundreds of thousands of programmers to write software, but there is only one Tom Cruise and only a handful of similarly suited actors for a role he gets… maybe Matt Damon or Robert Downey Jr. could also fill the role and draw as many viewers, but there just aren’t that many A-list actors who can fill a particular role.
And then there are the economies of scale… while Wal-Mart needs dozens of people in thousands of stores to stock all the shelves, they need to pay hundreds of thousands of people to do stock shelves for selling $200M in merchandise. Similarly, all the software companies, large websites, etc. all need many, many programmers to achieve $200M in software sales. But a movie can sell $200M in tickets on account of one specific star actor.
If you did something for your boss that made your boss hundreds of millions of dollars, would you not think it fair to get paid some reasonably large share of that money, or would you be happy with a normal salary?
A huge part of why people collectively pay tens or hundreds of millions of dollars to go see a movie in the theaters is because of the actors in the movie. The actors want a share of the money their work helped to make.
Starting with pure facts:
Most actors do not get paid tens of millions. Based on [BLS statistics](https://www.bls.gov/oes/current/oes272011.htm), there are about 20k actors in the movie industry in the US. They earn a median hourly wage of about $15, and a mean hourly wage of about $30 – that is, the hourly wage for a “typical” actor is about $15, but if you took all the money paid to all actors and split it evenly, they would all earn about $30.
The actors you are thinking of – big-name stars – are extreme outliers; they represent perhaps 1% of all actors in the US. As with many industries, there is a significant skew – a tiny fraction of actors earn the majority of the total earnings.
One way to rephrase the question – why do a few actors get paid so much more than the typical actor? Here I’ll put in some of my own evaluations.
What is the most valuable trait of a recognized actor like The Rock? It’s that they’re a recognized actor. They are valuable because they are valuable.
It is unlikely that The Rock or RDJ has 100x the “acting talent” compared to an actor who makes 100 times less. If we did a comprehensive study that evaluated “acting talent” in an objective way, and put a “top 1% actor” – let’s say RDJ – alongside a “top 10% actor” – let’s say John Doe – alongside someone who makes we might find that RDJ has 10% more “acting talent” than John Doe – but it’s about as likely that RDJ has 10% less. Or it could be 50% more or 50% less. Who rises to the top is in many ways determined by external factors; who is in the right place at the right time, who has a good agent that makes them advantageous deals, who happens to get cast in a breakout movie that becomes very popular.
This sort of thing happens in many industries. The skew in acting, specifically, is increased because it’s a naturally limited space. It’s limited by human psychology – we can only hold so many actors and/or movies in the “forefront” of our awareness. We might recognize a thousand current and former actors by name, but they won’t hold the same emotional reaction (and thus desire to see a movie) compared to the top 5-20.
You can see a similar effect in league sports. There, the space is limited explicitly – there can only be one team winning each year, there can only be one #1 team in a division, there are only so many teams and only so many player slots per team.
A blockbuster is a corporation. If you’re spending $200 million to make a movie, you can give Will Smith 10%. Now it’s a Will Smith movie. Those make money.
Stars have to also promote the movie, so they are promised a portion of the profits.
You don’t see Katherine Heigl much because people realized she was overpaid.
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