"By putting all your eggs in one basket, you run the risk of picking the wrong horse to bet on," Kozmo.com CEO Joseph Park says. So Kozmo is paying Majors good old-fashioned cash, signing him for a marketing campaign worth more than $2 million.
To be sure, not every Hollywood star is cashing in. Tinseltown super-agencies such as Creative Artists Agency - home to Tom Cruise, Tom Hanks, Will Smith and hundreds of other A-list celebs - have been deluged with offers from Internet companies buoyed by a fresh influx of venture capital and looking to quickly establish brand identity. But agents say high-caliber stars are reluctant to shill for a company with an unknown public profile, let alone an unclear future.
And not all dot-coms are starstruck. "The key issue is equity shareholder value vs. benefits received," says Scott Kurnit, About.com's CEO, who has held off on hiring a celebrity spokesmodel in favor of promoting the site's online guides. "If you're a young company, there's a lot of reason to do it. But as the company matures, less so."
Moreover, Kurnit notes that a spokescelebrity can quickly turn out to be a burden. "The Internet is such a vibrant ad medium," Kurnit says. "And as a business morphs, you run the risk that who you're building the brand with may not be the person to go the distance."
For celebrities, too, the deals are far riskier than a standard contract. For starters, the volatility of the Internet market means the valuations on these types of deals are difficult to calculate; what sounds like a steal one week can look like free labor the next.
The uncertainties have Hollywood executives complaining that the deals are happening without anyone knowing for certain just what's involved. "I don't think Internet companies have identified the right models for these deals," says one agent, speaking on the condition of anonymity. "They don't fit into traditional deals, in which people in the traditional advertising environment, for instance, know what people should be paid."
The high stakes, however, make the potential payoff that much larger, argue other agents. "We're literally making this up as we go along," admits Shotland. "That's why I'm here."
Despite the upside, Kozmo's Park is still gauging the success of taking on the stars, though he's not swearing off the possibility that Lee Majors may become a real six-million-dollar man. "If it turns out great, there's a great reason to get into bed with him."
