What Celebrities Are Doing To Make Money In 2019
For years, the business model for celebrities was simple: get cast. Play the role. Get paid.
But now, that’s changing.
Celebrities all over Hollywood are discovering that when it comes to money, movies aren’t the only option. As a result, they’re taking the capital they’ve built up from acting careers and putting it into a new venture: mobile development.
Return on Fame
Basketball superstar Shaquille O’Neal is one of the greatest examples of a celebrity who understood that fame isn’t the only way to make money.
While O’Neal has certainly done well in basketball, the majority of his wealth has come from outside endeavors. O’Neal has built a business empire by investing his sports earnings into franchises: he reportedly owns 40 24-Hour Fitness Gyms, 150 car washes, and at one point owned some 155 Five Guys franchises, amounting to more than 10% of the company’s franchise portfolio.
In a sport where so many star athletes run into money trouble after leaving the prime of their careers, O’Neal is a lesson in the wisdom of diversifying one’s investments. Now, other celebrities are taking note – but instead of fast food, many of them are investing in the digital space.
A Growing Market
Since their inception more than 10 years ago, mobile apps have grown to be a key part of the modern digital economy. Global mobile app revenues surpassed $350 million in 2018, and forecasts predict they’ll swell to nearly $1 trillion by 2023.
But how is that money made? While every app is unique, most subscribe to one of a few primary monetization models:
A fan downloads their app and uses the app for free, indefinitely.
With free access comes advertisements. Companies pay celebrities to be able to promote their products (or even their own app) on the celeb’s app.
A fan pays a one-time fee to download the app.
Unit sales, plain and simple. The app costs a few dollars to download, and after that there are no charges.
A fan pays a monthly subscription to be able to use the app.
The monthly subscription model gives celebs passive income that they can rely on. For example, if 100,000 users are subscribed to their $10/month app, they’re making $1,000,000 per month off of their app.
A fan downloads the app for free and pays for in-app-purchases.
Whenever a user wants to upgrade within the app or access a new piece of content, they have to pay for it (usually a small amount of money like $1-$5). These apps are free and all the money generated comes from add-ons, or purchases made inside the app.
Whether it’s from one of these models or a combination, today’s apps are generating hundreds of millions of dollars in revenue. It makes sense that celebrities want to get in on the action.
But it’s not as simple as slapping together a mobile app and waiting for the cash to roll in.
Building to Win
“App development can be lucrative, but for consumer-facing products you have to know what you’re doing. It’s important to put in the legwork before development – understanding your target user, designing a sound monetization model, validating through testing; all of that is crucial.”
That’s Ben Lee speaking, the Chief Revenue Officer of digital development agency Rootstrap. Rootstrap has built digital products for celebrities before, and their client list includes the likes of Snoop Dogg, Tony Robbins and MasterClass. They were also recently named on the Inc 5000 list of Fastest-Growing Companies, with revenue on track to grow 120% this year on an annualized basis.
Lee says that with celebrities, the key is to spend the time and energy to find the right model and the right fanbase to target.
“Everyone wants to reach millennials, but that’s not always the best call,” Lee explains. “Often we find that middle-aged adults are more willing to spend money on an app than millennials – but the point is you have to do that user research before jumping into the build.”
Rootstrap has proven experience in this approach. Working with Snoop Dogg, they built a digital sticker app that generated upwards of $30,000 a week, even including a $100 “golden jay” sticker that, contrary to what you might think, actually sold.
But selling digital stickers is far from the only way celebrities are leveraging digital products to make money. E-learning unicorn MasterClass has produced an impressive content library of courses from high-profile figures ranging from Natalie Portman to Barack Obama, with access sold on either a per-course basis or a yearly subscription fee. Rootstrap worked with MasterClass to help them rapidly build out their platform in order to reach the goal of $100 million in annual recurring revenue, and with sales on track to double this year, they’re well on their way.
The Monetization of Influence
The approach is different from project to project, and according to Lee, that’s part of the key to success. But while the app design and the monetization model may be different, it’s all part of a larger trend.
Celebrities are moving away from the traditional role of “movie star.” They’re getting wise to what a name is worth, and they’re using their influence to build empires. Shaquille O’Neal’s franchise fiefdom is one example. Fenty, the makeup line by Rihanna, is another.
Now, celebrities are getting into the digital product and mobile app space. We’re only at the beginning of this trend, and we can expect to see it grow. The old model for a movie star is over: with the modern web of social networks, today’s celebs have more ways to connect with fans than ever. And thanks to app development shops like Rootstrap, they can even build – and monetize – their own.