People Is Stoopid: $5 Million Baby Pictures

Question: What kind of person would expose her children to ruthless paparazzi just in order to make a few bucks? 

Answer: The kind of person who doesn’t need the money in the first place.

Today’s New York Times reports that People Magazine paid $5 million for the first public pictures of J-Lo (pictured) and her newborn twins, so that you can see the same picture for free here.

One interesting thing about this agreement: In the New York Times article, it seems quite clear that the publishers cannot justify the prices they have been paying for baby pictures, which now frequently exceed $1 million. The Times quotes industry executives as saying that “the most important factors are impossible to measure:the value of being known as the place to go for those pictures, and ofkeeping them out of a competitor’s hands.”  It gets clearer still:

Larry Hackett, People’s editor, said, “Last year, we lost a couple ofweddings because OK! magazine was willing to spend more money than wethought made sense.” If that sort of thing becomes common, he said,“they’re going to get traction, and I don’t want any competitor to gettraction where I can stop it.”

This kind of comment falls into a pattern of grossly inflated contracts that benefit the ultra-rich, something this blog has commented on before.  These contracts are not subject to rational defenses.  People is now pretty much admitting that it pays more for these photos than “makes sense.”  The competition, OK!, has yet to make a profit.  The high prices are motivated by fear of the competition, which creates a feeding-frenzy dynamic in the bidding and defies conventional market logic.

[Jeremy Telman]