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Comment by eberkund

This is an interesting subject, because intuitively one wants to make the comparison "Is Conan O'Brein paid a multiple of how many times funnier he is than a local standup?". But economically what's important isn't how funny he is, but how many viewers he can draw. So then you might ask, does Conan draw 30x more viewers than some no-name comic? But that also isn't the comparison that matters. If no-name comic can draw 10M viewers, but Conan can draw 20M viewers then should he be paid 2x as much? It depends on the costs for the rest of the show. If a show costing $500K to produce and $10K for a no-name host earns 1M then if they were to replace the no-name host with Conan and could earn $2M per show, it would make sense to do that as long as you weren't paying more than $1,010,000 (101x the no-namer) for Conan to host the show.

The point I am trying to make here is that these figures vary from industry to industry and from job to job, I could have conversely changed these numbers around and shown that it doesn't make sense to pay Conan a huge multiple of the no-name comic's pay. For example, if the revenue does not increase substantially (like from 1M to 2M) or if the salary of the person in question makes up a much larger portion of the overall expense of the company.

parent eberkund 8 years ago

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