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The Britney Exchange

Due to the voracity of the stock markets and traders looking for
new ways to wheel and deal, we will soon be trading in things we never
thought of trading before.   

For example, I was intrigued that Britney Spears has her own economy.  The
poor lass, who is being hounded by the paparazzi to either hospital or
an early grave, has great value with her $9 million a year earnings
ballooning into an annual $120 million industry, even in her current
fragile state. 

This industry, nicknamed the Britney Industrial Complex in Portfolio magazine, operates through:

  • her 83 million record sales, worth $400 million since her debut in 1999;
  • she generated almost $150 million through tours;
  • she
    is worth $50,000 to sit next to, or that’s the cost for a table at Pure
    Nightclub in Las Vegas who reportedly sold seats at a table next to
    hers;
  • Britney’s perfumes have sold almost $100 million;
  • photos of Britney are estimated to generate $4 million a year; and
  • she generates magazine sales of $360 million a year, with her impact on those sales worth around $75 million a year.

This Britney economy
reminded me of the move ten years ago, when David Bowie converted his
back catalogue of music into Bowie Bonds.  This was a first and netted
Bowie $55 million so everyone followed, from Rod Stewart to Iron Maiden.  Nevertheless such bonds, a bit like subprime, are viewed as being near junk status today (some of the music was considered that status originally).

The
reminder of this is purely the coming together of celebrities and
financial markets.  So why not consider a Celebrity Stock Exchange,
where you can buy celebrity equities and even options and futures on
someone’s career?

Oh yes, sorry, there already is one.  In fact there’s many, such as The Hollywood Stock Exchange (HSX), The BBC’s Celebdaq and Celebrity Contest.
On these exchanges, I can create a portfolio of the great, not so great
and downright sad.  A little bit of Jack Nicholson and Nicole Kidman
would be a good backdrop for low-risk, and then throw in some Lindsay
Lohan, Amy Winehouse and Britney for higher risk with higher returns. 

Then
stitch this together with some futures and options.  I’ll hedge a bet
that Britney gets sectioned this year with an option on her being #1 in the charts.  I’ll take a slice of Amy being wino housed with an option
on her performing at the Royal Variety Show. 

As this starts to
become more and more complex, I could then build in some news
algorithmic engines to change my investment strategy.  Aha, the rumour
of Heather Mills’s money pay-off from Paul McCartney automatically
triggers a hedge on his daughter Stella ripping out Heather’s eyes at
the Fashion Rocks show. 

The more this goes on, the more extreme it could become, and far more fun than dealing with commodities or FX.    I could even start building some really complex cross-celebrity class trading strategies. 

Should
David Beckham get groin strain then invest in Posh Spice trying to make
a comeback hit song; underwrite this with an option that as long as
Posh Spice does not record a song this year then buy shares in LA
Galaxy along with the US economy recovering from recession; and, as a
result, invest in the Spice Girls making a new movie, Spice World 2: The Climax, offset by the Spice Girls being played by Lindsay Lohan, Britney Spears, Paris Hilton, Nicole Richie and Charlotte Church.

The
only trouble is that, like these other markets, much of what we’re
discussing here is just called gambling.  In Britain, we actually tried
to ban such gambling 200 years ago.

In those olden times, folks used to bet on well known persons dying or getting the pox. 

"I reckon the King will be around for at least another year, don’t you?" says the odorous oike. 

"Oh
no, I think he’ll pop his clogs well before November 13th", some
peasant replies, "and I’ll give you a shilling if he doesn’t". 

"That’s good", says the smelly squire, "and I’ll give you two shilling if he does." 

"Tis a deal", says t’other and they shake their grubby mitts. 

This
form of gambling was outlawed in Britain in 1774 by the Life Assurance
Act.  This Act is the foundation for today’s modern life assurance
markets and a fundamental principle enshrined in the Act is ‘insurable interest‘.

After 1774, life contracts could only be enacted and honoured if you had an insurable interest in
the life you were paying premiums for.  This meant that the person
being insured had to be related to you in some form, and that you were
dependent upon them.  The usual life assurance is therefore only taken
out by the policyholder, such as a father or mother insuring themselves
to protect for their children, who would be destitute if they expired
suddenly. 

The problem before this Act was passed is that I’d
bet that Joe Blow would die before the year end, and would then go and
kill him.  Sure enough, I’d win my bet and get my money. 

Maybe,
200 years later, as we look at the Britney Exchange in action, we’ll
realise we haven’t changed that much.  So let’s all join the 16.7
million people who have watched Chris Crocker on YouTube pleading, "Leave Britney Alone!".

 

p.s. I think I’m going to buy a little equity stake in Chris Crocker’s acting career on HSX

 

About Chris M Skinner

Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, the Finanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

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