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It's that time again when Hollywood puts on its best face for the Academy Awards, and perhaps a time when people start trading on movie stars' futures.
Hollywood Stock Exchange describes itself as an "entertainment stock market simulation" that looks and acts like a real trading system for "MovieStocks" and "StarBonds" -- although the dollars exchanged are only virtual.
Don't laugh. Collective wisdom can often determine the value of otherwise hard-to-value properties, and research has shown that markets often do an extremely good job of forecasting events and trends.
Just look at interest rate futures, widely used by both political and economic analysts. And consider the daunting problems facing global intelligence agencies. They have to calculate the likelihood of various destabilizing events and must draw on a variety of opinions, expert and not so expert, as well as market data. The Pentagon's Defense Advanced Research Projects Agency at one point sponsored a private terrorism futures market, though it ended in a public relations fiasco when politicians raised a ruckus.
The Iowa Electronics Markets had been predicting election results using a system very much like the one that DARPA suggested. Similar markets have sprung up to predict the next move in Federal Reserve interest rate policy, or the success or failure of certain consumer products. And even professional commodities traders sometimes get their kicks from online betting sites such as tradesports.com, which offers markets in criminal case outcomes, Supreme Court vacancies, major sports competitions, hunts for suspected terrorists and other real world events.
So it a trading market might seem a natural application for Hollywood and entertainment executives who are in the business of making money-making films. Some academics, traders and studios are interested in the Hollywood Stock Exchange in an effort to predict which movies will succeed.
Exchange users can buy and sell shares of their favorite actors, actresses and their new movies. Traders can track the rise and fall of their values based on their success. Prices soar with a blockbuster opening at the box office and plummet with the bomb nobody went to see. Anyone can join for free and earn virtual dollars with which to buy and sell shares. In effect, users are trading an entertainment product.
That message has not been lost on the music business, anxious to find the new hot band or diva, and base their contract offers on public opinion. You can't buy research like that.
Oscars speculation currently dominates much of the Exchange's trading, but there are plenty of offerings for day-to-day entertainment buzz. Hollywood Stock's site hasmost of the usual features you'd expect from a professional exchange, including a scrolling ticker tape, a list of notable gainers (currently topped by the controversial Passion of the Christ, which opened in theaters today) and even a "Hot IPO of the Day" section (now featuring a documentary on the metal band Metallica).
Of course, many question the reliability of such forecasting, as it can be as unreliable as some analyst's stock recommendations. So other factors might come into play, such as the director, supporting actors, and success of other films in its genre, given a specific time of year. But as of today, Lord of the Rings: Return of the King is Hollywood Stock Exchange's runaway favorite for Best Picture, with its director, Peter Jackson a shoo-in for Best Director. In the Best Actor category, Sean Penn of Mystic River and Johnny Depp in Pirates of the Caribbean are in a close race, having moved ahead of Bill Murray who seemed in the driver's seat last week, but got Lost in Translation. Charlize Theron is leaving her Best Actress competition in the dust, after winning the Screen Actors Guild, or SAG award for her powerful performance in Monster.
Join us this Friday night as we roll out the red carpet and go faux glam with Michael O'Rorke, Vice President of Content and Programming at the Hollywood Stock Exchange. Oh, and don't forget the bubbly.
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