From...

by Kenneth Li

(IDG) -- Never one to watch the action from the sidelines, actor Edward James Olmos has been looking to combine his passion for community activism with his taste for the cutting edge. So when the Rev. Jesse Jackson approached him to be a part of a new Internet company, OneNetNow, Olmos leapt at the opportunity.

The Internet "is the future," says Olmos, who notes that OneNetNow's main objective is "to bring about understanding and diversity on the planet." Set to debut in January, the site hopes to create a global online community. Olmos will be the site's celebrity draw, along with Sammy Sosa, Kenneth "Babyface" Edmonds and other celebrities. "I'm not here to make money," says Olmos. "I'm here to make sense."

But it can't hurt that, as part of his participation, Olmos, who sits on the board of directors along with the other celebrities, gets an undisclosed amount of stock in the company.

Olmos isn't alone. A growing cadre of celebs – including Cindy Crawford, Whoopi Goldberg, tennis champ Anna Kournikova and hip-hop chanteuse Lauryn Hill – are lending their faces and time to Web sites in exchange for a potentially lucrative stake in the Internet Economy. With Net ads booming, and startups eager to rise above the clutter, even Lee Majors of Six Million Dollar Man fame has found a Net company to call his own.

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Inspired by William Shatner's endorsement contract with Priceline-.com, which netted him some 100,000 shares, worth about $7.5 million, and took the company to unexplored galaxies of market capitalization, a slew of celebs are jumping into dot-com deals. Led by the Big Three talent agencies – International Creative Management, William Morris and Creative Artists Agency – celebrity reps are racing to link their clients with dot-com companies before the real estate dries up. Call it the Kirk Effect – agents are taking their clients where few celebs have gone before.

"The William Shatner deal put all of this on the map," says Lisa Shotland, director of William Morris' new-media group. "It just happened at the right time." One of the latest: Whoopi Goldberg's deal with Flooz.com, in which she snagged an undisclosed number of shares in the company. Her stake makes her the largest shareholder after the founders and financiers.

On the face of it, celebrities taking a stake in a business in exchange for valuable promotional time is nothing new. Planet Hollywood International was launched in 1991 by Robert Earl, a founder of the Hard Rock Cafe chain, and British film producer Keith Barish. But it was movie stars Bruce Willis, Demi Moore and Arnold Schwarzenegger who became the public faces of the company, promoting the restaurants across the globe, in exchange for what turned out to be a small interest in the company. This year, Planet Hollywood filed for bankruptcy and was delisted from the New York Stock Exchange, leaving the stock of Willis et al. worth far, far less than a few years ago.

But the incentive to keep trying is high, especially with the airwaves dominated by dot-com ads. Amid the deluge of flying gerbils and exorbitantly wealthy truckers, the appeal of a celebrity spokesperson is undeniable. Even better when they bring their own audience, as is the case with eStyle, which recently hired Cindy Crawford as spokeswoman for its BabyStyle maternity-wear unit.

"Cindy's a great traffic generator," says eStyle CEO Laurie McCartney. "She's a mom and has really good appeal to different types of women."

Aside from appearing in promotional campaigns and events, Crawford plays an advisory role in the company and holds a seat on the board. She also pens a periodic column aimed at new mothers visiting the site.

New York-based Kozmo.com, which delivers videos, music, books and convenience-store items to customers' doors, recently made a deal for a celebrity of its own – Lee Majors – but didn't want to lock him into a long-term deal by giving him equity. "By putting all your eggs in one basket, you run the risk of picking the wrong horse to bet on," Kozmo.com CEO Joseph Park says. So Kozmo is paying Majors good old-fashioned cash, signing him for a marketing campaign worth more than $2 million.

To be sure, not every Hollywood star is cashing in. Tinseltown super-agencies such as Creative Artists Agency – home to Tom Cruise, Tom Hanks, Will Smith and hundreds of other A-list celebs – have been deluged with offers from Internet companies buoyed by a fresh influx of venture capital and looking to quickly establish brand identity. But agents say high-caliber stars are reluctant to shill for a company with an unknown public profile, let alone an unclear future.

And not all dot-coms are starstruck. "The key issue is equity shareholder value vs. benefits received," says Scott Kurnit, About.com's CEO, who has held off on hiring a celebrity spokesmodel in favor of promoting the site's online guides. "If you're a young company, there's a lot of reason to do it. But as the company matures, less so."

Moreover, Kurnit notes that a spokescelebrity can quickly turn out to be a burden. "The Internet is such a vibrant ad medium," Kurnit says. "And as a business morphs, you run the risk that who you're building the brand with may not be the person to go the distance."

For celebrities, too, the deals are far riskier than a standard contract. For starters, the volatility of the Internet market means the valuations on these types of deals are difficult to calculate; what sounds like a steal one week can look like free labor the next.

The uncertainties have Hollywood executives complaining that the deals are happening without anyone knowing for certain just what's involved. "I don't think Internet companies have identified the right models for these deals," says one agent, speaking on the condition of anonymity. "They don't fit into traditional deals, in which people in the traditional advertising environment, for instance, know what people should be paid."

The high stakes, however, make the potential payoff that much larger, argue other agents. "We're literally making this up as we go along," admits Shotland. "That's why I'm here."

Despite the upside, Kozmo's Park is still gauging the success of taking on the stars, though he's not swearing off the possibility that Lee Majors may become a real six-million-dollar man. "If it turns out great, there's a great reason to get into bed with him."