How Hollywood's power elite lost the plot

It's been an extraordinary few months for Hollywood's A-list actors: embarrassing outbursts, drunken tirades and - here's the real issue - their films tanking spectacularly at the box office. Are we witnessing the last generation of true movie stars?

In a recently published biography of Jimmy Stewart, it emerged that - when he was just starting out, in the 1930s - his studio, Metro Goldwyn Mayer, deemed it necessary to scotch any rumours that the young actor might be gay. He was packed off, under the instruction of Louis B Mayer, to the private, studio-owned brothel located just off the MGM lot, with the following words ringing in his ears: "Get your ass over there and get those rocks off with at least two of those broads."

Ah, the golden age of Hollywood. When stars were stars - otherworldly and untouchable - and a selection of discreet broads were readily available to help a not-gay-anyway man to get his rocks off. It's a relief that Stewart and, most of all, Mayer are not alive today to witness the antics of the present crop of Hollywood's finest. What would they make of Tom Cruise jumping up and down on Oprah's couch screaming, "Whaaooo!" What advice would they give "teen queen" Lindsay Lohan as she is drunkenly and very publicly scraped off the sidewalk, offering indecent photo opportunities to the expectant paparazzi? And you can be sure they would have an uncompromising view on Mel Gibson, who added to this summer's A-list implosion after his drunken, anti-Semitic and sexist remarks to police officers were leaked to the press.

But also, what are we - the people who pay their wages (well, £8 every so often, anyway) - to make of it? Hollywood has always been a strange place, but increasingly it seems to be out-and-out dysfunctional.

The isolated incidents with major stars hint at a much larger truth: the business of movie-making is undergoing a major shift, one that will be felt a long way from California. The reality is stark and impossible to ignore. Box-office figures are down: the returns from 2005 - due to high-profile flops such as The Island and Kingdom of Heaven - were the lowest for 15 years. DVD sales, so lucrative during the past few (omega) years, have flattened. Piracy is rampant: according to industry experts, illegal copying now accounts for $1.3bn annually in lost revenue in the US alone. All the while, the stars want more money for their performances. In 1995, the average cost of making and marketing a movie was $54.1m; by last year, it had spiralled to $96.2m.

The bottom line is that the figures do not add up. The boom years of the 1990s - when Bruce Willis earned more than $100m for starring in The Sixth Sense, and Keanu Reeves negotiated a deal that would see him paid $206m for The Matrix trilogy - are over. The studios are looking to cut costs, and an obvious place to start is the grossly overblown salaries of the performers. Meanwhile, our culture is changing: once, we viewed actors like Jimmy Stewart as heroes and role models; now we live in a society defined by gossip rags such as Heat and Grazia, determined to show that celebrities have zits and beer bellies like the rest of us.

If you need proof of how the situation has changed, you need look no further than the ignominy suffered by the world's biggest movie star, Tom Cruise. In August, Paramount terminated his 14-year production deal due to frustration over his increasingly "erratic" conduct and, more specifically, a 15 per cent "loss of anticipation" for Mission: Impossible III. The more pertinent question is: can there be a sequel for any of this generation's action heroes?

A rundown of the most successful films of all time makes surprising and somewhat unedifying reading. Titanic heads the list, naturally, with returns of $1.8bn, but the top 10 also includes a couple from the Lord of the Rings franchise, two Harry Potters, one Star Wars and a Pirates of the Caribbean. The one thing that these movies share in common is that they are all driven by the story, rather than relying on a specific actor's name above the title. No one goes to see a film because Elijah Wood or Hayden Christensen is in it (well, we hope not anyway) and this is good news for the studios. Why waste your budget on expensive - and difficult - talent, when you can save your pennies for the things that really matter?

There is evidence that this message is starting to hit home, and the wrangling over fees has started to get uncompromising and nasty. Russell Crowe recently dropped out of negotiations to star in a new movie directed by Baz Luhrmann (Moulin Rouge!) and made no secret that he blamed 20th Century Fox. "I do charity work," he said. "But I don't do charity work for major studios."

The studios can afford a hard-line approach, driven on by the knowledge that the audience will remain faithful to a successful franchise (omega) regardless of the cast. Hence Daniel Craig emerges this week as the new Bond in Casino Royale after Pierce Brosnan fell out with MGM over his pay, believed to be around the $20m mark, plus 10 per cent of box-office profits. In comparison, Craig is rumoured to be on $1.5m for the same role. That's a saving of one fifth of the overall budget and he doesn't have that funny, mincy running style.

When it comes to spectacular falls from grace, you have to go a long way to beat the one that American director M Night Shyamalan has experienced. Aged 29, he wrote and directed The Sixth Sense, and the astonishing success of this 1999 supernatural thriller rocked the film industry. Made for $40m, it grossed more than $600m and saw Shyamalan held up as the heir to Steven Spielberg. The following year, the precocious auteur told US Esquire that he had discovered "the secret to making hit movies" and Hollywood believed him - for his follow-up film, Unbreakable, Disney paid him a record $5m for writing and another $5m to direct. He was allowed almost unprecedented creative freedom over all aspects of production.

Shyamalan has made four films since The Sixth Sense and none has come close to repeating its success. His "Oprah's sofa" moment was his bizarre, convoluted pet project Lady in the Water, originally bankrolled by Disney, which was released in August. As revealed in Michael Bamberger's book The Man Who Heard Voices: Or, How M Night Shyamalan Risked His Career on a Fairy Tale, Shyamalan fell out with what he saw as overpowering studio influence - he claimed they "no longer valued individualism... no longer valued fighters". Another way of seeing it was that Disney realised they were throwing their money at an ego out of control, and backed out. When the film finally came out, produced by Warner Bros, most critics sided with Disney's verdict; the New York Post even called the director "a crackpot with messianic delusions". They had a point - in a film he wrote, produced and directed, Shyamalan also decided to cast himself in the pivotal role of a writer whose work influences a magical world. The public, needless to say, stayed away in droves.

The lesson here? Raw talent still needs structure. Disney had in effect become a victim of its own hype machine. Like one of those hyperbolic movie trailers that raises expectations to levels that are impossible to fulfil, they realised a little too late that their Boy Wonder was as human as the rest of us.

Hollywood, like nowhere else, loves a system. Everyone is in search of the perfect plot, of the golden rules to guarantee a box-office hit like Shyamalan claimed to have unearthed. Star Wars director George Lucas has spoken of the need to create "60 two-minute scenes" with which to sustain the public's excitement. He is also a famous proponent of the theories of Joseph Campbell, whose book The Hero With a Thousand Faces posited the concept of the "monomyth", an archetypal heroic plot that is supposedly common to all mythologies and religions. But it wasn't just Lucas's biblical sci-fi fantasy that benefited from Campbell's vision. A seven-page memo created for Disney by Hollywood producer Christopher Vogler reignited interest in the monomyth in the 1990s - inspiring films as diverse as The Lion King and The Matrix trilogy.

And a recurring thread running throughout many of these epic stories is that the hero is just as often an unknown, unproven actor. Mark Hamill and Harrison Ford, for instance, were nobodies before Lucas cast them as the ultimate heroes, allowing the audience to empathise with their journey all the more. Even better, there's no reason why the hero can't be a cartoon cat. As long as the plot is in place, the rest will follow.

Recently, Hollywood has been all abuzz over a new golden formula. Epagogix is a system for determining the commercial potential of screenplays, being hawked by the entrepreneurs Dick Copaken, Nick Meaney and Sean Verity, as well as two boffins who refer to themselves only as "Mr Pink" and "Mr Brown" (after the characters in Reservoir Dogs). The team concentrates specifically on how to break the $50m barrier that is seen to mark the divide between a hit movie and a flop.

The Epagogix approach is elaborate and almost insanely detailed, but its strength, say its inventors, is that it is ruthlessly impartial: it is purely interested in what makes money (and what doesn't). One of the main findings, from their extensive research, was that neither the identity of the star nor the director was a major factor in guaranteeing success - plot development, locale and character are far more important. As one studio executive, quoted by Malcolm Gladwell in The New Yorker, said: "They cared about venue, and whether it was a love story, and very specific things about the plot that they were convinced determined the outcome. It felt very objective. And they couldn't care less whether the lead was Tom Cruise of Tom Jones."

You can see the appeal to the studios: a supposedly foolproof system for delivering box-office returns - without the need for A-list tantrums or fees. As cold and clinical as it sounds, Epagogix provides the message all the studios want to hear: the script is everything. We can survive without prima donnas.

So, what does this mean for the stars? Film magazine Premiere recently claimed that we are witnessing the demise of "the last unironic movie-star generation".(omega) Certainly, Russell Crowe and the rest had better get used to considerably deflated salaries. In another high-profile case, 20th Century Fox and Universal clashed with the mighty Peter Jackson, Oscar-winning director of The Lord of the Rings trilogy, over wage demands - the Jackson-produced Halo, based on the video game of the same name, has since been halted.

If Hollywood is beginning to question if it needs its Tom Cruises, think what that means for the Lindsay Lohans. This is partly to do with a loss of mystique. The movies are about escapism, and it's easier to escape when you can commit your imagination fully to the film's conceit rather than concentrating on the people you saw in the gossip rags this morning.

While it's true that scandal sheets are hardly a new phenomenon - they predate the broadsheet press itself in this country - the difference is that online gossip sites such as Holy Moly!, Popbitch and Perez Hilton rely on a steady stream of insider leaks from the A-list's coterie of minders, PRs and minions. Those nearest to them, those employed to keep the celebrity myth alive, are now contributing to their downfall, finally tiring of the demands of their clients.

Uncertain times are ahead for Hollywood. Many in the film industry are beginning to question the economic feasibility of films that cost upwards of $50m to produce. At the same time, some studios will always be willing to put their money behind a big name - Reese Witherspoon was recently paid a record, Julia Roberts-topping $29m for the upcoming horror film Our Family Trouble. It may be that the public will never tire of fame per se - just of particular egomaniacal individuals. And for every self-destructing A-lister, there's another hundred rising stars waiting in the wings for their chance. In the short term, we can expect more heroic fantasy epics with a cast of unknowns: the Spartan comic-book adaptation 300; the Viking saga Pathfinder; even Peter Jackson's rumoured film of The Hobbit.

But, in true Hollywood style, the hero may yet win the day. What do you do if you can't beat the system? You join it. Or, to be more precise, you buy your own. Earlier this month, MGM announced that Tom Cruise and his producing partner Paula Wagner had taken control of United Artists. The move neatly reflects the company's founding in 1919, when a group of disgruntled talents - Charlie Chaplin, Mary Pickford, DW Griffin and Douglas Fairbanks - formed their own solution to studio control, with a name reflecting their ambition. And with Cruise finally bringing the United Artists story full circle, who would deny him one last throw of the dice? Let's just hope he doesn't forget to build an on-set brothel s

Titanic (1997) $1.8bn

Fresh-faced Leonardo DiCaprio and Kate Winslet were paid $2.5m and $2m respectively for their career-making roles.

Lord Of The Rings: The Return Of The King (2003) $1.1bn

Using a largely unknown cast, director Peter Jackson personally banked $125m for the Tolkein trilogy.

Pirates Of The Carribean: Dead Man's Chest (2006) $1bn

Johnny Depp's buccaneering Keith Richards impression led the actor to a $20m treasure chest.

Harry Potter And The Sorcerer's Stone (2001) $970m

Squeaky-voiced lead Daniel Radcliffe earnt pocket money to the tune of $250,000.

Star Wars: Episode I - The Phantom Menace (1999) $922m

Director George Lucas's pay for his patchy six-part Star Wars series totals an astronomical $400m.

The Lord Of The Rings: The Two Towers (2002) $921m

Burnley-born luvvie/ knight Sir Ian McKellen was paid $9m for his portrayal of Gandalf the Grey (or was it the White?) in the second part of the Lord of Rings trilogy.

Jurassic Park (1993) $919m

At a monstrous $250m, director Steven Spielberg's earnings dwarfed those of his cast.

Harry Potter And The Goblet Of Fire (2005) $892m

The fourth film in the series that made writer JK Rowling Britain's Richest Woman.

Shrek 2 (2004) $880m

Mike Myers picked up $10m for providing the star voice in this computer-animated hit.

Harry Potter And The Chamber Of Secrets (2002) $866m

Radcliffe saw his salary magically rise to $3m for his second Potter outing. And for later films, he has received further increases.

Tom Cruise $67m

Despite his increasingly unhinged off-screen antics, huge earnings from War of the Worlds make Cruise the world's highest-paid actor over the past year.

Denzel Washington $38 m

Earned big bucks starring in Spike Lee's bank robbery drama Inside Man and in the upcoming Deja Vu.

Johnny Depp $29m

Took a tasty slice out of the $500m gross box-office takings for last year's Charlie and the Chocolate Factory; added to his booty with the Pirates of the Caribbean sequel.

Tom Hanks $29m

The 51-year-old was paid handsomely for the indignity of starring in the film version of The Da Vinci Code.

Adam Sandler $29m

Hollywood's highest paid comic laughed all the way to the bank with the September release of Click.

Jodie Foster $27m

The 44-year-old is still landing her fair share of lucrative roles, which have recently included Flightplan, Inside Man and The Brave One.

Brad Pitt $25m

The upheavals in his love life have kept him in the public eye, but he's also pocketed a tidy sum from his share of the profits from last year's Mr & Mrs Smith.

Will Smith $25m

Scored with DVD sales of Hitch. Also from The Pursuit of Happyness, out in January.

Leonardo DiCaprio $25m

Topped up his already groaning coffers by starring in Martin Scorsese's gangster flick The Departed; also in the forthcoming The Blood Diamond, set in South Africa.

Nicole Kidman $22

Remains a big player despite meagre box-office returns for last year's The Interpreter and Bewitched. Advertising contracts kept the wolf from the door.

Earnings listed are from June 2005 to June 2006, taken from Forbes Magazine's Celebrity 100