Oprah and Martha appear as different as night and day.
One is African-American. The other is whiter than white. One is
chatty and informal. She seems like one of us. She has weight
problems. The other one seems almost too perfect. Everything is
handmade, homemade, crafted with love and matches everything else.
Yet these two women have much in common, starting with their wealth.
Each possesses a talent that is hard to measure. Neither is a great
golfer or actress or mathematician, talents that jump out at you.
Yet each has something that is deeply appealing to large slices of
And each has been able to create a brand-name, a franchise. They
both have a television show and a magazine. Neither of them needs a
last name. Both attach their names to products for fame and money.
Oprah endorses books and elevates her reputation above your average
talk-show host. Martha has her own line of Kmart housewares. But she
also has her own palette of 256 paint colors at Sherwin-Williams
including Lamb's Ear, Fresh Hay and Araucana Colors, based on the egg
shells of her Araucana hens, whatever they are.
And that brings us to our puzzle for todaywhy is this brand
extension possible? Why would anyone buy a pot at Kmart that has
Martha Stewart's name on it? Or buy a book because it's a selection
of the Oprah Book Club?
Perhaps it's an immature form of hero-worship. Some want to be like
Mike, so they wear his shoes. Others want to be like Martha, so they
sleep on her sheets. In this view of the world, it's all about
image. If you're buying Martha's pans or reading Oprah's books,
you're deluding yourself into thinking you're part of Oprah or
But the economist in me sees it differently. Oprah and Martha are filters.
Your email program probably has a filter that lets you keep spam to a
minimum. A good filter keeps the good stuff and throws out the bad.
Life is too short to pay attention to everything. A good filter is
valuable. And filters pop up in the economic landscape to save us
precious time and make life easier.
A department store is a filter. When Dillard's or Famous-Barr puts
an item in their store, they're telling me that it has passed their
minimum level of quality. It's a stamp of approval. That keeps me
from spending a lot of time running around trying to figure out which
are the best specialty shops.
A bookstore is a filter compared to all the unpublished stuff I can
read on the web for free. I may not like every book in the
bookstore, but a bookstore is a place that's been pre-surfed for at
least a minimum measure of quality. But even in a bookstore, we
don't choose our books randomly. We use the Pulitzer Prize or the
quotes on the back cover or we ask friends for advice. And some of
us use Oprah's Book Club.
Martha and Oprah are filters. After watching their shows and reading
their magazines, we know what they like. And we trust them to
deliver the goods for the same reason we expect quality from
Dillard's or Plaza Frontenac or Houghton-Mifflin.
It's always in the short-term interest of these brands to take
advantage of us by charging high prices for low quality merchandise.
But if these brands give in to this temptation, it would hurt their
reputations and the long-term damage would outweigh the short-term
So it is with Oprah and Martha. If Oprah recommends a lousy book, it
hurts the franchise. If the ground beef sticks to Martha's no-stick
pan, it hurts the franchise.
Those franchises are rather valuable. According to Forbes Magazine,
Oprah is worth about $900 million and Martha, a mere $650 million.
(Down from $1 billion the year before. Sob!) You can imagine that
Oprah and Martha are very, very careful in deciding to put their name
on something. There's a lot at stake. And that care is what you're
counting on when you follow their advice.
They have one more thing in common. People like to make fun of them
and their recommendations. But you could do worse than read the
books that Oprah recommends. And while I have no idea what an
Araucana chicken looks like, I wouldn't be surprised if its eggs are
a lovely hue.