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Grammy attendees go home with $22,000 gift bags
Musicians and industry executives convened Feb. 14 for the 58th annual Grammy Awards, reported The New York Times. Apart from the sound issues that plagued Adele's live performance, the show went off without a hitch. Taylor Swift won Album of the Year and threw shade at Kanye West, Justin Bieber sub-tweeted former girlfriend Selena Gomez and Johnny Depp finally got to show everyone that he can indeed play guitar.
Most attendees went home happy, especially those who nabbed one of the show's extravagant swag bags. According to Business Insider, the bags included products worth a combined $22,000.
Promoting premium products
The tradition began in 1989 when event coordinators for the Academy Awards distributed thank-you gifts to award presenters, reported The Times.
Entrepreneurs like Lash Fary took Hollywood gift bags to another level by filling them with expensive luxury products. Fary, co-founder of Distinctive Assets, the company behind the Grammy gift bags, started pitching his lavish service to brands in the early 2000s. Potential clients were perplexed.
"The hard part was convincing companies that they should give their products away to rich people and pay us for the privilege of doing so," he told the newspaper.
These reluctant companies soon realized gift bags were essentially a cheaper form of product placement, reported ABC News. Brands didn't have to offer celebrities incentive-laden endorsement deals or assemble expensive production crews for ad shoots. They could just send some products to Fary and wait for the paparazzi.
"It's just a direct opportunity than traditional advertising to reach the talent, and then reach the consumer, through the PR generated around the gift bags," Samantha Milo Haft, president of a New York City-based event production company, told the news agency. "One photo of a celebrity wearing your product can ignite sales."
The taxman cometh
The IRS in 2007 took notice of Hollywood's excessive gift-giving tradition and ruled that celebrities who took home post-show goodies had to pay taxes on the items, reported Reuters. It argued that entertainers were actually receiving compensation in exchange for their tacit endorsement of the products included in gift bags. Both the Hollywood Foreign Press Association and the Academy of Motion Picture Arts and Sciences, organizers of the Golden Globe Awards and Oscars, respectively, agreed to comply with the federal government's ruling. The organizations also paid back-taxes on gifts handed out at ceremonies in 2004, 2005 and 2006.
Event planners like Fary were outraged.
"Why should an entertainment celebrity (pay tax) on an unsolicited gift more onerously than a corporate executive who receives a Christmas present? Our celebrities should not be punished for their fame," he said in a statement on his company's website.
Following the ruling, Fary and company scaled back their offerings to account for the potential tax burden.
Go big or go home
Last year, the Academy Awards offered the most bountiful gift bag, reported Promotions Now. Actors who opted to take home the bag received over $100,000 in gifts, including a piece of custom furniture valued at $28,000; one year of free Audi rentals worth $20,000; a $14,000 luxury train trip through the Canadian Rockies and an $11,500 Italian vacation package. The 2015 ESPYS handed out the paltriest package. It included two sailing sessions worth $780, a two-night stay in Hawaii and a smartphone breathalyzer.
Attendees at this year's Grammy Awards received a fairly refined gift bag filled with fitness and personal grooming products, jewelry, fancy chocolate and reading material. The priciest item was an ultherapy treatment valued at $5,500.
No matter the total value, most celebrities love receiving gift bags.
"I'm looking forward to that basket. I can't wait to see what's in it," actor and musician Queen Latifah said prior to the 2002 Academy Awards. "I don't care how much money you have, free stuff is always a good thing."
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