Ask any agent at any shop, boutique or behemoth about the state of the tenpercentery biz, and he or she will earnestly testify: “It’s all about the clients.” Of course, that’s been true for Hollywood talent reps since the days of Myron Selznick, Charles Feldman and Abe Lastfogel. But in the past five years, the role of the agent, and the business of running a sizable agency, has been buffeted by monumental changes, spurred by seismic shifts in the broader entertainment landscape.

Top agents are on the front lines, figuring out how to make money off cell-phone screens and the like. It’s an alien landscape that’s calling for them to see around corners in ways that are vexing even the industry’s sharpest CEOs.

The emergence of WME as a superpower to challenge the hegemony of CAA has altered the talent representation playing field for everyone — agents, managers, lawyers, publicists and, of course, clients. And the influx of private equity coin into a notoriously unpredictable, closely held sector could add volatility down the road. There’s a sense in the biz that the outside money that has flowed into CAA and WME will eventually exert outsized influence, although insiders strenuously dispute that scenario.

For now, the biggest change within the art-bedecked walls of the largest percenteries is the growing complexity of these companies as businesses. At CAA, NFL draft day is almost as big a deal as Oscar nominations day, given the agency’s aggressive charge into sports. And like every other media company, CAA is counting on overseas growth. Last year it planted a flag in Mumbai with the launch of the CAA Kwan talent agency.

WME is involved with a range of digital media investments, and it’s affiliated with merchant bank Raine Group, which helped Matt Stone and Trey Parker to fund the launch of Important Studios. UTA is aglow from the $33 million sale of AwesomenessTV, the YouTube channel that it incubated for client Brian Robbins, to DreamWorks Animation.

The driving force behind all of this expansion is to provide new and better services to clients — and to prosper with them in success. The trick is to stay abreast of new opportunities without neglecting the fundamentals. While digital content in all its forms may be the future, for the most part, it amounts to experimental arthouse fare in terms of payday. That why the AwesomenessTV sale — an example of a deal that involved real dollars — made such a splash. And the pricetag could rise to $117 million if the channel meets performance targets over the next few years.

“If you do a great job for your clients in our core business areas, then you’ll have the leverage to build businesses in emerging markets,” said UTA chief exec Jeremy Zimmer.

Industryites say it’s clear that key leaders of the top shops are occupied with managing the agency’s business activities and investments. But the bread and butter remains the core film, TV, music, touring and publishing realms.

Agents are feeling the whiplash of a changing content marketplace. It’s the best of times — or not — depending on the business you’re trying to book.

Old-school Hollywood has been forced to adjust to dealmaking in a buyer’s market dominated by a handful of media congloms. The studio movie realm is shrinking, as evidenced by the diminishing release slates of the majors. Studios are driving harder deals even on A-list salaries, which trickles down to the agencies. First-dollar gross, $20 million-a-picture players are an endangered species.

The expansion of television has been robust, aided by the blossoming of content-hungry SVOD platforms around the world (thank you, Netflix, Amazon, Hulu, et al). But the biggest boom is still coming on the lower end of the pay scale, with cable and unscripted series.

Yet in totality, entertainment content has never been more in demand. And the opportunities to turn not only actors and hosts but also writers, directors, athletes, bloggers and lifestyle mavens into brands that work across multiple platforms have obviously never been more plentiful. Think Seth MacFarlane, one of WME’s MVPs.

Agents are challenged to juggle the options and serve more as entrepreneurial coaches for those clients with the talent and the ambition to spread their wings. Case in point: Actress Alyssa Milano is a sports fan, so CAA set her up with a line of femme-styled jerseys and other apparel, dubbed Touch, sold largely in stadiums. Ellen DeGeneres keeps ICM’s wheels turning with her syndie talkshow, primetime production pact, book deals, tours and endorsements.

Brand management and consulting services for companies well outside the entertainment realm are a target growth area for agencies ranging from CAA to APA.

“If somebody had told me five years ago we’d be representing brands like Bombardier and Lamborghini, I wouldn’t have believed it,” said APA prexy-CEO Jim Gosnell. “We used to talk about working under the ‘umbrella’ of the entertainment business. Now it’s a circus tent.”

Skeptics of the percenteries’ diversification push warn about the increasing possibility of conflicts of interest for talent reps. Are the new ventures designed to assist clients, or are the clients being leveraged to spur new ventures? Those in the trenches are adamant that the clients are always the top priority; why risk alienating the golden goose? But they’re also quick to raise questions about the competition.

Even industry vets say it’s hard to predict what the makeup of the largest talent agencies will be five to 10 years down the line. With new sources of money flowing in, mergers and acquisitions could increase, and lead to intriguing nontraditional tie-ups. The pending sale of sports-marketing powerhouse IMG — which has piqued the interest of CAA and, to a lesser degree, WME — could be a bellwether of movement to come.

The changing profile of the agency biz is perhaps best exemplified by the investors that have stepped in as equity owners in what have traditionally been closely held businesses. Private equity giant TPG acquired a 35% stake in CAA for an estimated $165 million (plus other financing commitments) in 2010. WME sold a 31% interest to Silver Lake for $200 million last year.

The motivation for both agencies was similar: Gain access to capital and a more sophisticated view of potential acquisition and investment opportunities. For both TPG and Silver Lake, the coin pumped into the percenteries is modest compared with the multibillion-dollar bets made on other companies. Still, there’s the Hollywood premium to consider. It’s hard to find a sexier place to park some money, even if it doesn’t make a lot of sense on paper.

“The real problem is scalability of these businesses,” says longtime media analyst Harold Vogel, author of “Entertainment Industry Economics.” “If you want to scale it up, you have to hire a bunch of expensive agents. But you’re not going to see your productivity grow because these are about personal relationships, and there’s only so much a person can do. And there’s always the threat that you could see your top five agents walk out the door.”

TPG coin has helped CAA expand its international footprint and its sports operations. CAA Sports bowed in 2006, and now reps more than 800 athletes, coaches and personalities. Its recent tie-up with Jay-Z’s Roc Nation brought New York Yankees All-Star second baseman Robinson Cano into the fold, leveraged away from baseball uber-agent Scott Boros in a deal that sent tremors through the sports world. CAA also handles megabucks deals for team and venue sponsorship pacts as well as media rights agreements for leagues in the U.S. and abroad. These are typically fee-and-retainer-based deals rather than 10% commissions, but enough of those will go a long way to offsetting the shrinkage in movie-star paychecks.

TPG, meanwhile, sought a pipeline into the entertainment deal flow that comes CAA’s way; CAA started its own inhouse investment bank, Evolution Media Capital, in 2008.

For its part, after the union of WMA and Endeavor in 2009, WME was courted by numerous suitors before clinching the Silver Lake pact. In fact, the agency was far down the road on an equity agreement of a different kind when Silver Lake entered the picture. Silver Lake was attractive to the WME partners because of the company’s expertise in technology and digital media. Those skill sets help WME sift through the deluge of offers that pour down from Silicon Valley looking for Hollywood cred.

Plenty of observers see the entry of private equity into the industry’s two largest agencies as letting a fox into the henhouse. Private equity players traditionally have very specific expectations for return on investments in a timeframe that rarely exceeds seven to 10 years.

ICM was a forerunner in this area in its 2005 deal with Rizvi Traverse, which ultimately led to battles between the percenters and the money mavens until a management buyout was orchestrated last year. The divorce from Rizvi cost ICM most of its portfolio of profit participation stakes in TV shows, movies, books, stage shows and other ventures assembled since it was formed in 1975.

Are CAA and WME headed for similar conflicts? Sources close to both emphasize that their investors only have minority stakes, unlike Rizvi, which controlled ICM. CAA and WME both declined comment for this report.

CAA has been in a period of belt tightening, trimming the salaries of some agents and cutting down on perks. That has inevitably led to a level of grumbling from insiders that is unusual for the agency known as the “monolith” for many reasons, not least of which is the united front presented by its agents at all levels. But colleagues at other talent rep firms have expressed surprise at the amount of discontent that CAA-ers have shared openly in recent months.

The agency’s focus on cost containment has been pegged to TPG influence. Sources close to the situation say the scrutiny over spending actually started during the writers strike in late 2007-early 2008, and continued through the nationwide economic meltdown. Both events were a jolt to the system, even for Hollywood’s most successful agency. Sources emphasize that the focus on fiscal responsibility began around that time and has been heightened, but not dictated, by the association with TPG.

WME meanwhile, has assured insiders and clients that the Silver Lake deal is atypical for private equity in that it has no set timeframe for an exit, according to sources. There are no Silver Lake reps on the WME board, and the agreement explicitly prevents them from having the power to force decisions at the agency.

So what’s in it for Silver Lake? A long-term bet on WME’s ability to prosper through the intersection of technology and entertainment and the ability to work with the agency as a co-investor in third-party deals.

TPG’s focus with CAA, according to a source close to the private equity firm, is similar, with TPG said to be happy with the investment returns so far.

It’s no secret that CAA is prepping a bid for IMG, which seems a natural fit with CAA’s growing activity in the meat-and-potatoes side of the sports world (sponsorship, marketing and rights deals). CAA’s leaders, rather than TPG’s, are driving the push to acquire IMG (which is expected to fetch at least $2 billion).

While CAA and WME are the biggest — and size definitely matters in Hollywood — rivals have made the size issue a selling point. Managers frequently raise concerns about clients having to “wait in line” for their shot at the most desirable projects.

“We think we’re unique in both our size and our attitude about seizing opportunities for clients, and we’ve invested heavily in the resources to help clients do whatever it is they want to do,” said David Kramer, a managing partner of UTA.

The important thing, he said, is that artists are aware of their options. “Twenty years ago the job was about booking clients in films or TV shows. It wasn’t as entrepreneurial. Clients didn’t cross verticals. We’ve adapted to that change.”

At ICM Partners, having been through an 18-month civil war that ended this time last year, agency toppers emphasize its independence as it courts clients as well as new staffers. Since the buyout, the new-model ICM has brought on 13 new agents in the past year, with emphasis on rebuilding its profile in film and expanding in digital and marketing.

“There’s no outside force that can influence us,” said ICM partner Chris Silbermann. “This company is run 100% by agents. Now it’s about entrepreneurial agenting and shaping markets for our clients.” Added fellow partner Ted Chervin: “We pressed a reset button here in a meaningful way.”

Paradigm is intent on beefing up its roster beyond its stronghold in music and TV lit. The agency has been on a hiring kick, bringing in well-known bizzers (Robert Bookman, Ken Stovitz, Rand Holston) in recent months.

“We don’t intend on slowing down our growth,” said Paradigm boss Sam Gores. “But we don’t want to be so big that we lose focus on what we do for a living.”

It’s a daunting market for new entrants. The youthful founders of the three-year-old Verve agency emphasize the benefits of the boutique approach when courting clients. Former ICM boss Jeff Berg is trying to get back in the game in a bigger way with the launch of his Resolution shingle.

Industry veterans are quick to complain that many of the town’s top agencies have grown too large, too impersonal and too corporate in many respects. There’s a feeling among many that clients lists are too long, and the team rep approach translates to more people who don’t promptly return calls.

The competition among the largest shops, particularly between CAA and WME, some say, at times gets in the way of doing business. (“Those guys don’t just want to win, they want to hurt each other,” said one manager.)

Creative talent who are not marquee names often rely on managers to help navigate the politics of the agency world — especially when it comes to trying to assemble projects with talent from different agencies.

But the decision about where a promising client should sign also can become harder when there’s interest at multiple agencies. It often comes down to the choice of an individual agent with a track record rather than the firm, per se. Multiple sources noted that CAA’s trademark “military-like follow-through,” as one described it, seems to have waned some as the agency has grown.

What does the future hold for the town’s matchmakers? Observers expect some of the larger players to evolve into hybrid entities facilitating more
content financing, production and marketing in service of the biggest cross-platform clients. That could also help them hold on to superstars that may be inclined to go it alone in a digital world where talent exerts more control over projects.

But not every client has superstar potential. There’s a vast middle in Hollywood that depends on representation to guide them through the jungle.

“Actors and writers are the core business across this landscape. They want to be handled in a very personal way with a sense of urgency and commitment,” said Paradigm TV lit chief Debbee Klein. “No matter how many car companies you represent or how many digital companies you own, at the end of the day, your responsibility is to the writers and the actors. This has not changed and it will not change.”

As the complexion of the largest Hollywood agencies evolves, leaders privately say they are mindful of the need to maintain a distinct culture that is conducive to servicing creative people. No matter how many protections are in place for CAA and WME to maintain control and avoid the ICM scenario, their moves will be watched carefully.

CAA for so long has set the industry standard that bizzers quickly take note of any perceived chinks in the marble. It’s hard to say that an agency whose recent signings include J.J. Abrams, Kanye West, Chris Pine, Sofia Vergara and Melissa McCarthy is losing steam. But it’s true that the aura of invincibility there is not what it once was, perhaps inevitably so.

One of the reasons scrappy Endeavor was able to orchestrate a takeover of the much larger WMA in 2009 was because, by most accounts, the culture at WMA had ossified to the point of decay. The Endeavor crew brought with it leadership skills, plenty of swagger and a sense of collective
purpose that re-energized the combined entity.

As much as every agent in town can wax on (and on) about being entirely “client-focused,” leaders of these shifting organizations say they’re equally concerned about cultural affairs with so much change on the horizon.

“You want to be a place where people love to come to work,” said a senior agency exec. “Culture does eat strategy for lunch.”