How dramatically is the world changing for Hollywood’s largest talent agencies? Three words: Professional Bull Riders.

WME/IMG’s acquisition in April of the Pueblo, Colo.-based sports outfit underscores how talent agencies are searching far and wide beyond the traditional film, TV and music arenas for new profit sources.

The PBR produces more than 300 bull-riding competitions a year around the world, making it a natural partner for IMG’s event-management and promotion operations. It also makes money by selling media rights and branding opportunities to its various events, which complements IMG’s sponsorship and media sales divisions. In other words, the bull-busting stars are a perfect fit with the new-model WME/IMG.

Abe Lastfogel, the late, storied leader of William Morris Agency from the 1930s through the ’60s, might have shuddered at the idea of rodeo roughnecks roaming his halls. But Uncle Abe didn’t have to make a living in 21st-century Hollywood.

Sports has been a major new frontier for the entertainment industry’s superpower percenteries — as evidenced by the rapid growth of CAA Sports and WME’s $2.4 billion acquisition last year of sports and fashion powerhouse IMG. CAA’s and WME’s drive into the sector has come at the same time other large agencies — UTA, ICM, Paradigm and APA — have beefed up inhouse expertise in marketing, licensing, financing and rights sales in order to be more proactive in orchestrating lucrative deals for clients.

A push among the bigger agencies to diversify their income streams has been driven as much by necessity as opportunity. Megabucks movie and TV deals are harder to come by for talent, which means the companies that represent them have had to move into new markets to offset the decline in commissions and packaging fees.

The impetus for change comes down to simple math. Movie deals are generally not as rich even for top-tier talent at a time when star power is no longer the bankable B.O. commodity it once was. The television business is growing apace, but the structure of dealmaking in the on-demand era is changing dramatically. The big scores from packaging fees on shows that become monster hits in syndication — think “The Big Bang Theory,” “Modern Family,” “Friends,” “Two and a Half Men,” “Seinfeld” — are more elusive now, because of audience fragmentation and the changing off-network business model for scripted series.

But while the biggest traditional profit centers for tenpercenteries may be contracting, the breadth of money-making possibilities for talent in nontraditional markets is broader than ever — just as the definition of Hollywood stars is changing with the rise of the YouTube generation. The number of platforms available to help establish a client as a true “brand” is growing by the day, forcing talent reps to think creatively across digital and social media, licensing and merchandising, publishing, endorsements and live-event opportunities.

Bullish on new revenue: WME/IMG bought sports org Professional Bull Riders as an investment for its event-management arm. Photo Credit: JEWEL SAMAD/AFP/Getty Images

That’s why Ellen DeGeneres has launched a line of home decor products sold via QVC. Kim Kardashian has extended her celebrity halo into the mobile-game market. Actress Eva Mendes has developed brands of women’s apparel. The ubiquitous Nick Cannon has put his name on high-end headphones, Kate Hudson just launched a line of yoga and athletic wear, and Drew Barrymore is hoping to follow Sarah Jessica Parker into retail mogul-dom with her Flower line of cosmetics and fragrances, sold via Walmart.

And CAA Sports is moving deeper still into a new territory — luxury corporate hospitality packages tied to major events ­— with the June 8 launch of the CAA Premium Experience service. The agency acquired two smaller companies, Goviva and Beyond Sports & Entertainment, to grow its ability to offer “experiential” opportunities for high-paying customers built around sports as well as entertainment, art, fashion and food gatherings around the world.

Questions persist at the agencies over whether a bull market in nontraditional businesses will be enough to offset the declines in Hollywood’s core markets. Is the agency business better or worse, from a bottom-line perspective, than it was five or 10 years ago? It depends on how you measure it, insiders say. The diversification strategy has made for a patchwork quilt of profit sources, some of which are just starting to be developed — like the realm of “digital influencers” who can earn six- and even seven-figure fees for product plugs across platforms ranging from print to Instagram to their personal YouTube channels.

A senior showbiz exec and former top agency partner marvels at the scope of the activity that agencies engage in compared with the pre-Internet era. “The business is not what it once was,” he observes, “but it’s still a pretty good business.”

In an era when an artist’s clout is measured in Twitter and Instagram followers and Facebook “likes,” new-breed A-listers are less dependent on studios and networks. All of the top agencies have scrambled to sign YouTube stars with the potential to branch out in multiple directions.

Michelle Phan, a self-styled beauty expert who rose to prominence via YouTube and is now repped by UTA, inked a pact with L’Oreal, and also started her own cosmetics line. Selling monthly makeup goody bags to fans through her Ipsy e-commerce site now generates more than $100 million in annual revenue.

Nash Grier and Cameron Dallas, a YouTube duo better known as Nash & Cam, have gone from making $250-$500 per live appearance to selling out 3,000-seat venues and larger after WME took charge of their touring biz. The pair also created a branded apparel line with Aeropostale, and have other licensing deals brewing.

Talent now has ample opportunity to build up a big following that ideally proves to be “portable” in support of various endeavors — from branded consumer products to digital media ventures, books to live events.

In this respect, the launch of an apparel line for an actor isn’t that much different than the launch of a movie. Both cultivate a client’s image and audience — and bank account.

“I really think the possibilities are infinite,” says Brian Dow, board member and head of branding and digital for APA, which has been a forerunner in the celebrity-lifestyle marketing arena on behalf of clients such as Bethenny Frankel and the Kardashian clan. “I think traditional entertainment will become the means for (talent) to build an audience, and the real monetization will come from tapping into that audience in what we now call nontraditional ways. I think all of the big talent agencies need to be thinking of themselves as marketing agencies.”

Steve Lashever, CAA’s co-head of commercial endorsements, echoes that sentiment: “Without a doubt, (brand development) has become a core aspect of the needs and desires of many of our clients.”

CAA has beefed up its endorsements and lifestyle department to a staff of 10 agents in the past few years, and they’ve orchestrated a bevy of deals. Eva Longoria has a line of bed sheets with JC Penney. Halle Berry has a lingerie brand with Target. Matthew McConaughey’s line of sportswear and swimwear helps support his Just Keep Livin Foundation. Brooke Burke created a joint venture with Langers Juice Co. to debut a health drink this fall targeted at women. Reese Witherspoon just launched the e-commerce site Draper James to sell clothing, jewelry and housewares.

There’s an important element of casting that goes on in finding the right fit for clients. Parker’s success with her fragrance, clothing and shoe lines has been instructive for the CAA team: A product endorser has to be authentically engaged in the development and marketing of the item to truly engage the public.

“When they’re as passionate about working on a brand as they are when they show up to the set of their movie, the possibilities of building something exciting are great,” says Peter Hess, who co-heads CAA’s endorsement department with Lashever.

Books have become a surprisingly strong arena of late for YouTube personalities and social media-friendly Hollywood personalities — offering more evidence that fans will follow their fave raves into many markets. And it’s an appeal that crosses borders: WME just set up a rich deal for a Spanish-language book to be penned by Chilean comedian German Garmendia, who has become a force through his Mexico City-based YouTube channel HolaSoyGerman, which boasts 22.5
million subscribers. The volume promises to be an important stepping stone for Garmendia at a time when Spanish-language media in the U.S. is exploding.

UTA created imprint Keywords as a place for digital influencers to publish books in partnership with Simon & Schuster. Traditional commissions apply to much of the representation, though UTA sets a different formula when its clients write works for the startup, because the agency already makes coin from Keywords content via its equity interest in the entity, says Brent Weinstein, who heads UTA’s digital wing.

The ultimate payout could come later, if Keywords continues to grow. A comparison might be found in AwesomenessTV, which features YouTube stars, and which the agency incubated on behalf of client Brian Robbins before arranging a sale to DreamWorks Animation. That deal was valued at up to $117 million. UTA continues to collect an earn-out on the sale.

UTA’s faith in the new-media space is proven by its staffing—up to 12 agents for digital and videogames.

Agents active in the digital arena say the moneymaking opportunities from brand-integration deals have skyrocketed in the past two years as traditional TV networks have grappled with a clear decline in live TV viewing. Advertisers are working with YouTube stars, and cutting deals based on a client’s social reach. Some integration pacts specify that the final fee is to be determined by the number of “likes” and “shares” that the branded video content receives over time.

“We’ve seen a trend in the endorsement space with a shift toward digital influencers taking roles traditionally occupied by actors, tv personalities and music talent. The criteria used to be ‘How many followers does the client have on social media?,'” says Brett Pacis, an agent in ICM Partners’ Global Branded Entertainment department. “Now, it’s deeper – ‘What is their engagement, count clicks, shares and Retweets, how they affect fandoms, even Snapchat open rates.”

Industry sources say there are still only a few dozen digital personalities who can bank on earning seven-figure annual incomes from advertising deals. But the number of six-figure earners is rising, which is why the major agencies are trying to build up broad portfolios of digital talent.

“There is definitely a wave of high profile digital stars seeing celebrity money through lucrative advertising partnerships. Brands love doing deals with YouTube stars as they have a massive captive audience,” Pacis says.

One of the biggest challenges of cutting deals for clients with companies outside of the entertainment ecosystem is that there’s not a standard template or shorthand that can be used in negotiations. Accordingly, there are no protocols for how agencies get paid for work that is time- and labor-intensive. Some work for corporate clients is done for consulting fees, which are typically less lucrative than a standard 10% commission.

A source notes that dealing with major retail chains is an entirely alien experience for most Hollywood talent reps, who often have trouble navigating the many layers of management, and understanding the Herculean effort it takes to get a product on shelves.

Most product deals involve talent receiving an advance that is recoupable out of future royalties, but is nonrefundable. That advance is usually a six-figure payment for all but the biggest stars, who can command more.

However, the focus of consumer-product ventures is increasingly shifting toward stars creating their own companies to market branded products rather than being a part of passive endorsement deals. The process often requires agents to help match clients with business partners in the same way that they play matchmaker between actors and directors or showrunners and comedians. That opens the door to agencies getting a toehold in promising ventures via equity stakes or through ongoing packaging fees.

“We think of it as packaging,” says John Frierson, a lifestyle agent at CAA. “You’ve got to have a lot of ingredients that work together here — the talent, the product, the retail outlet and the timing.”

DeGeneres, for example, partnered with Christopher Burch, head of private equity fund Burch Creative Capital, to launch her growing ED by Ellen line of decor, lifestyle products and clothing. With a deep background in the lifestyle retail arena, Burch brought the connections and the know-how to get ED products off the ground, first in a partnership with QVC, and as of this month by EdbyEllen.com website. ICM Partners, which set up the Burch-DeGeneres deal for the star, is an equity partner in the company.

APA grabbed the industry’s attention in 2011 when then-“Real Housewives of New York” star Frankel’s Skinnygirl Cocktails brand was sold to liquor giant Beam Global Spirits & Wine for $100 million. Skinnygirl had launched only two years earlier, after APA had teamed Frankel with Skyy Vodka creator David Kanbar to make a line of pre-mix margaritas that was sold mostly in New York, New Jersey and Florida. But Frankel’s relentless plugging of the brand, which has since expanded into other product lines, made the company an acquisition target. Frankel has since left APA, but the agency still makes money every time someone sips a Skinnygirl drink.

The Skinnygirl buyout scenario is seen as the holy grail for talent-centric product companies. But realistically, such scores are sure to be as infrequent as the creation of blockbuster global franchises or out-of-the box broadcast TV hits.

Industry sources say the average range of talent royalties from consumer-product deals varies from low-single-digits to as high as 20%, depending on the leverage dynamic between the talent and the manufacturing and distribution partners. The bigger the retail chain — Walmart, Target, Kohl’s, et al. — the lower the royalty rate. Deals with home-shopping channels QVC and HSN tend to be more generous, because of the lack of brick-and-mortar overhead.

Meanwhile, the digital realm is become an important platform for stars with brand names as big as DeGeneres and Kim Kardashian.

With ICM’s help, DeGeneres last year formed a joint venture with Warner Bros. TV Group, Ellen Digital Ventures, to better monetize considerable footprint in social media. She has 45 million-plus Twitter followers alone. The company hired former HSN marketing exec Jill Braff to oversee a ramp up of DeGeneres-branded digital content, including a revamp of her popular Heads Up! mobile game app and the EllenTube video clip channel that launched last year.

Kim Kardashian’s home run in mobile videogaming with last year’s “Kim Kardashian: Hollywood” app has been a commissions windfall for WME’s digital department.

Kardashian had no particular interest in gaming, but WME digital maven Chris Jacquemin did. He realized that with growing competition in the mobile arena, game publishers would be open to content partners that could help differentiate their offerings. He pitched game-firm Glu Mobile on the idea of revamping its generic “Hollywood” title around the ultimate famous-for-being-famous celebrity, who brought a built-in promotional machine to the effort through her 32 million-plus Twitter and 24 million Facebook followers.

The Kardashian-branded iteration of the game took off like a rocket after its June 2014 debut, grossing an estimated $150 million to date, strictly through in-game purchases (players pay $1-$99 to level up faster). Kardashian’s profit participation stake is said to be a hefty 45%.

The partnership with Glu has become much more than just lending her likeness to the game. Creatives who work on the app have become part of Kardashian’s entourage as they work aspects of her daily life into the gameplay. If the star knows a few months in advance that she’s going to be in Milan for a fashion show, she alerts the game team. And then she spreads the word before, during and after her trip via social media, to help players feel engaged in her virtual life.

The success of “KK:H” is an object lesson in the potential for a mobile game to serve as a valuable content platform — one with the ability to reach many more people than even a TV show (or in Kardashian’s case, shows). The free app has logged more than 28 million downloads during the past year; Glu’s stock price, meanwhile, has shot up 84% during that time.

“It’s a platform for her,” Jacquemin says. “It’s a way for her to directly monetize her social-media activity. My prediction is that over the next two or three years, you will see more and more of these games functioning as a place where celebrities seed content and launch products.”

Virtual Kardashians. Ellen DeGeneres-branded chaise lounges. CAA’s imprimatur on high-end hotel packages. New frontiers for talent agencies are popping up every day, taking the industry on as wild a ride as anything the Professional Bull Riders have to offer.

James Rainey contributed to this report.