By Stacy Jenel Smith My fellow industry watchers, as we begin the New Year 2007, the state of the entertainment business is optimistic, celebratory - and jittery.

The headline of the day is how they'll be rewriting blockbuster records come May, the month when not one, not two, but three feature franchise giants unveil their part threes - "Spider-Man 3" on May 4, "Shrek the Third" on May 18 and "Pirates of the Caribbean: At World's End" May 25.

Seeing that the $1,065,200,000 worldwide-grossing "Pirates of the Caribbean: Dead Man's Chest" all by its onesy boosted 2006 into a winning year for Hollywood movies, no wonder they're already getting the champagne chilled.

This heady year of sequels will also bring us "Rush Hour 3," "Ocean's 13," "Fantastic Four: Rise of the Silver Surfer" and "Harry Potter and the Order of the Phoenix" - the fifth "Harry Potter" movie.

So what does that do to the highly-reported new "get tough" stance studios were supposedly taking with superstars around last summer's divorce between Tom Cruise and Paramount?

You'll recall the studio opted not to continue his 14-year relationship, and mogul-at-the-top Sumner Redstone let the world know that it was all Tom's fault for turning off much of the public with his Scientology, his dissing of psychiatry, his couch-jumping on Oprah's show and so on.

In his estimation, Redstone told media, Cruise's bizarre behavior cost Paramount "$100 million, $150 million on 'Mission: Impossible III.' It was the best picture of the three, and it did the worst."

Having enlisted other studio powers in his verbal campaign in favor of star cost-cutting, he said he wasn't sorry to have embarrassed Tom: "The explosion was good. It sent a message to the rest of the world that the time of the big star getting all this money is over. And it is! I would like to think that what I did, or what we did, has had a salutary effect on the rest of the industry."

Yeah, you tell 'em Sumner. The business people of Hollywood are through with all that toadying to a bunch of spoiled actors. It's over, d'you hear?

The fact is, other stars had already quietly taken the cue. With studios having a more and more difficult time dealing with declining movie audience numbers, plenty of stars realized that squeezing companies for maximum dollars no longer made sense. More than a year ago, for example, Tom Hanks lowered his own "first dollar" deal on "The Da Vinci Code" -- from an expected 40 per cent to a still-heady 25 per cent.

Cameron Diaz reportedly decided to forego getting a percentage of the boxoffice on "Holiday" in order to get the film made at the beginning of last year.

"Cameron Diaz is thinking of the future and she is still getting north of $10 million for two months' work," a Sony executive told the Times of London. "Let's not get too weepy here."

And before either "Pirates of the Caribbean" 2 or 3 was filmed, Johnny Depp reportedly agreed to a somewhat smaller percentage of the films, in part so that Keith Richards could be brought aboard to play Jack Sparrow's father. Johnny reportedly still gets $20 million per picture plus a percentage of the gross - figures now being hailed as a huge bargain by other studio executives.

So behind those boffo box office numbers in this exciting year of the sequel, Tinsel Town is still fraught with the underlying, never-to-get-better reality of the audience shifting away from traditional theater-going and splintering into fragments from which it is harder to wrestle revenue.

The dichotomy is quite clear when you consider that Disney, with a $1 billion blockbuster in '06, also decided to cut its production from about 18 movies a year to eight in an effort to shore up its infrastructure.

But fear not for today's stars. As is obvious to anyone who has not been living in a cave in the last five years, the celebrity culture is bigger than ever. If you have a "name" you can pretty much write your own ticket in a variety of areas that stars of decades past didn't even think about -- whether it comes to coming out with clothing lines, having signature perfumes, cosmetics and jewelry, penning children's books, taking on anonymous or not-so-anonymous voiceover work in commercials and cartoons, or lending one's imprimatur to technical gadgetry, ala Jay-Z's and Pharrell's eye-catching Computer is Personal Again ads for the HP Pavilion line of entertainment notebooks.

But before we leave the movies too far behind, what of films that don't aspire to breaking box office records?

There's a reason creative types in Hollywood keep talking about a lot of the most meaningful work in film getting done on cable television - not the big screen -- these days. It's because a lot of the most meaningful work in film is indeed getting done on cable television now. The space available for grownup dramas in the feature marketplace continues to dwindle. In fact, as awards season unfolds, it's become quite common to hear the words, "This wouldn't have been an Oscar contender a few years ago."

While the Oscars continue to glean ratings second only to the Super Bowl each year, they've retained their status as the pinnacle of industry honors. Still, there is no doubt that Oscar has taken hits from the proliferation of other awards shows over the last decade - which is why the Academy chose to move its ceremony up to February from its traditional March slot in 2004. After an initial boost in the ratings, with 43.5 million viewers watching the show in the U.S. in 2004 (arguably, that had more to do with "Lord of the Rings" than an earlier show date) -- the past two years have seen viewer numbers shrink again (in 2005, 41.5 million, and last year, 38.59 million).

It is not that hard to envision a future scenario in which Academy members continue to bestow their honors on films the public has not seen, the ratings continue to erode, and the Oscars themselves follow film drama into art house smallness.

The shifting of audiences and the rise of new entertainment options are, of course, the biggest stories of the new millennium and continue to be - and the shifts and changes are occurring faster and faster. YouTube and iTunes, MySpace and TMZ.com - names that didn't exist a few years ago - are now vital entities in the entertainment realm.

More and more shows are being produced strictly for the internet. And as more and more audience members choose to view shows on demand, the old networks' audience numbers continue to shrink - and shrink. Old norms - like the accuracy and reliance on Nielsen ratings - are being questioned. Old power centers are graying, going or gone. Case in point: as of last year, 40 per cent fewer viewers watch network news broadcasts than in the '80s, and they're the demographically undesirable crowd of those 45 years old and up - while the Number One choice for news among 18-to-35-year-olds are general interest web sites that include continually updated news.

"What is happening is, in short, a revolution in the way young people are accessing news," said no less a media presence than Rupert Murdoch in a speech. "...They don't want to rely on a God-like figure from above to tell them what's important?.They want their news on demand, when it works for them. They want control over their media, instead of being controlled by it."

Not unlike the Old West, the new media frontier is filled with lawlessness, licentiousness and trash - naughty ladies' crotch exposures, rampant on-line haters and hundreds of thousands of mindlessly pontificating bloggers. But it's also, of course, the gateway to a universe of new opportunities -- new careers, new fortunes and maybe, if we're wise enough to use it well, new understanding of each other.