Mr. Lohan was hardly morose about his own legal troubles. His hotel room and the hallway outside it buzzed with giddy deal-making as he and his entourage, which included two beefy, bejeweled bodyguards, conducted business with the door open. It could all be overheard by passers-by — or, by coincidence, a New York Times reporter staying in a room across the way.

An associate of Mr. Lohan’s ran through the plan: ignite a bidding war between TMZ and its rival Web site Radar for Mr. Lohan’s side of the story and for embarrassing recordings he claimed to have of his fiancée, Kate Major. “What you have to do is monetize this,” the associate said, adding, “What you want is to make them pay for that exclusivity.”

Sure enough, Radar went on to post four “exclusives” quoting Mr. Lohan denying the charges and threatening to release tapes of Ms. Major.

This is how it works in the new world of round-the-clock gossip, where even a B-list celebrity’s tangle with the law can be spun into easy money, feeding the public’s seemingly bottomless appetite for dirt about the famous.

A growing constellation of Web sites, magazines and television programs serve it up minute by minute, creating a river of cash for secrets of the stars, or near-stars. An analysis of advertising estimates from those outlets shows that the revenue stream now tops more than $3 billion annually, driving the gossip industry to ferret out salacious tidbits on a scale not seen since the California courts effectively shut down the scandal sheets of the 1950s.

It all kicked in with a vengeance last week when news broke that former Gov. Arnold Schwarzenegger of California had fathered a child with his family’s housekeeper.

Radar was the first to reveal the mother’s identity, in a joint report with Star magazine. TMZ quickly flooded its site with her pictures. Several gossip outlets were prepared to bid big dollars for any new video or photographs of the mistress.

On Friday, TMZ posted the most confidential document of the entire affair: the bank form that Mr. Schwarzenegger signed last year giving her a down payment for her house.

“I don’t know who got ahold of it and how they got ahold of it,” said the mortgage broker involved in the sale, David Rodriguez.

This new secrets exchange has its own set of bankable stars and one-hit wonders, high-rolling power brokers and low-level scammers, many of whom follow a fluid set of rules that do not always comport with those of state and federal law, let alone those of family or friendship.

Now there is a growing effort to stop the flow of private information. In the past few years, a federal Department of Justice team in Los Angeles has conducted a wide-ranging investigation into illegal leaks of celebrity health records and other confidential files, according to officials involved. Working in secret, they have plumbed cases involving Tiger Woods, Britney Spears and Farrah Fawcett, among others.

That inquiry is just one of at least six here into whether workers at hospitals, the coroner’s office or the Police Department have accepted money for private information, according to officials, most of whom spoke on the condition of anonymity.

But payment often comes in cash, making it hard to track, officials say, and new laws meant to plug the geyser, many of them promoted by Mr. Schwarzenegger, have hardly worked. “Sometimes I think we’re losing,” one investigator said.

Increasingly, celebrities are not just victims. With only so many big-time personalities in rehab, facing indictment or — á la Charlie Sheen — in public crack-up mode, a raft of reality stars, former reality stars and would-be reality stars have filled the breach with attention-grabbing antics of their own.

Kitty Bennett contributed research.

Article source: http://feeds.nytimes.com/click.phdo?i=613b910e2c3c556cb85f3efac71e6db6