Next come various theories based on evolutionary psychology. Gossip clearly plays some elemental function. As Robert Wright put it in The Moral Animal, "knowing who is sleeping with whom, who is angry at whom, who cheated whom, and so on, can inform social maneuvering for sex and other vital resources. Indeed, the sorts of gossip that people in all cultures have an apparently inherent thirst for—tales of triumph, tragedy, bonanza, misfortune, extraordinary fidelity, wretched betrayal, and so on—match up well with the sorts of information conducive to fitness." At the level of instinct, our brains don't distinguish between gossip about people we actually know, and people we see regularly on TV or in magazines. Support for this idea comes from my colleague Jack Shafer, who noted some years ago the high proportion of celebrity news that is about reproduction and child-rearing. Hollywood stars serve as proxies for our ancestral in-groups in the contemplation of reproductive strategies.
Another version of this theory comes from a 2008 article in Scientific American ($), which attributed our celebrity obsession to status-jockeying. Some research findings: Men are mainly interested in gossip about men and women mainly interested in gossip about women; we care much more about those above us in social hierarchy than those below; we care more about people in our own age group; we care more about negative news (someone got arrested) than positive (someone won an award). According to Frank McAndrew, professor of psychology at Knox College, we instinctively collect information that can affect our social status. Negative information about higher-status, same-sex others is ammunition against biological competitors.
Finally, celebrity obsession may simply be economically rational activity in the sense that everyone involved in the value chain—celebrities, agents, producers, paparazzi, publishers, etc.—makes more money than they would otherwise. Celebrity "journalism" is not only diabolically popular but cheap to produce, which explains why People is America's most profitable magazine. To become a celebrity requires no talent beyond what Boorstin described as the ability "to get into the news and stay there." And for many, public humiliation may be a better business model than trying to gain admirers—see index under: release of sex tape, "accidental." Charlie Sheen may not get $10 million for his memoirs, but they're worth more than they were this time last year. It does not seem impossible that his "breakdown" has been entirely calculated.
Thanks to @Hirschorn, @williamcfoster, @pauldevlin and Laura Kipnis for sources and suggestions.