If I alter the picture so that I'm making fun of it, sort of like PerezHilton does on his site, would that be fair use??
Perez Hilton is definitely a very bad example of this, since what he is doing is definitely very borderline. Personally I don't view what he does as fair use and the legal proceedings taken against him seems to point that many other people also don't think so. Fair use is a rather difficult thing to define, since what you view as fair use might not be the copyright holder's view of what fair use is. There are 4 things taken into account to establish whether something is fair use or not: 1. the purpose and character of the use, including whether such use is of commercial nature or is for nonprofit educational purposes; 2. the nature of the copyrighted work; 3. amount and substantiality of the portion used in relation to the copyrighted work as a whole; and 4. the effect of the use upon the potential market for or value of the copyrighted work. In most cases when a site generates revenue from the usage (from ads etc), uses the complete picture with only minor changes (similar to Perez Hilton) chances are that it would not constitute fair use. More on Fair Use Your best bet would be to actually contact the copyright holder and get their permission to use the picture. That way you'll know that you are covered and won't run into issues later on.
hmmm that's interesting....so if I made major alterations to a picture, then it would actually give me more chance of saying that it is a parody.
To a degree. However it all depends on the actual usage and you need to fulfil all 4 requirements of fair use. Parody can't be used simply to get past copyright issues.