Today The New York Times ran the news
rapper Jay-Z is close to announcing a $150 million deal with the
concert promoter Live Nation that will cover his recordings and tours
for the next decade, as well as financing for an entertainment venture.
This should give him more farewell tours than the Who. But it's
surprising that someone is willing to pay that much for a rapper who,
great as he is, hasn't had a bona fide smash hit in a few years.

Live
Nation has signed similar deals with Madonna and U2 (whose contract
doesn't cover recordings), who remain top tour attractions as their
fans age. The Jay-Z deal is a riskier one, since most rappers don't do
blockbuster business on the road and since few have the career
longetivity of rock stars. If you think of the rap acts that became
popular around the same time as Madonna and U2, how many of them could
still fill a large club, let alone an arena? This is risky business.

The
deals Live Nation offers are innovative in one way, conservative in
another. They're innovative because they're what the industry calls
"360 deals," which include rights to ticket and merchandise sales. Now
that music can be downloaded so easily, executives believe, that's
where t he money is. They're probably right. But these deals still
involve paying acts a large advance, betting that they'll earn enough
to make it worth it. Whether or not Jay-Z actually generates $150
million worth of business, that money is still spent. Meet the new
boss, in other words, same as the old boss.

Today's other big news
was the deal that three of the four major labels struck with MySpace to
open an online music store. Basically, the social networking site is
setting up MySpace Music as a separate company with minority shares
owned by Universal Music Group, Warner Music Group, and Sony BMG Music
Entertainment. (The EMI Music Groups hasn't signed on.) The company
will operate a music store that lets MySpace users download tracks for
a fee, much as iTunes does. But it will also let users stream tracks,
which will generate advertising revenue, and a subscription service may
be added soon.

The potential to download music from another Web site isn't
revolutionary, although it makes more sense to download music from a
site where people are talking about it. What's innovative here is the
idea that users can play songs for free, with the music companies
making money from advertising. Other sites already do this, but few of
them have the audience of MySpace. It makes sense to put the music
where the music fans are.

The Live Nation announcement is bad
news for traditional record labels, but the MySpace deal shows that
they have some life in them yet. Record stores might not be so lucky.