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Live
MySpace and a concert promoter shake up the music business
It's only Thursday and it's already been an interesting week in the music business.
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.
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.
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