Madonna ditches record label to sign up with concert promoter

The Eighties may be distant history, but Madonna has proved she is still a Material Girl. The singer has abandoned Warner Music, her long-time record label, in favour of a $120m (£60m) deal with Live Nation.

Warner Music would not match the offer made by Live Nation, the company behind Live8 events, and last week Madonna's management informed Warner that it would be losing her.

Madonna, 49, who is renowned for her capacity to reinvent herself, is clearly still a lucrative proposition. She has been recording for Warner ever since she burst on to the music scene in 1983, and this new deal, which combines her touring and recording rights, is regarded as a landmark in the industry.

In recent years, promotion and record companies have been branching out to combat the problem of internet piracy and dwindling CD sales.

The rights to Madonna's tours, which continue to be highly profitable, will now be owned exclusively by Live Nation. Last year's Confessions tour featured eight sell-out performances at Wembley Arena, which is managed by Live Nation. The tour grossed $260m.

It looks to have been a canny business move from the singer, who will pocket an $18m signing bonus and an additional advance of $17m in cash and shares for each of the three albums in the 10-year deal. If Madonna goes on tour, she will get up to 90 per cent of the profits, with only 10 per cent reaching Live Nation.

Music labels are increasingly including concert promotions in their deals, but this is the first for such a major artist. Traditionally, big acts such as Madonna would release albums through a major record label and have a separate deal for touring and merchandising.

Despite teaming up with LAC/InterActiveCorp, which owns TicketMaster, Warner could not counteract the Live Nation offer.

Music industry experts estimate that for Live Nation to profit from this landmark deal, it would need to sell 15 million copies of each of the three albums she releases under its auspices. But with CD prices falling, and the increase in illegal downloading, this figure might even go up.

Live Nation began as a specialist in the promotion and production of music shows and other live events, but had been looking for ways to expand its remit. Warner will keep the rights to Madonna's back catalogue of albums.