The rise of concert promoter Live Nation

The rap star Jay-Z is the latest artist to ditch his traditional record label in favour of an all-embracing deal with a concert promoter that is transforming the industry

Live Nation is the future of the music business. At least that's what it claims, immodestly, and with U2 and apparently now Jay-Z hitching themselves to the company it no longer seems an idle boast.

Live Nation is the world's biggest concert promoter. It owns or operates intimate gig venues, giant rock arenas and music festival sites around the globe, including the Brixton Academy and Wembley Arena in London.

And now it is gunning for a whole new area of business: recorded music.

Madonna, always among the first to spot a trend, signed a record deal with Live Nation last October. Jay-Z is in the final stages of talks that would see the company put out three of the rap star's next albums over 10 years. For both stars, the record deal is just part of a much broader – a very, very lucrative – relationship with Live Nation's artist management division, called Artist Nation, which will have rights over their concerts, websites, merchandising and even other business ventures.

With traditional record labels such as EMI and Universal Music watching their CD sales collapse by 25 per cent over the past two years, the music industry is indeed in a state of profound change, and that has given Michael Rapino, chief executive at Live Nation, his chance to pounce. "I am the worst enemy of the labels," he said recently.

The power shift reflects a money shift. Following the advent of internet file-sharing, a whole generation of music fans don't pay to download songs. They do pay to go see their favourite artists perform live, or for a T-shirt. Major artists might now get three-quarters of their income from touring.

Record labels themselves are signing "360 degree" deals with their artists that cut them in on these non-music revenues, but Live Nation has been arguing that it has more expertise in these newly important areas. Its work to secure corporate sponsorship for tours and venues can be extended to find sponsorship deals for individual artists, it says, and it can take charge of a band's website to better promote the artists and their merchandise. Our aim, Mr Rapino says, is "further strengthening and monetizing the relationship between artists, fans and sponsors – before, during and after live events".

"We want a closer, more direct relationship between the band and its audience," the U2 frontman Bono said when the band signed up to a wide-ranging concert promotion and marketing deal on Monday. "Live Nation has pledged to help us with that."

U2's 12-year deal was rumoured to be worth more than $100m, but unlike Madonna's $120m, 10-year pact it does not cover recorded music, and U2 will continue to be signed with Universal.

$100m? $120m? Punchy numbers. The mooted Jay-Z deal raised eyebrows even higher, leading some analysts to predict that Live Nation's shareholders may revolt before pen reaches dotted line. With upfront payments of $10m an album, a $25m fund to support business ventures such as Jay-Z's clothing lines and his talent-spotting agency, plus other costs, the final price tag on the 10-year deal comes to $150m, it was reported yesterday.

Jay-Z – real name Shawn Carter – has been looking for a new record label since his relationship with Universal soured. For three years until the end of last year he was running the Def Jam label within the company, but despite the emergence of Rihanna as a global star, the overall performance wasdisappointing.

A deal with Live Nation would allow him to increase his focus on touring, he told The New York Times. "In a way I want to operate like an indie band. Play the music on tour instead of relying on radio. Hopefully we'll get some hits out of there and radio will pick it up, but we won't make it with that in mind."

And with younger artists experimenting with distributing their own music online and bypassing the traditional hunt for a major label record deal, he expected that many would look to the Live Nation model in future. "They think: Something must be happening. Madonna did it, she's not slow. Jay-Z, he's not slow either."

David Kenstenbaum, analyst at Morgan Joseph & Co, said he rather hoped reports of the Jay-Z talks were "a trial balloon" sent up by the company to test investor sentiment before committing itself. "While we believe the Artist Nation development is a prudent move for the company, in our view Live Nation would be better off investing in less pricey artists that can fill its amphitheaters and accordingly, generate more favourable economics.," he said.

The company dismisses those qualms, saying that innovative sponsorship deals, online ventures, licensing arrangements and a myriad new ways to squeeze money out of music artists will more than justify the deals it has signed, and Mr Rapino shows no shortage of ambition. A concert promoter all his life, the Canadian sold his company to a group that merged with Clear Channel in 2000, and he was installed as chief executive when Live Nation was spun off in 2005.

Last year the company's revenue jumped 13 per cent to $4.2bn, and it has a goldmine of a database of 25 million people who attend its concerts. That should jump dramatically next year as the company takes over control of ticket sales, currently outsourced to the highly profitable Ticketmaster, giving Live Nation another leg-up in his quest for global domination. The question, though, is whether the share price's downward trajectory can be reversed. With the big bucks being paid to Madonna and now Jay-Z, Mr Rapino is being applauded for betting on the right business model – but worried onlookers think he might be betting too much.

MySpace to stream free music

In another sign of the changes sweeping the music industry, Rupert Murdoch's MySpace social networking website is going into business with the biggest record labels – two years after the Arctic Monkeys shot to fame using the site to bypass the major labels.

A joint venture created yesterday, called MySpace Music, will stream free music from artists in the Universal, Sony BMG and Warner Music stables, and offer paid-for downloads, concert tickets and merchandising all in one place.

It will integrate the existing 5,000 artist profile pages with the range of new services, said Chris De Wolfe, chief executive of MySpace. He described the launch date of the new service as "fluid".

MySpace Music is being touted as a potential rival to Apple's iTunes Music Store, which accounts for more than 70 per cent of digital download sales.

The music industry, fearful of Apple's outsized influence over its business, sees another competitor in the song downloads business as crucial.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Arts and Entertainment
Reimagined: Gwyneth Paltrow and Toni Collette in the film adaptation of Jane Austen's Emma
books
Arts and Entertainment
Jesuthasan Antonythasan as Dheepan
Cannes 2015Dheepan, film review
Sport
sport
News
Richard Blair is concerned the trenches are falling into disrepair
newsGeorge Orwell's son wants to save war site that inspired book
Arts and Entertainment
The pair in their heyday in 1967
music
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Neil Pavier: Management Accountant

£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

Sheridan Maine: Commercial Accountant

£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

Laura Norton: Project Accountant

£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

Day In a Page

Abuse - and the hell that came afterwards

Abuse - and the hell that follows

James Rhodes on the extraordinary legal battle to publish his memoir
Why we need a 'tranquility map' of England, according to campaigners

It's oh so quiet!

The case for a 'tranquility map' of England
'Timeless fashion': It may be a paradox, but the industry loves it

'Timeless fashion'

It may be a paradox, but the industry loves it
If the West needs a bridge to the 'moderates' inside Isis, maybe we could have done with Osama bin Laden staying alive after all

Could have done with Osama bin Laden staying alive?

Robert Fisk on the Fountainheads of World Evil in 2011 - and 2015
New exhibition celebrates the evolution of swimwear

Evolution of swimwear

From bathing dresses in the twenties to modern bikinis
Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine