Big money deals are starving pop

So, $80m for REM. But that leaves little change for tomorrow's acts, says Andy Gill

Judging by the colossal deal signed this week between Warner Brothers Records and the American rock group REM, reports in recent years of the "death of pop" have proven not only premature, but well wide of the target.

The arrangement, which nets the Athens, Georgia-based group a cool $80m for only five albums, is one of the biggest recording deals ever struck in the music industry, confirming the band's position as one of the most popular acts in the world today.

It is not, however, the largest deal ever struck with a recording artist. That, like most record-breaking feats in the record business, remains in Michael Jackson's domain, although the $890m multi-media deal he signed with Sony in 1991 involved not only Jackson's own work but also the rights to other artists' publishing catalogues that he had previously purchased, most notably the Northern Songs portfolio containing Lennon & McCartney's Beatles compositions.

As with English football transfers, the Nineties have been the silly season for music-industry deals. Observers were shocked in 1991 when Virgin Records signed Janet Jackson for $50m and The Rolling Stones for $30m - although the deals were explained as a means whereby Richard Branson could "fatten up" his Virgin record label with only a few money-spinning stars (Genesis, Phil Collins), before selling it off for around half a billion pounds.

In the film industry, appearances are all-important: accordingly, telephone- number deals are often struck simply to demonstrate to the Los Angeles film colony that the studio in question can attract the talent.

Much the same holds for the music business. When CBS, for instance, re-signed Bob Dylan, it wasn't necessarily expecting to recoup its entire investment from Dylan's own recordings. It was buying Dylan's position as an artist of great probity, which would be of incalculable help in attracting other artists.

So, too, with Warner and REM, lauded as much for their humanitarian ethos and environment-friendly attitude as for their music. Nirvana's Kurt Cobain, deeply troubled by the conflict between his original punk ideals and the immense success that would eventually lead him to suicide, once regretted being unable to handle the fame as well as REM's frontman Michael Stipe, whom he referred to as virtually a saint. It's that saintliness, as much as anything, on which Warner has taken up its option: in negotiations with young indie or "college-rock" bands, it will doubtless prove invaluable.

But, as with English football once more, big-money deals tell only part of the story. Every $80m that a label is paying a Janet Jackson or REM is $80m less in the kitty to develop those young indie bands attracted by the big-name artists. When rock music first became a global mega-bucks business, record labels would routinely sign bands to six-album deals, relying on their artist & repertoire (A&R) departments to develop the band's career over the full course of the contract. Rare indeed was the debut album that made money, or was intended to do anything other than introduce the group's name to the public; indeed, there would be several years of subsidy - through tours, advertising, marketing and further recordings - before the company expected to see a return on its investment.

Now, new bands sign deals for singles, and if the first single doesn't chart under its own steam, they may never get to make an album. It's a myopic, short-term strategy that has resulted in the erosion of the major labels' A&R departments, whose traditional talent-spotting duties are now carried out by independent companies such as Creation and Go! Discs - which are then forced to sign licensing deals with the majors to finance the development of acts, such as Oasis, that break through to wider audiences.

It's a remarkably similar situation to that of the early days of rock 'n' roll, when local hits on small American labels would be picked up by major distributors for national release. Then again, the stakes weren't quite as high in those days. When Sam Phillips sold Elvis Presley's contract to RCA, he received the princely sum of $35,000.

RISING RECORD DEALS

Band Company Est. Deal Year

REM Warner Bros $80m 1996

Janet Jackson EMI $70m 1996

George Michael Dreamworks/Virgin $50m 1995

Michael Jackson Sony $60m 1991

Madonna Warner Bros $60m 1991

Rolling Stones Atlantic $5m 1971

Beatles EMI Royalties 1962

of 1p/record

James Elder and Ben Summers