If you haven’t been keeping up with this news lately, maybe you should. First Radiohead announced that they’d be ditching their record label and publishing their new album online. Then Trent Reznor announced that Nine Inch Nails will do the same. That’s worrying to the music industry, but not that bad. Radiohead is a great band, but they’ve never been a big seller, especially here in the U.S., and NIN only has about a dozen fans left, so the labels probably don’t give a damn where they end up.
But then Madonna went and dropped a bombshell today. She’s leaving Warner Brothers – the label she’s been on for most of her 25 year career – and signing a deal with Live Nation, the concert promotion people. Although Warner will still have the rights to her next studio album and another “greatest hits” album (as well as her entire back catalogue), Live Nation will distribute three new studio albums, have exclusive rights to promote upcoming concert tours, and exclusive marketing rights to Madonna’s name. The 10 year deal is worth $120 million for Madonna in cash and stock.
This is interesting news, not only because it’s the first time a truly huge superstar has left the traditional music industry behind, but it also reflects where the money is for the artists. Madonna’s last four albums have sold 10.4 million copies in the US. Even if Madge was getting $2 per CD sold (a completely outrageous amount, even for her), that’s “only” $20 million. In reality, she’s probably getting $1 or 75¢ per disc, so cut the $20 million number in half. On the other hand, her last three tours have netted $385 million in ticket sales, to say nothing of merchandise sales. We can assume that Live Nation will be getting a cut of Madonna’s ticket revenue under this deal, but how much is unknown at this time. What we do know is that this deal is so big that it’s driving down Warner’s stock price: Madonna’s Confessions on a Dance Floor was the #1 selling album in the US in 2005, and without Madonna as a “marquee brand” on Warner’s roster, the label looks like a poorer investment. As of this writing, their stock is down 30¢.
Read all about Madonna’s new deal here. Oh, and Oasis and Jamerquai might be next…
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