Thursday, October 18, 2007

Madonna deal more about money than music

The deal confirmed Tuesday between Madonna and Live Nation tells us a lot about the future of the corporate music world. But it has very little to do with ensuring the future of great music or serving the dedicated music fan.

It's a deal for the few, the rich, the branded.

Unlike Radiohead's recent end-run around the music industry, which was about using the Internet to get music from band to fan as directly and inexpensively as possible, Madonna's global megadeal with the nation's largest concert promoter is all about maximizing revenue streams.As the first performer signed to the Artist Nation imprint, her agreement with Live Nation is built on the idea that an aggressive entertainment company can sell Madonna in more ways than ever.

It points the way toward a major-label system that will be even less about innovative music, and even more about innovative marketing.

Executives valued for their ability to find talented bands and artists who excel only at music, and not glamour, will become extinct at this mega-corporation level. Their future will be in smaller niche markets, on smaller labels, which cater to hardcore music fans. Those fans are still out there by the tens of millions, as peer-to-peer file sharing has demonstrated, but the Artist Nation model isn't for them. It's for and about celebrities, and the people who can't get enough of them.

No one can begrudge Madonna's business smarts. She saw this as a way to get even more rich and more famous, if that's possible. Live Nation is taking a huge risk investing so heavily in an icon who will turn 50 next year. It's betting on the idea that it can sell Madonna not just through concert tickets, where the two shared $86 million in revenue last year, but also through record sales, merchandising, fan clubs, Web sites, DVDs, music-related television and film projects, and sponsorship deals.

The deal likely means the rich will get richer if the music industry adopts the Artist Nation model. Multimedia stars such as Justin Timberlake, Jay-Z, Eminem, Christina Aguilera, Jennifer Lopez, U2's Bono and a handful of other established performers for whom music is just one part of what they do, and how they sell, should be smacking their lips.

Meanwhile, it's more bad news for the established major labels. Live Nation presents a threat to the near monopoly once enjoyed by Warner Brothers, with whom Madonna has been contracted for 25 years, as well as Sony BMG, Universal and Capitol/EMI.

In the past, the majors have worked out Madonna-style partnerships with artists such as Robbie Williams and Korn to share not just in their record sales but in all their music-related income. But they have been slow to remake their business model, and some artists -- such as Radiohead -- are beginning to abandon the majors as a 20th Century relic and set off on their own. Last week, Radiohead started selling its new album as a digital download through its own Web site at a price determined by each consumer.

Madonna's decision strongly suggests that even the artists who benefited most from the majors' business-as-usual approach are no longer interested in living in the past.

Now the nation's dominant concert promoter has set itself up as a new breed of record company, gunning to sign the same big-name artists that have been the majors' meal ticket for a half-century and offering them one-stop shopping benefits. With Starbucks and Live Nation now in the music-label business, can other powerful corporations with music-related product -- such as Steve Jobs' Apple or Paul Allen's Microsoft -- be far from establishing their own labels?

But these multifaceted deals only make sense for a few artists. For a new or midsize band with a niche audience, the Live Nation-Madonna model has nothing to do with their reality, and probably never will. Artist Nation points the way toward a future where the biggest corporations will be about only the biggest stars and the most revenue streams. Smaller artists will likely gravitate toward some variation of the Radiohead model, a combination of touring, niche marketing and direct-to-fan sales that doesn't require the involvement of multinational conglomerate.

As for Artist Nation, celebrities only need apply. Hello, Madonna -- a celebrity with a profound understanding of who she is at this stage in her career. She no longer needs a record company. She needs a marketing machine that can help her cash in on all the business opportunities that her music made possible.

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