Of course, CDs themselves are not toxic, but they are fast becoming toxic to record labels that have been asking for the beating they are beginning to take.
No. Not at the hands of young music pirates.
By the artists they represent.
After 25 years with Warner Records, Madonna went for the sure thing or you can say she took the money and ran. She still has to deliver one more album for Warner. And Warner gets to keep her catalog, but what Warner wanted was what Live Nation could do better – promote her concerts and sell her image and merchandise.
Industry accounts reveal that Warner tried to get TicketMaster’s parent company to go in with them on a Madonna deal. Madonna’s representatives were negotiating with both sides.
She will be choosing to do a deal with the people who promote concerts and not the company that sold all her albums and CDs.
The Wall Street Journal reports Madonna will get a $17.5 million general advance and advance payments for three albums of between $50-60 million. Plus, $50 million in cash and stock for Live Nation’s right to promote her concert tours. Oh, and did I mention that as with most superstars, she gets to keep 90% of the gross when she tours and when Live Nation does licensing deals in Madonna’s image, they split the proceeds.
Not bad.
Warner was over its head because the music industry has passed it – and the other major labels – by.
It’s a risky deal for Live Nation even with Madonna on board. She is a major concert arena attraction and is one of a vanishing breed of music superstars, but…
She will be 60 when her Live Nation contract expires. It doesn’t mean she’ll die of old age. Mick Jagger didn’t (although he and Keith Richards look like it). But it is a risk nonetheless.
Live Nation isn’t a record label so Madonna could need a label to market her three studio albums.
Or…
She might not need a label.
A lot can happen between now and her first Live Nation album and we’re all watching the Radiohead experiment in the meantime. We’ve seen Prince stuff his new CD into a tabloid newspaper that his fans probably don’t even read and sell out his 21 U.K. concert dates.
The “album” – whatever that morphs into – could also become a loss leader for stars who are shifting their strategies faster than the record labels.
So what have we learned?
Is Madonna’s deal the end of the record labels?
Probably not.
But artists who are big enough are taking note. They don’t need a label anymore than consumers need to buy CDs from record companies.
Is Prince a marketing genius?
Probably not.
But he did sell out his concert dates and gave away a record label’s most precious asset – the CD – for free.
Is Radiohead setting the trend for big artists to offer real variable pricing for online downloads that include the option of paying nothing?
Probably not.
But at least it’s an idea. One more than most record labels come up with.
Are record labels dead?
Probably.
But not for five or ten more years. They currently don’t have the skill sets to seize new opportunities that are being created by this upside down digital music revolution. After all, labels manufacturers in designer jeans.
To get in on the new action record labels would have to become what they are probably not.
At 60 Madonna may outlast some or all of the big labels and laugh all the way to the bank.
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