Thursday, October 11, 2007

Is It Live Or Is It Memorex?

It's increasingly looking like the future of recorded music is as a marketing tool for selling concert tickets and developing brand identities. The deal reportedly in the works between Madonna and Live Nation is just another step in that direction:

The story was first reported on the Wall Street Journal's Web site, which said Madonna would receive a mix of cash and stock in exchange for allowing Live Nation to distribute three studio albums, promote concert tours, sell merchandise and license her name...

The paper, quoting people briefed on the Live Nation deal, said the package includes a general advance of $17.5 million and advance payments for three albums of $50 to $60 million. (Album advances are generally recouped from sales income.

Live Nation also is expected to pay $50 million in cash and stock for the right to promote Madonna's concert tours.

To give you an idea of how lucrative the concert circuit is, in 2005 the industry totalled $3.1 billion in revenue, and that's not counting the ways in which technology will allow promoters to develop new revenue streams from live performances. Madonna's last three world tours grossed $400 million combined. Add to that merchandising, image endorsements and music licensing (which I'm surprised isn't part of the deal), and you've got a pretty lucrative market, even if the actual sales of mechanical copies will continue to decline.

It's ironic that at the dawn of the recording era, musicians felt threatened by technological advances that allowed mechanical copies to achieve better sound quality. Rightly so, since at the time, any activity that depended on music -- dance classes, theatre performances, nightclubs and private parties -- required live musicians, hence guaranteeing their livelihood. They became enthusiastic only after it became clear that recorded music sales could not only provide a revenue stream (although never a very reliable one due to shady industry practices), it could also serve to spread an artist's reputation. In the intervening years, recording became both an art and an industry in and of itself, distinct if not separate from the artistry of performance.

It would seem as though the industry has come full circle. Recorded music will once again serve primarily to publicize an artist's work, with live performance (complimented by licensing revenue from advertising) providing the livelihood. For artists with an already established stature, it won't really change much other than their accounting methods. What remains to be seen is how it will impact the way in which new artists are discovered and popularized.

Posted by Judah in:  Arts & Letters   Markets & Finance   

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