Friday, October 12, 2007

Memorex Redux

A quick footnote to yesterday's post about Live Nation, the company buying the rights to Madonna®:

Although it is the largest concert promotion company in the world, it lost $161 million in 2005 and 2006, and barely managed to make $10 million profit from $1 billion revenues in the most recent quarter of this year.

Meanwhile, according to leaks about the deal, Madonna's cut of the concert tour take will be 90% of the gross. Frankly, I don't see where the upside is coming from for the folks distributing the music, whether it's record companies or concert promoters. Teenage boys will form rock 'n roll bands for as long as there are groupies crowding the stage (and the dressing room after the show). The $64,000 question is, who's going to record their music?

Update: To answer my own question, they'll record it themselves using the ridiculously inexpensive home recording technology now available. And they'll distribute it themselves using file sharing over the internet. And then when they've gotten enough exposure and buzz (precisely measured by clicks and downloads), they'll sign a deal with a tour promoter, who will expand their distribution capacity. In fact, it looks to me like there's some room there for a savvy online middleman to connect the talent to the re-invented "distribution" outlet. A cross between an online record company and an agent.

Posted by Judah in:  Arts & Letters   Markets & Finance   

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