Friday, June 20, 2008
Is the buying spree at Live Nation coming to an end or just starting? Michael Cohl who sold his concert promotion company to Live Nation and then became it's Chairman thinks the deals need to cease until they can prove the formula a winner. Chief Executive Michael Rapino thinks more 360 deals should be happening. 360 deals are those in which an artists puts all his/her eggs in one basket. In most cases the company that makes the deal with you gets a piece of record royalties, touring, merchandise, etc. essentially anything that you make money from, possibly publishing being the only exception. Live Nation has taken a financial leap by signing Madonna and Jay-Z to deals totaling $270 million in guaranteed money to those artists. These seem like two crazy deals in the current music atmosphere. Since Live Nation announced the Madonna deal, their stock has fallen 44% and that of course is the number everyone looks to. Give me the days when Warner Brothers signed an act they liked and took two to three album cycles to develop the act. Careers were made, the acts had fans and fans could afford to attend numerous shows. I heard somebody say the other day that Madonna tickets were $400 a piece. I guess Live Nation has to try and make the money back somehow and justify the signing to their shareholders. Younger people can't afford those prices! Most people can't afford that number! If she had a faithful audience, this is a great way to lose them. Randy Meisner, one of the original Eagles and the author of their classic, Take It To The Limit, was quoted in Rolling Stone last month as saying how much money do you really need?