Live Nation: Spend? Wait? Exit the Chairman?

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?

Live Nation Scooping It Up

According to the NY Times, Live Nation is now signing Jay-Z for a $150 million dollar deal. He was president of the record label he was on. He now signs with a tour promoter. JayZ is not know as a road warrior.

The deal includes financing for his own entertainment venture, in addition to recordings and tours for the next decade. The pact, expected to be finalized this week, is the most expansive deal yet from Live Nation, which has angled to compete directly with the industry’s established music labels in a scrum over the rights to distribute recordings, sell concert tickets, market merchandise and control other aspects of artists’ careers.

As it's been stated, it appears Live Nation is just bulking up the assets to sell it again. Nothing like regifting. As Bob Lefsetz said, who do you want to be in with Michael Jordan or the hottest young basketball player. He also points out that when David Geffen started his own label he signed Elton John, John Lennon and Donna Summer. Not until he signed a new act, Guns N Roses, did he start printing money. Three veterans now signed to 10 year deals with Live Nation. Jay-Z wil be 49/50 years old when the deal expires. Madonna will be 60/61 and U2 will be close to Madonna. I'm not throwing stones as I could have gone to school with Bono. I just know that touring is not for the faint of heart. The older you get, the less important it is prove yourself or take on the road. We'll see if Live Nation gets the big payday. We'll see if it's worth the money to these acts.