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Tours  de force

When Madonna announced she was leaving her lifelong record label Warner in October 2007 to sign a “360 degree” deal worth around €95m with Live Nation, the world’s biggest concert promoter, it stunned fans, the record labels and the wider business community. The ever-astute Material Girl realised that while a new generation of fans don’t pay much (if anything) to download songs, they do pay to go see artists live, or for a commemorative T-shirt. Madonna’s 2008 world tour is believed to have hauled in more than €180m in ticket sales alone and major artists may now get three-quarters of their income from touring.

While record labels rant about pirates or cuddle up to mobile phone companies, California-based Live Nation is in the throes of building a diversified entertainment business that includes music licensing, recordings, merchandising and sponsorship. In the first half of 2008 it laid on 30 events and provided services to 895 artists through its Artist Nation division. As record industry executives woke up sweating over peer-to-peer networks, Live Nation followed its deal with Madonna with similar ones with rapper Jay-Z – which included a €20m fund to support Jay-Z’s clothing lines and his talent-spotting agency – and Latin pop star Shakira.  

In October it emerged that U2 could earn more than €700m in shared revenue after signing a 12-year contract with Live Nation, which will entitle them to 1.56 million shares in the company worth around €12m. As well as handling U2’s tours, Live Nation will also handle all merchandising, digital and branding rights. This deal does not even include albums for U2’s record label, Mercury Records. 

Live Nation is not simply cajoling its artists to embark on a globe-crossing tour to sell T-shirts. The company will end its partnership with Ticketmaster early next year so it can enter the lucrative primary concert ticket sales market and is looking closely at the increasingly valuable ticket resale market as well.  

However, Live Nation is not the only name muscling in on traditional music business territory. Partly spurred by self-preservation, Ticketmaster recently bought a controlling stake in Front Line Management, one of the most influential firms in the business, whose clients include The Eagles, Christina Aguilera and Neil Diamond.  

As Bob Dylan, who has just ended a global stadium tour, would surely acknowledge, the times they are a-changin’.