Music majors can learn from Madonna
Madonna, who was upset by London’s congestion charge, might well be one of the wealthy non-domiciles to be hit by a new £30,000 tax charge announced in the pre-budget report. But the 49-year-old Queen of Pop will soon be better able to afford both, as she is on the brink of signing a recording, performance and merchandise contract with concert promoter Live Nation that could be worth $120m.
Her move could be seen as fresh evidence that the end is nigh for the music majors, as artists experiment with new ways of distributing their work: Sir Paul McCartney is selling his latest album through Starbucks, Prince used the Mail on Sunday, and Radiohead are dabbling in freakonomics by inviting fans to pay whatever they want to download their In Rainbows album.
The deal is a blow for her long-standing label, Warner Music. But it is also risky for Live Nation: to recoup a $50m to $120m advance on three albums, the singer, who will be eligible for her free bus pass by the end of the 10-year deal, could have to sell 15 million copies of each. I’m second to none in my admiration for her, but that is some going.
Record companies have been boxed into a corner, but I am not so sure they are doomed. They can copy tricks from their rivals: Universal, the world’s largest, is investing in the ‘360 degree’ model where the label manages an artist and helps organise concerts and sell merchandise. The majors still have huge strength in marketing, distribution, production and studio management – and regardless of MySpace, most artists still need a backer to launch, and sustain, their careers.
Like Madonna, the big labels are not yet past it, but they need to adopt her strategy: self-reinvention.
From an article by Ruth Sutherland, The Observer.