Starting last year a concert promoters at Live Nation made headlines by signing Madonna to what's become known in the music business as a 360 deal. Under the agreement Madonna shares revenue from recordings, merchandise, and concerts with Live Nation in exchange for several million dollars up front. They've since made similar 360 deals with U2 and Jay-Z. Now, for an encore, they've fired the man chiefly responsible for those deals.
Apparently Micheal Cohl, who ran the Live Nation Artist's division, was pushing to sign even more artists. That put him at odds with Live Nation CEO Michael Rapino who wanted to stick with the company's original plan to find out if the 360 deals were actually profitable before spending the additional money.
The idea behind 360 deals is a fairly obvious one for many people in the music business. Since music sales are down while concert and merchandise revenue are growing, offering a single contract that covers all of them makes more sense financially than just a recording contract on its own. The problem is that artists know that too and they're not ready to give up their more lucrative businesses without big advances.
It will be interesting to see if Cohl's firing has any affect on the rest of the industry. Other companies have been considering 360 deals as the potential saviors of record labels, but so far none of them has signed such a contract. It's fair to say it's much easier for a concert promoter to do the job of a record label than the other way around.
That, of course, raises the question of what the purpose of labels really is in the internet age. If there's no profit in music distribution maybe it's time to step aside and let someone with a workable business model take over.
The idea behind 360 deals is a fairly obvious one for many people in the music business. Since music sales are down while concert and merchandise revenue are growing, offering a single contract that covers all of them makes more sense financially than just a recording contract on its own. The problem is that artists know that too and they're not ready to give up their more lucrative businesses without big advances.
It will be interesting to see if Cohl's firing has any affect on the rest of the industry. Other companies have been considering 360 deals as the potential saviors of record labels, but so far none of them has signed such a contract. It's fair to say it's much easier for a concert promoter to do the job of a record label than the other way around.
That, of course, raises the question of what the purpose of labels really is in the internet age. If there's no profit in music distribution maybe it's time to step aside and let someone with a workable business model take over.
