From Yahoo News
NEW YORK (Reuters) - Live Nation Inc said on Monday it has reached an agreement for a 12-year global contract to handle the merchandising, digital and branding rights as well as the touring of Irish group U2.
Live Nation has been expanding its business model to develop more far-reaching and deeper relationships with artists beyond just handling their touring. The deal with U2, one of the world’s biggest rock bands, comes just five months after Live Nation announced a comprehensive partnership with pop star Madonna, which included her coveted recording rights.
The company would not reveal financial terms of the U2 deal though analyst David Joyce at Miller Tabak estimated that the deal would “likely be in the $100 million range.” Live Nation said U2 will continue the band’s long-term recording and publishing relationship with Universal Music Group, a unit of French media giant Vivendi. “It’s not a do-or-die situation that we have to be involved in the recordings,” Live Nation Chairman Michael Cohl said in an interview with Reuters. “We’d prefer to, but it’s not always available.” The deal with Madonna, which included the recording rights, was estimated to be worth $120 million over 10 years including a three-album commitment after the artist submits her last album to her current music company, Warner Music Group.
Its partnership with U2 will now include merchandise and licensing rights, sponsorship and strategic alliances, digital rights, fan club/Web sites and other marketing and creative services. Cohl said the new model will help boost the overall company’s profit margins. Analysts have said that touring and ticketing have traditionally been a low-margin business. Several of the company’s executives had managed U2’s tours for more than 20 years.
Live Nation’s attempts to diversify its business and win artists from music labels come as the major recording companies are also trying to reinvent their business and win control of touring, digital and merchandise rights of their artists. Joyce, who rates Live Nation a “buy,” said that as the company tries to bolster relationships with its artists, this latest deal should help its efforts to retain live event market share from existing competitors such as AEG. But he said there is a question whether music labels will fend off Live Nation’s expansion attempts as they attempt to diversify themselves. The music companies are keen to replace lost revenue caused by falling recorded sales. Fans are buying fewer CDs and not purchasing enough digital music to make up for the shortfall.
The major labels have started signing some artists to so-called 360-degree deals which include recording as well as publishing, touring, digital and other rights. Cohl said his company will focus on signing other major artists rather than developing new acts such as a traditional music label or publishing house. “Our intention is to work with artists who are already making it or on their way to making it,” he said. Live Nation said its new strategy will also include its Web site LiveNation.com, which Cohl said was aiming to become the biggest music portal on the Web through a mixture of ticketing, merchandise sales as well as fan clubs and other features. Shares in Live Nation were up 3.5 percent, or 41 cents, to $12.24 in Monday morning trading on the New York Stock Exchange.
What this all means will come to light once U2 hit the road again. One thing for sure, we are likely to get a new U2.com and we will not all be buying concert tickets through the usual outlets like ticketmaster.
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Live Nation, the promoter that owns or manages venues such as Wembley Arena and Manchester Apollo, has signed an $80 million (£40 million) upfront deal with U2 that will tie the Irish rock band to its venues for the next 12 years.