Madonna

Live Nation is in the process of locking in a long term exclusive deal with Madonna that would have her severing ties with Warner Music Group. The deal would encompass not only touring, but recorded music and merchandising as well. Some say the total package could be worth anywhere between $120 - $180 Million.

Madonna is one of the last arena acts that can sell tickets at obnoxiously high prices and fill arenas. Some of Live Nation’s motivation had to be CEO Michael Rapino wanting to make Madonna’s services off limits to rival AEG. With fewer acts of this caliber available to gross absurd amounts of money in the concert business, look for this to possibly be a business trend in the future.

Does anyone think Madonna is going to sell huge amounts of albums anymore? Certainly her “hits” collections will move a lot of units indefinitely, but WMG gets to keep cashing in on that material. The potential of Madonna producing a hit record isn’t high, especially if she keeps making calculated dance music.

This is all about securing the long-term services of a major concert attraction. It will also be somewhat of a test business model by an entertainment company like Live Nation trying to branch out into other areas to see if they can innovate something lucrative for both themselves and the established artist.

Madonna’s live show still grosses huge dollars, so Live Nation will make back its money and then some. Madonna obviously wins here too. And what does this say to the traditional major labels? A big star chooses to align themselves and their future music making enterprises with a non-major record label. Certainly Live Nation made a better deal with Madonna than AEG did with David Beckham (have you ever seen $200 Million tossed away more quickly?).

The promoters are going to keep throwing insane amounts of money at stars that are at the end of their artistic run, but that have a few more lucrative tours in them. For Madonna to command that kind of deal from Live Nation, the consumer ultimately takes the hit because you can bet that ticket prices for a Madonna show will remain extremely high. This is about greed, not creativity. In the end, it is still all about overpaying for talent, overcharging the consumer and milking this cash cow for every last drop.