Whether you love or hate Madonna, a groundbreaking deal was announced when Madonna signed a $120M deal with “LiveNation” out of L.A. The contract is for 3 CD’s, and they will also promote her concerts, merchandise, and license her name. I don’t know what else they do, but I know Live Nation primarily for it’s concert promotion efforts. It seems like every time I see a new concert announcement (in my area), you see the Live Nation name behind it.
I think this is key, because for years the P2P and torrent rallying cry by many was to “free the music”, because the artists make most of their bank on tour anyway. At least, they seem to get a greater percentage of it. I believe that some of the best artists only make about 20% royalty for their CD sales, and the less ones….well, they probably get much less. Let’s say a “successful” band, artist, or pop star sells 500,000 CD’s. That’s pretty good nowadays. What if the average retail was $16.99, their half million CD sales would equal just about $8.495M (about eight and a half million). Twenty percent of that is about $1.7M. But wait – they probably have to pay their manager, producer, agent, and maybe even a lawyer. We better take 25% off for that, which leaves $1,275,520. Let’s say in this scenario there’s 4 guys in the band, so each one would get $318,812.50.
If that same band went on a 100 date tour with an average of 5,000 people per night (I’m being pretty conservative here), and the tickets were $45, they would gross $22.5M on ticket sales alone. If only 1/2 the people in attendance bought one shirt or memoribilia (again being conservative) that would bring in $6.25 in merchandise revenue, for a total of almost $29M. Let’s say that 50% of the gross has to be paid to promotion, road crew, tour manager, etc. That still leaves $14.375M to be split by the 4 band members = $3.59M each!
Alright – I don’t work in the music industry, and my theoretical numbers may be waaaay off. But if they’re even close, it shows that artists stand to potentially make 10 times more money on tour than from their album sales! So (in my head) I believe that Madonna took the $120M deal because it’s more than she would possibly make from a traditional record company. A couple weeks ago Radiohead gave away their entire album on their web site FOR FREE. This TechCrunch article states Oasis and Jamiroquai and about to do the same. It also makes the bold statement “The deal shows that even for a world famous act, a record company is no longer required in the days of digital downloads and P2P music sharing.“. Is this the new frontier of music – will over major artists and music superstars follow suit?
Has P2P file sharing and Bit Torrent peer to peer networking finally won the battle? Especially now since earlier this year iTunes and other music download services are offering significant music catalogues with no DRM whatsoever?
I would love your comments on this hot topic – share view with everyone now by clicking on the comment link below now!
*UPDATE*
Here’s another article from Wired that describes the current state of the Music industry to a “T”. They’re busy sueing single parents for $222,222.00 in damages (for 12 ‘shared’ songs), while they are screwing the artists out of the lion’s share of the royalties anyway. Unbelievable.
[tags]riaa, music, p2p, download, itunes, drm, madonna[/tags]
