Filed under: Deals, Rants and raves, Competitive strategy, Entrepreneurs, Media World
Madonna has been a trend setter for three decades and has built, not just a music empire, but a financial one. She is brash and savvy. The “Material Girl” who popularized wearing undergarments as formal wear and accent pieces has made another splash this year, not with her music or wardrobe, but with her new record contract.
She has abandoned the major record labels to sign on with a concert promotion machine for $120 million. Goodbye long-time record label, hello Live Nation (NYSE: LYV). In October, the iconic and very wealthy 49-year-old Madonna signed her biggest contract to date, and one Warner Music Group (NYSE: WMG) would not match.
Live Nation, the concert promoters, have acquired her touring and recording rights. Her first album was released in 1983, 26 24 years ago, and she has been going strong ever since. According to published reports: “The rights to Madonna’s tours, which continue to be highly profitable, will now be owned exclusively by Live Nation. Last year’s Confessions tour featured eight sell-out performances at Wembley Arena, which is managed by Live Nation. The tour grossed $260m.”
Specifics include an $18 million signing bonus and an additional advance of $17 million in cash and shares for each of the three albums in the ten-year deal. If Madonna goes on tour, she will get up to 90 percent of the profits, with only 10 percent reaching Live Nation.
This landmark contract is bound to modify the playing field in the music industry that has been combating internet and CD piracy once again. Madonna, though, won’t be following behind but leading the charge as she’ll be under contract well into her fourth decade.
Madonna the music machine is a well-established money machine. It might turn out that the on-stage nationally televised kiss between Britney Spears and Madonna that got everybody’s shorts all bunched up wasn’t a passing of the baton. It might turn out to have been a large kiss-off! For since that time Britney has appeared in more court room battles, mugshots, and scandals then she has music accomplishments, and Madonna, not Britney, is the new Madonna – still out front — still making waves, setting trends — and collecting royalties.
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm.
Be sure to check out more Money Winners of 2007.
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