ROBERT SIEGEL, host:
Well, the contract hasn't been signed and lawyers are likely still haggling over the fine print, but last week's reports of a megadeal between rapper Jay-Z and concert promoter, Live Nation, are still reverberating through the music industry or what's left of it.
Jay-Z is just the latest music star to sign with Live Nation, a company eager to sell more than just concert tickets. The deal is reported to be worth as much as $150 million over 10 years. But some observers wonder if Live Nation is thinking too big.
Joel Rose reports.
JOEL ROSE:Jay-Z hustled his way from a Brooklyn housing project to the top of the chart.
(Soundbite of song "Encore")
JAY-Z (Singer): (Singing) How can I get an encore? Do you want more?
ROSE: That was just the beginning. The rapper, who was born Shawn Carter, launched his own record label, his own clothing line, his own nightclubs, basically his own lifestyle brand.
JupiterResearch analyst Michael Greene says that's what Live Nation is after.
Mr. MICHAEL GREENE (Analyst, JupiterResearch): They know that it's not just music that's making money for these superstars anymore, it's their movies, it's their apparel, all these other things that they market in addition to what made them famous to begin with.
ROSE: And it's not just superstars. Musicians at all levels of the industry long ago figured out that touring and merchandising are the ways to make money.
Gary Bongiovanni is the editor of the concert industry trade magazine Pollstar.
Mr. GARY BONGIOVANNI (Editor, Pollstar): Historically, an artist's touring and merchandise revenues were kept by the artist. Artists today make much more money from their touring and any related merchandise sales on the road than they do from anything - recorded music.
ROSE: Record labels traditionally keep the lion's share of record sales. With those sales plummeting, the labels are looking for a cut of the touring and merchandising money. And so is Live Nation, the world's biggest concert promoter. While the concert business is good, analyst Michael Greene says Live Nation also takes a lot of risks and spends a lot of money on overhead, including venues and publicity.
Mr. GREENE: It's a very, very low-margin business. It's a very tough business to be in. You know, it's hard to find a superstar artist that want to tour all the time. And part of their idea is that they can find new revenue streams that are potentially more lucrative.
ROSE: So Live Nation is paying handsomely for a foothold in those other businesses. Last year, the company signed a so-called 360-degree contract with Madonna that gives Live Nation a share in all of the singer's revenues for a reported $120 million over 10 years. The Jay-Z deal is reported to be worth even more: $150 million. That's a number that would tempt any artist to hand over control of their touring revenues, says New Yorker pop critic Sasha Frere-Jones.
Mr. SASHA FRERE-JONES (Pop Music Critic, The New Yorker): It sounds like one of those numbers that somebody made up, like they were at dinner when they wanted to impress Jay-Z, and he says, sure, because, you know, he's not stupid.
ROSE: Neither is Live Nation, says analyst Michael Greene.
Mr. GREENE: The fact that we're sitting here talking about Live Nation, the concert promoter, is truly an important move for them.
ROSE: Live Nation declined to comment before the Jay-Z deal is signed. The company was formed three years ago, out of what used to be Clear Channel Entertainment. Live Nation's publicity materials refer to it, not so humbly, as the future of the music business.
But critic Sasha Frere-Jones says the strategy of spending big money on aging talent resembles nothing so much as the past.
Mr. FRERE-JONES: It's not like you banked on the wrong person, it's just, did you do it at the right time with the right numbers?
ROSE: To Frere-Jones, the Jay-Z and Madonna contracts look a lot like the megadeals of the 1990s when record labels threw hundreds of millions of dollars at artists whose best work was behind them.
(Soundbite of song "Whatchulookinat")
Ms. WHITNEY HOUSTON (Singer): (Singing) Why you looking at me?
Unidentified Group: (Singing) Don't get mad at me.
ROSE: Singer Whitney Houston has released just two lackluster albums since signing a $100-million contract with Arista Records in 2001. Live Nation is betting Jay-Z, who's 38 years old, still has more in the tank. The rapper told The New York Times, he's, quote, "The Rolling Stones of hip-hop," meaning he can keep playing packed arenas into middle age and beyond.
But Sasha Frere-Jones says the rapper's track record suggests otherwise.
Mr. FRERE-JONES: You got to wonder about a guy who's never gone on a huge tour, really, not the way that U2 tours, not the way that The Stones tour. That's not something I imagine Jay-Z doing.
ROSE: But Frere-Jones admits, he's underestimated Jay-Z before. He didn't think the rapper's clothing line would go anywhere. Last year, Jay-Z sold the rights to Rocawear for $200 million in cash.
For NPR News, I'm Joel Rose.
(Soundbite of music)
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