Why Live Nation Wants to Put Madonna and U2 Under New Management
Bloomberg News by Claire Suddath (2013-11-13)
Madonna and U2 are about to get a new manager: Live Nation Entertainment.
The concert-promotion titan and owner of Ticketmaster is in talks to buy both Principle Management and Maverick, the companies behind U2′s manager Paul McGuinness and Madonna’s Guy Oseary, and thus solidify Live Nation’s hold on two of its most profitable artists. “This is a way for Live Nation to more efficiently bundle together all those revenue streams related to two artists in which they’ve already made much larger investment,” says Larry Miller, professor of music business at New York University’s Steinhardt School.
Live Nation actually manages a lot of artists: The company’s Artist Nation division works with about 200 acts already, and Madonna and U2 have long been under its wing. In 2007, Madonna signed a 10-year, $120 million deal to let Live Nation distribute her studio albums, promote her concert tours, and sell her merchandise. U2 and Jay-Z struck similar deals in 2008.
So far these deals have paid off. In 2011, U2′s 360 Tour—the band’s first after signing the 12-year Live Nation deal—broke the Rolling Stones’ record for most profitable tour ever by selling more than $700 million in tickets. Madonna’s numbers have been significantly smaller: Last year’s 88-stop MDNA tour pulled in $305 million, which was still enough to make her the top-selling act of 2012.
Concertgoers may be wary of Live Nation’s vertically-integrated stranglehold on the music industry now that it’s managing, promoting, and selling tickets to two of the biggest live acts around, but the deal with Principle and Maverick seems unlikely to raise prices much further. “Prices are already pretty high,” says Miller. “I don’t think this is going to drive them up much further. This is more about optimizing the revenue that’s already coming in.”
What’s more interesting about the deal is that Live Nation is investing so heavily in artists who are past their prime. Last year, for example, Madonna’s MDNA album dropped from 359,000 in sales its first week to a shockingly low 48,000 its second week. U2′s last album, 2009′s No Line on the Horizon, was also a disappointment.
But album sales haven’t been an arbiter of an artist’s moneymaking potential for years. These days, its concerts and festivals that bring in all the money—and middle-aged U2 and Madonna fans have more disposable income to spend on tickets. Last year, the average cost of a Madonna ticket ($160) was nearly twice that of Justin Bieber’s.