Live Nation’s bid could have far-reaching effects
As reported earlier, concert-industry conglomerate Live Nation Entertainment is said to have bid on a portion of Warner Music Group, according to a report today in The Wall Street Journal. Warner put itself up for sale earlier this year when one of its private-equity backers, Thomas H. Lee Partners, decided to sell its 35 percent stake in the company.
Live Nation already owns its longstanding concert-promotions arm (with operations in Connecticut including Comcast Theatre in Hartford and Toyota Presents Oakdale Theatre in Wallingford, along with a booking deal at Mohegan Sun), and last year announced a merger with Ticketmaster and its associated artist management company, Front Line Management Group.
Adding a record company that includes the labels Warner Bros., Atlantic, Nonesuch, Reprise and Elektra, could give the company complete control over nearly every aspect of an artist’s career, from management to recording to concert tours – that is, provided an artist still wanted to work for (and no longer with) Warner Bros.
Live Nation has already negotiated a handful of similar overarching arrangements. Known as 360-deals, the company has contracts with artists including Jay-Z, Korn and Madonna that give Live Nation a cut of revenue from merchandise and product endorsements, along with record sales and live performances.
Apart from the obvious value of having a finger in every pie, it seems like an odd deal: record sales continue to decline, for one thing, and a potential deal wouldn’t include Warner’s music publishing arm, Warner/Chappell, which owns the copyrights to melodies and lyrics of a slew of songs. Also, it took the federal Justice Department nearly a year to investigate the Live Nation/Ticketmaster deal, and it seems unlikely that buying a record label would allow Live Nation to avoid similar scrutiny.
There’s also the very real possibility that the label’s more established artists, including Green Day, Gnarls Barkley, Metallica, the Red Hot Chili Peppers, Weezer and the Flaming Lips, could leave the company to do for themselves what their labels had been doing. Wilco, another Warner act, recently did just that, launching its own record company in Easthampton, Mass.
It’s the 21st-century version of the indie-rock do-it-yourself model. It has always been a viable business model on a certain scale, and that scale is only growing in the digital age, when it’s easier than ever to distribute music. That makes for tough times for a major label like Warner, and an even tougher time to think about buying one.
From an article by the Hartford Courant.