Since reporting Monday that Nine Inch Nails had dumped its record label and was to offer future albums direct to the public, Oasis and Jamiroquai have also joined the move away from the record industry, but the biggest announcement of all is news today that Madonna has dumped the record industry.
According to reports, Madonna has signed a $120million deal with L.A. based concert promotion firm Live Nation to distribute three studio albums, promote concert tours, sell merchandise and license Madonna’s name.
Whilst the deal differs from Nine Inch Nails in that Madonna is not offering direct-to-public albums, Live Nation isn’t a record company. 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.
The only real question now is how fast will the music industry model come tumbling down. When Radiohead led the way in offering their music directly to fans many predicted that the move was the beginning of the end; Madonna may well be the tipping point from where we will now see a flood of recording artists dumping record labels and where todays model will shortly become a footnote in Wikipedia.
madonna is just moving from a label company to another, nothing comparable with Nine Inch Nails or Radiohead moves !
LiveNation is a concert producer and promoter. The money is an advance against future sales (over 10 years). They have a return on capital of 1%, deal like this increase it to over 100%.
Artisits will be giving their music free to lure in fans to pay for concert tickets which will be their primary source of income by doing this LiveNation is thinking ahead and making the money on back end.
“the industry has made them famous”
Depends on what you listen to.
I’ve never heard Radiohead played on the radio, or at a concert, yet I’m familiar with Tom Yorke and Radiohead. Another popular band I enjoy sometimes, Ladytron, I found through Myspace. But the best music I find through Last.fm. The last time I heard anything surprising on the radio was when I was a kid and I heard Thriller.
@(fake) Michael Arrington. LOL
Hey, we Universal Constructors have been giving away our trip-hop and ambient dub music for free online for nearly 10 years now…
Yeah, we’re not world-famous, nor have we had a huge record deal to tear up but our mp3s have been downloaded in their tens of thousands over the years and we get plenty of people who take time to let us know they’ve enjoyed our tunes. That’s enough for some musicians …admittedly, ones with day jobs…
Sorry if this comes across as self-promotion, but it’s not like we’re doing it for the money. Just our egos.
This is model of the future for the music (recorded) industry.
1. Put the FREE music on GRUUVE http://www.gruuve.com.
2. Let users syndicate and build a user base.
3. Monetize user base by signing deals with a touring company like (LiveNation).
Backdrop
1. Declining costs of production and distribution (less capital required upfront)
2. The web is more efficient at identifying the gravitational points in the long tail. Use those metrics to build a touring base.
3. More people will be served and more money will be made by the touring companies.
There is something here – Live Nation produces concerts, this is where the overwhelming bulk of revenue comes from for artists. Madonna has agreed to a 3 record deal – with DRM free music? we don’t know yet, but if they use the music as a tool to promote the live events this could be a pretty big deal. We could be seeing Madonna music bundled with everything in the near future for free.
Duncan is right.
It doesn’t say how they’re going to distribute the music. That could be very important. Very easily Line Nation will make back it’s investment in Madonna in their first tour together, so the studio albums are only promotion for the tours.
Live Nation could easily turn around and say “We’re going to distribute the records online for free”. If they pay $80 million per album recorded and recoup nearly $200 million from the tour, the album’s sales are nothing in comparison. They could promote, distribute and manufacture millions of CDs and still come away with over $100 million per album/tour.
Live Nation might not be creating a record label in the traditional sense, they might be redefining what a record label is.
@myself.
That doesn’t count licensing Madonna’s songs and non-tour related merchandise either. There are more millions to make there.
Duncan, sorry you got pwned by Alaska. I read every comment in this thread and it’s clear he’s right, you’re clinging to a silly shred of your original argument in the original post. Sorry just giving some constructive criticism, you don’t want to hear it but he’s right. There’s no applecart being upset by Madonna’s announcement today. On the contrary there there ARE a lot of bloggers going for exaggerated Armageddon headlines to pull in readers without the context.
@47: People like you always raise that half-quote as mantra and implicit conclusion; how about you go read Brand’s actual quote ? It goes like this (and is far less absolute and conclusive than you make it out to be):
“”Information Wants To Be Free. Information also wants to be expensive. Information wants to be free because it has become so cheap to distribute, copy, and recombine—too cheap to meter. It wants to be expensive because it can be immeasurably valuable to the recipient. That tension will not go away. It leads to endless wrenching debate about price, copyright, ‘intellectual property’, the moral rightness of casual distribution, because each round of new devices makes the tension worse, not better.”"
Information does not want anything by itself, guys.
What do we want the information to be ? free or controlled ? free or paying ? closed or shared ?
Music is art, cinema is art, it is far more than “information”…
don’t forget the Smashing Pumpkins, they’ve released an album only online
Like Radiohead, Madonna is an artist who has had the benefit of years of those “evil” major label dollars promoting her music. She used their resources and connections to build a brand. Unlike Radiohead, Madonna is on the tail end of her hit making career and is more of a live act than a sensational recorded artist. This deal makes sense for her.
Very few artists have the resources or acumen to build a career to this level on their own. So as “talent incubators” labels still have a place- they provide the money and the bodies necessary to create brand ubiquity for an artist.
The recording industry is obviously losing mindshare amongst the public, because people are recognizing how antisocial some of its activities are and major artists are now setting the example of doing without it. Clearly the artists mentioned don’t need financial support, so an interesting question to me is – what about those who do need financial support?
Isn’t a band very much like a modern internet startup? In the old days (of 20-30 years ago), if a young person wanted to write software, it was hard to do so without the financial support (and equipment) of working for a major corporation. Now, a few credit cards, 6 months of savings, or someone like Paul Graham can be enough to make a hit.
I can imagine something similar emerging within the music industry – perhaps some established artists will mentor and (financially) support talented newbies, with the responsibility for distribution staying with the artists. Obviously musicians can do ‘consulting’ in the form of live performance and session play as another way to pay the bills incrementally.
I think this could bode well for the ultimate quality of available music because of the potential for mentoring relationships between actual artists rather than newbeis being groomed by marketing execs.
On the other hand I’d also expect to see a lot of ‘me too’ stuff produced because it’s easy and cheap (just like we see in web2.0).
she is old, and her style does not appeals to most of the younger generation….who cares
http://vidsonly.blogspot.com
Royalty & Licensing model are broken. Music is a commodity business today.
I think the smart thing here is that Duncan didn’t call Madonna a washed up act
But seriously, this is a great move for the industry. I don’t know why some of the comments here call Madonna as unappealing to a younger generation, but as part of that generation myself, I think that her music is still popular among us today. Her latest album, released in 2005, broke the world record for the number of #1 debuts in the most countries, so I think the market has pretty much spoken.
This blows my mind.
Does this mean that the RIAA wont have any Record Companies to represent in lawsuits against piracy?
Will Madonna and others Join the RIAA individually?
With no big shot record execs, who will young singers date/marry when they want to boost their careers?
If you go over to their website under careers, it is apparent that they are gearing up to distribute music digitally.
No, artists would not join RIAA individually.
It is almost as if live nation is going to be acting as a surrogate record company, which I think is a mistake. From a consumer stand-point, I don’t want to have to remember that Madonna is signed with Live Nation to purchase her music. Either sell it direct from her site or through the number 3 music distribution point, iTunes.
Yup, I gotta agree with Alaska and other comments on this site. If LiveNation is going to distribute Madonna’s albums and give her $120 Million for the privilege, then LiveNation is now a record company.
There’s no question that the music industry is evolving, as it always has been. But the vast majority of the music sold in the marketplace is still manufactured, promoted and distributed by trans-national multimedia conglomerates. It doesn’t look like that will be changing anytime soon.
#70 That’s a good point; balkanization of sales points making it harder to find content. That’s one thing megasellers like iTunes and large brick & mortar stores have going for them; finding the latest album I want (say, Bjork), isn’t a project unto itself; I can just go in on my way to work, take a few minutes to pick it up, and be back on my way in no time. Same with iTunes. Acquisition isn’t frictional; my time is worth more than the eschewed savings, so I’m happy to pay more for the convenience. If I need to google an artist to find out who is selling their wares, I also have to wonder which of these companies I never heard of is the real thing, and which are scams. Store brand recognition and trust association matters.
I commend both Radiohead and NIN and I do hope more artist will by pass the Mega Record companies. Remember how some of the Rap Artist like Too Short and Master P started by selling their tapes out of the back of their cars. Master P became a millionaire selling both his tapes and his videos through direct channels. Just think if he had used the power of the Internet back then. Oh an please don’t forget the girls from TLC who sold 10 million records one year and because of the deal they signed with the record company they were still BROKE.
hmm. i thought musicians paid record labels to distribute their music. to that same thought, musicians pay promoters to promote their music.
this sounds like they are hiring madonna to perform in concert to me. kinda like how movie studios hire actors to perform in movies.
m3mnoch.
Can we meet somewhere between Alaska and Duncan? This isn’t revolutionary, but it’s hard to deny that it bears some subtle news for those of us who are eagerly awaiting the downfall of the RIAA.
People keep harping on whether or not this music deal suddenly turns Live Nation into a record label. The implication being that, if they are just a label, this is no different from the status quo. I think this implication is false, or at least could reveal itself to be false in the near future.
What is important is whether or not this “fledgling record label” becomes a member of the Culture Cartel that is the RIAA, or even begins to behave like a member.
For instance, if Madonna is able to retain full copyright ownership as a part of this deal and is merely licensing her music for distribution (a question I have not seen an answer to yet), then that is worth noticing. It would be even more interesting if such a deal were obtained by a less noteworthy artist, but this is still moving in a good direction.
This doesn’t have to be a matter of “it’s all over” or “it’s status quo.” There are interesting things happening here regardless.
The post states: “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.”
I would change that “even” to “especially” — Madonna, Radiohead, NIN are in a wholly different position than most other artists out there, seeing as they’ve already benefited hugely from the traditional record label machine. Your “even” here implies a fundamental oversimplification and misunderstanding of the situation, as is evident in so much of the vague and giddy music industry analysis the tech world seems so eager to hand out right now.
I also agree with other commenters’ observation that what Madonna is doing is entirely different from what Radiohead and NIN are doing (mainly, she’s not self-releasing).
Why is it important? Because a major artist is showing that there is no money to be made in the traditional ’sell records’ sense. Her true money is going to be made during tours now and Live Nation is foremost a tour company. Hell they could give the music away, it’s all pirated now anyway, they are going to cash in on selling Madonna tickets to her tours.
Remember, she set a record for her last tour as the highest grossing female act ever, in the 100’s of millions. When was the last time selling an album made that kind of money?
It is a house of cards, and Duncan is correct. If selling tickets to a live show can generate 100 million+ dollars, and selling a record label album can generate 20 million dollars and that number is going down down down, it makes sense for an artist to leave the labels and sign to live promotion companies.
First!?!?! Negativland was giving away music on the Internet before most of you even heard of it. Get your facts straight.
Whether Madonna hires a professional company to help her with distribution of her music, or she does it herself like RH, NIN, BareNakedLadies etc., is irrelevant. She is using her music/art/IP as a tool to generate a community to market to rather than for revenue. This is a fundamental shift in the industry. I am surprised there are so many naysayers her, especially since this is a web 2.0 blog where most of the companies features are in a give a free version monetize the userbase model. It remains to be seen if Madonna is going that route as well.
If this music is DRM free, and freely available through indirect channels there is an inarguable trend emerging that artists are going it alone.
In countries with a lot of piracy, such as the Philippines or India, where you just can’t make money from record sales, this has been the standard model for entertainers for a looooooooooooooong time. The developed world is finally catching up with the real world.
The Internet has challenged the whole notion of paying for music. The main reason for buying a record was to hear your favorite songs whenever you wanted to as oppose to only when it came on the radio. The Internet allows you to do so with the endless amount of options from the artist page on myspace to the music blogs, music message boards, internet radio, etc…At no cost. If you leave your computer then the I-Pod serves as your ultimate “interchangeable, interactive compilation album”. The Internet has also broken the marketing monopoly (radio/mtv) that was dominated by the major labels so the hype machine is there but has little effect on the targeted audience. The majors will still be around (mostly due to their valuable catalog) but will not lead the way in creating the new stars and classic records as their business model is in direct conflict of the “do-me” era the Internet has ushered in. Soon things will calm down (after one has access to all his favorites but find it difficult to get their hands on good NEW music) and the demand for the proper online business infrastructure will increase and then we will see the right innovation needed to finally push the music business into the 21 century
It’ll be a long time until the model crashes, too much of a norm to change, and too much shit pop/rnb music making big bucks for them to lose money anytime soon.
http://roddotnet.blogspot.com
If that is not a record label deal then i dont know what is.
Live has become increasingly important to artist in the wake of the explosion of the ‘record label’ model. What live nation is doing is leveraging their newly imposing position in the value chain to impose a label model on the consumer of that womens content. they will be doin frictionless scrobbling of your Itunes to learn what music you like, inform you of the next show of the artist (just like tourb.us) try and impose some social tools on you and hope you end up buying the content (which ofcourse will be DRM’d) and that is their achilles heal.
@35 — I second that. Why do we still have this joker on the payroll? This is the reason Business 2.0 went down the tubes. Lousy stories, not related to topic, with faulty premises.
Can we just agree that this article is much to do about nothing?
Yes it is amazing that a major artist elected to bypass the labels but, we are only talking semantics here.
Radiohead and NIN are P2P and that is interesting. Madonna is just newsworthy because of the $$$.
Also, Live Nation’s live concert margins are terrible. They desperately need to re-develop their strategy. And, as this deal indicates, becoming a label is one way to do that (although margins are not much better here)
I earn much of my living as a lighting tech, sometimes working in ClearChannel venues and I’d back everything the Recording Industry Insider has posted.
Oh, and bear in mind that the total value of ticket sales has to cover the cost of ticketing agencies, hire of venues (nice one, CC!) let alone the cost of shipping huge quantities of expensive kit around the world. And the wages of, erm, the family of crew to make it all work.
LiveNation is not a record company. But they’re still a bunch of b*stards.
Duncan, Michael et all…
We all seem to believe this is the begining of the end, made all the more delicious by the fact that, at least on the surface, the labels have been caught napping on this issue and will now reap the consequences.
But the truth is, the labels have most definately not been napping. Instead they have been simply fortifying the areas of music where this new movement will have very little impact… namely hip hop (or rap or whatever you may want to term it).
You see, for acts markets such as this, where image is just as important as musical content (in some cases even more!) the record industry is still an all important and feared god. In these genres, the labels act as more of a bank or credit facility to the artist. Take 50 cent, without his exotic cars, giant houses, pimped out tastes and impossibly prosthetic bimbos attached what is he? Nothing! And where does all this finery come from? You cant seriously believe that, whilst he may make a fairly decent pay day from royalties, he could afford even half of all the accoutrements we constantly see surrounding him. No, he doesnt own jack! The label does (or in this case the parent label of the label that owns his own label, confused?).
So, bearing this in mind tell me, how do you remove the labels from one of the most popular forms of music worldwide and still maintain the image that has brought it to this position in the first place? The “bling” would dry up pretty damn fast!
Recording labels are ready for this, as much as we are ready to tear them down (and rightfully so!) it cannot be said that the end is nigh. Just a slight change in course for a few well established rock monsters.
I live in the USA, am the same age as Madonna. I haven’t heard a single pop song I would pay one penny in the last ten years.
The Record Companies came to power by controlling the means of reproduction, and more importantly the distribution channels for their physical goods. Then the distribution channel changed. Now they have lost power because they have not tried to build a new distribution channel, leaving that up to others like Apple. They deserve their fate.
The interesting idea from this discussion is that Record Labels still have a role in marketing new music. While that may be so, it will be a very different, more difficult and less profitable business than the old one.
Let me just say that NIN, on their brilliant new release Year Zero, put the entire new release on nin.com in streaming format to listen to, to your heart’s content before purchase. How many ‘artists’ out there (including Madonna if I may stretch the definition of ‘artist’ ) would be willing to do that? To me that was the beginning of the end(pun unintentional…really), as the modus operandi of the recording industry has been one or two good songs to get you to purchase…then you find out those are the only 2 good songs on the damn thing.
Good luck Madonna, if it wasn’t for leftover Clear Channel money and ozzfest, Livenation.com would have sunk under the weight of its VP’s ego’s by now.
They think they’re going to be able to take on Ticketmaster in a year or two (when their ticketing deal with TM expires) but it took them over a year to implement user registration and profiles. What a joke!
On the other hand, Live Nation ticketing and promotions own a bunch of venues so that side of the business will remain profitable.
To partially quote Shakespear: The fault is not in our stars, it’s in ourselves. If music consumers now can and will acquire the music they want by bypassing any form of payment, all artists are in trouble, but especially the grass roots emerging variety and all those who happen to pursue artistic innovation rather than mass popularity. If we scare away this ocean of potential artists and innovation by expecting the music to be free for the taking, we will be left with only corporately produced art of one kind or another.
Touring is NOT the answer for many – I HATE touring! Studio work is where the creation occurs and studio work is what needs to be economically supported in the life of independent artists, or there wont be any except for the already independently wealthy. Music becomes a great hobby for the rich.
Any obsession with who is desparately exchanging one multi-million corporate deal for another is irrelevant to the main cultural problem at hand – HOW CAN WE SUPPORT THE PRODUCTION AND ENCOURAGEMENT OF NEW, INDEPENDENT, AND UNKNOWN MUSIC WHEN THE RESULTS ARE NOT BEING PAID FOR?
The Internet has miraculously solved half the problem (the potential for independent distrtiuubution) but the situation is only half baked to date. Voluntary donations simply don’t cut it because the vast majority of consumers simply wont do it. Try it and see. We desparately need new ideas on how to get efficiently paid on line for making music. Itunes’ pennies per track can only actually benefit those already mega-famous artists who can sell several hundreds of thousands of tracks there. For emerging unknowns and the experimental, a few sales on Itunes wont even pay for the electricity used to make the work.
I yearn for a more useful discussion here and everywhere concerning how to actually set up the Net to support the economic viability of an individual’s independent music.
Here’s one idea: The Net can be made to track anything. All music put up on line might be registered with a new ASCAP/BMI type Internet royalty organization. When every computer user pays their server fee, a miniscule “art usage” tax is included. All music downloads on line are free, but the net tracks ALL registered music downloads (only that a track has been downloaded, not who does it) and the server “art usage” tax is distributed to those who have been downloaded according to these individually tracked download numbers. Very similar to what BMI now does for radio play (now accomplished with far less accurate radio play tracking than the Net could do for downloading). A tiny tax on all worldwide server users would be a huge amount of money to distribute for the “use” of all music on line, and pay per track could be significantly more than pennies.
One remaining problem if we attempt to keep the downloading privacy of the user: How do you prevent an artist from downloading his/her own work a million times?
Time is wasting. More actual ideas and less rich celebrity gawking, please!
My mouth waters as I consider the demise of Hilary Rosen and her ilk, the RIAA mafia who decided that suing twelve-year-olds for “theft” was a good idea. Now, finally, the content providers (musicians) are coming on board. It’s time to find a new distribution mechanism that leaves the middle men in the mire of shit they have themselves excreted.
She is one of my favourite singer .. anyway I think she lost a bit in last two/three years… Anycase for me is still one of the best!
Interesting move by these artists. It seems like they’ll be the ones to benefit from the changing music industry, not the labels. They understand that they should be the digital trend, but ride it.
Madonna will forge ahead regardless of trends and opportunists that cling to her she has been doing this for a long time and will probably always have the last say to her next move …she is one off the top 6 richest music makers on the planet and is speedy and up to date on all the latest high tech.She also came up hard on the streets of New York and plans to stay in touch with what is going on …Music is a tough industry and I admire some of her gut and bouncing back and facing the critics the way she does.And she has stayed pretty clean I wish her well I hope she remembers her fans and the the other musicians out there who paved a way for her to keep jumping…
As pointed out this move may boil down to nothing more that clear channel was the only company to give Madonna the money she thinks shes worth – after all anyone with half a mind can see all the shallow platitudes she made to hype and keep her career alive in the past were blatant lies since she is arrogant,greedy,selfish and materialistic as she ever was.Since she lives most of her life in upmarket London now she has long lost any touch with the street and as she still values her opinions over others this has been blatant in her music for years – “Ray of Light” will easilly be remembered as the last good record she ever made. I imagine her comercial decline worldwide will follow that in the US – and not a moment too soon for such an anachronistic POP dinosaur.
RE Radiohead as usual with this band they are the essential “Emperors New Clothes” idea put into practice. The whole download their new album for your choice of price was just the usual cynical sad promotional stunt as any teenyboper boy band.Why? The very album that was available for exclusive download is now going to be given a full priced physical conventional release after all the promotion via media hype from the novelty of the download… :rollseyes:
@94 Ti Piace . Excuse me but what has your opinion about Madonna as a singer got to do with this thread?
@ A.P. why does Madonna being greedy mean the ‘anachornistic POP dinosaur’ career should bite the dust? You have no idea how much cash this woman gives to charity or what her humanitarian interests are, she’s certainly not a saint but she’s worth more than your condescending judgement. And “Ray of Light” was definately not her last decent pop song, she isn’t in my top 100 singers but she is probably the best POP act ever, next to the Beatles.
Anyway, it’s good to see the boundaries changing. Too bad Radiohead stopped making good music years ago. NIN is the most exciting of the 3. Live Nation is said to be hoping to make a similiar deal with U2, and for any major artists they may swap up in the coming years, I hope cutting cd prices is ideal for them. Imagine Madonna’s next album going for a flate rate of $6.00 at Amazon.
good
good works and nice