Material Girl Madonna appears to be thinking not just like an artist, but also like a businesswoman. The 49-year-old singer has signed a groundbreaking record deal with concert promoter LiveNation, citing her decision to adopt a more comprehensive, unrestricted business model as her reason for abandoning Warner Music after 25 years.
The $125 million deal gives LiveNation the rights not just to Madonna’s songs, but also to all the activities that go along with them: TV shows, films, sponsorship, websites, tours and merchandise.
“The paradigm in the music business has shifted and as an artist and a businesswoman, I have to move with that shift,” she stated. “For the first time in my career, the way that my music can reach my fans is unlimited. I’ve never wanted to think in a limited way and with this new partnership, the possibilities are endless.”
The singer’s move is reflective of the transitioning state of the music industry, which is currently racked by two strongly opposing forces: the implementation and preservation of digital rights management methods by record labels on the one hand, and the constant erosion of the same by fans and users on the other. Radiohead’s recent release of its latest album online added a third dimension to this already complex picture, bypassing the record labels altogether and sending the message that even artists themselves think it is perhaps time for labels to overhaul their existing business models.
“…the trend shows how desperate record companies, faced with declining sales and profits, have become… more and more music executives are beginning to conclude that DRM is not the solution to their problem. It is easily circumvented, makes life difficult for law-abiding fans and does nothing to prevent the copying and online distribution of music from CDs,” states the latest edition of The Economist.
The Economist also points out that a compelling reason for the music industry to forego DRM is to dissolve the mammoth advantage Apple currently has in online music sales because of it. Legally downloaded songs are protected by Apple’s DRM system, FairPlay, which allows the company to negotiate favorable terms with labels. Foregoing DRM would weaken Apple’s monopoly by allowing others to sell songs for the iPod.
The bottom line: having to abandon DRM will force record labels to think more innovatively, and more comprehensively, about how to market their music. LiveNation’s deal with Madonna is a prime case in point.