Op-Ed: U2/Live Nation – By Bob Lefsetz

You don't want to pay for the rights, you want to be the MANAGER! The manager gets his equity for free. Funny how Irving Azoff trumped Michael Rapino and Cohl regarding this, and got Ticketmaster to fork over a ton of dough for his Front Line asset to boot!

The star in this stock repurchase is Paul McGuinness. U2's manager from the beginning. Always protecting the band's interests. You want to make a ton of money, become a manager! But it's also a license to starve. Because finding great talent, that people want to acquire the music of and see, is very hard to do. But managers take risks, working for no guaranteed income, and they're handsomely rewarded.

We can debate all day long whether Michael Cohl's strategy was a reasonable one, but even more fascinating is to go back further and ask whether Robert Sillerman's concept of rolling up the regional concert promoters was sound. A decade later, with Clear Channel taking a significant write-off/loss and Rapino sitting on a business that has been dubbed "a river of nickels", one can easily say no. It appears that concert promotion, like music creation, is best run by entrepreneurs, whose salaries are not guaranteed, who must make decisions by the seat of their pants, who must have their wits about them at all time for fear that a string of bad shows could put them out of business.

It appears that in the twenty first century it's not about owning the asset, but having the right to receive income from it. It's not about paying a fortune in advance, but a trusted bond wherein the parties can make money together. Labels pay less and less up front and deliver less than ever before, wanting more rights in return. All upon the promise that they'll make you a star.

I've got news for you. Today you've got to make YOURSELF a star. You've got to assemble your own team, that needs YOU to succeed. Universal doesn't care if your record is a hit, they only care if A record is a hit. So, you sign away your life for very little, all upon a promise of…not much.


As for Live Nation… Either they figure out a way to monetize the extras, selling merch, home broadcasts, live recordings, etc., or the company is doomed to marginalization. It's a giant bank beholden to a financial community that does not understand. This is a future business?

Wal-Mart and Best Buy might pay mightily for exclusive rights up front, but Apple does not. And the iTunes Store is the new king. It's not about Doug Morris getting beaucoup bucks up front, hobbling new distribution models in the process, but enabling new companies to succeed so both parties can win.

I've talked to Wall Street analysts. They've got no clue when it comes to Live Nation. They can't see that no new superstars are being born, that the company is beholden to acts and their managers and agents re rights, they're dazzled by these insane deals with U2 and Madonna and Jay-Z. It's not much different than the mortgage crisis. These acts are stars today…do you really think all of them are going to be selling out arenas a decade from now?

We need new acts. We need everyone involved to take a risk in their development. And hopefully, it will be personal money involved. The labels haven't been the same since Herb & Jerry and Chris Blackwell sold out. Alain Levy ruined Polygram by going into the film business. Would A&M have blown that much cash? No way. You play differently when it's your money.

It's got to be personal money once again.

http://online.wsj.com/article/SB122956194661216635.html?mod=todays–us–page–one

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