DanielF

Is Live Nation's Music Strategy Too Risky?

The music business has always been challenging, even in the days when vinyl singles sold by the million each week. Many artists throughout the years have signed deals that gave them huge advances, only to find that costs such as promotion were coming out their own pockets. It left some touring for years to pay back the companies when album sales waned after huge débuts.

The companies are like banks, lending to their fledgling enterprises based on business and PR plans within a market that makes oil look stable: music. Today's million selling artist is tomorrows "Where are they now" feature on VH1. Investing in established names who have proven track records is still not risk free, but the questions become "Do the artists have enough assets to pay back the advance if they don't sell another record or concert ticket" and "What is the potential for their future marketability".

On those scores, the deals are secure, Madonna is selling out her latest $100+ million tour across the globe, and is close to 2 million sales on her latest CD. U2 have consistently produced huge tours breaking box office records. Jay-Z's many ventures have made him one of the richest men in hip-hop. If they were to retire tomorrow, I'd bet each of them could pay back the part of the advances they've received so far, and still leave themselves with a lifestyle to which we'd all love to be accustomed.