Achtung! Live Nation locks up U2
EmptyLive Nation has inked a deal with U2 that puts the promoter in business with one of the world's highest-earning bands for more than a decade.
The 12-year pact with Live Nation Artists includes worldwide touring, merchandising and the band's Web site, U2.com. Unlike the landmark deal Madonna signed with LNA last year, this is not a true 360-degree pact; there is no publishing component, and the band retains its relationship with Universal Music to release music.
"It's not do or die that we have to have everything," said Michael Cohl, Live Nation chairman of the board and CEO of Live Nation Artists. "We just have to have certain critical mass, and we more than have it in this deal."
Said U2 manager Paul McGuinness, "There's a certain convergence taking place in the industry, and it's obvious that the biggest part of U2's business now is their live business, even though they're a major, major record-selling act.
The band's relationship with Live Nation has been "pretty near perfect," McGuinness said. "For some time now they've been executing, promoting and producing our tours as partners pretty well perfectly. Since they want to consolidate rights and they have an online vision that I believe in (and) their Ticketmaster deal is expiring, which is going to change their margin, I'm very happy to go into a partnership with them. And apart from all the financial stuff, there is a real friendship, a real bond."
Financial terms were not disclosed, but Cohl said the deal was similar to Live Nation's Madonna deal (valued at $120 million) in that there was some money paid upfront and that LNA would share in the profits and will be "substantially and materially involved" in all pertinent rights' revenue streams.
Both camps expect synergies to come into play when exploitation of these rights are integrated. "Conceptually it's got to be better, in that the broadcast and the streaming and the Internet and the fan club and the Web site are all in the same hands," Cohl said. "There's no debate. There are no different vested interests. We're going to have a great starting block, and where we go will be new, unexplored territory that instinctively feels like it should be exponentially better."
U2 is in an elite class for touring, with its 2005-07 Vertigo tour taking in close to $400 million, the second highest ever. So touring alone should generate more than $1 billion in grosses over the course of the contract.
The length of the deal, which exceeds even Madonna's 10-year pact, "indeed is a mark of the faith and trust we have in them," said McGuinness, adding, "In 12 years time, U2 will not even be the age the Rolling Stones are now."
Ray Waddell is an executive director at Billboard.