The Madonna/Live Nation deal has gotten a lot of attention following Radiohead’s move with In Rainbows. However these are different sorts of changes and those that think the Madonna deal undermines the music industry need to realize that Live Nation’s new Artist Nation division has simply positioned itself in the spot where the major labels are headed.
Major labels can’t make the money they need off just the music so they want a part of everything the artist is doing. This is starting to manifest in new artist contracts but deals similar to Madonna’s between the existing major labels and big stars will also emerge. So Artist Nation is an example of what the major labels might become.
That said, this description of Live Nation’s new Artist Nation division suggests possible negative repercussions for small firms servicing major labels and for up and coming artists.
In breaking down the resources gathered together by Artist Nation the press release reveals that, while the major labels have a serious new competitor that beat them to an implementation of a major piece of their business plan for the future, it’s the smaller independent firms that have been servicing the labels that should be seriously reassessing that future. I’m not sure how large a sector of the industry that would be but I certainly see major labels and media companies marketing simultaneously through in-house and outsourced services on a regular basis.
If you’re a small firm servicing major labels in any of the areas covered by the Artist Nation division, you should be seriously concerned about the possibility of competing with those very labels if they take such services in-house.
On the bright side, this shift does open up new exit possibilities if major labels start acquiring such firms in order to jump start their capabilities. It also opens up the possibility of leveraging the relationships you’ve built with major artists and their core partners as they strike out on their own and benefit from moves like that of Radiohead.
Biggest downside I can currently envision:
Once these deals become a more normal part of the major label way of doing business, many indies may follow suit leading to a horrifying world for new artists who will not only have to worry about shady small labels putting them in the studio and staking a claim to all their early work without bothering to promote them but also about bad deals that can affect previously independent revenue streams.
