There's no shortage of change in the music business lately, but a recent deal featuring a big concert company looms particularly large.
The move, made by the various parties involved in the management and promotion of heavy metal band
, marks a significant shift from traditional industry norms.
The Grammy-winning band, a staple for the leather and lace set in America, has teamed up with its label, London-based
. The venture will see the parties work together to promote and share the band's bounty.
Under the agreement,
spinoff Live Nation, Korn and EMI will all participate in the band's overall economic output. That includes recording, publishing, touring, merchandising, sponsorship and other activities. Financial terms were not disclosed, but sources say Live Nation put up $3 million and will receive some 6% to 7% of profits. A joint statement by the companies said that the joint venture does not dilute EMI's investment.
In the past, labels have participated in promotion and the selling of albums, while managers and venue operators have handled the concert scene. But if this deal is any indication, the game might be changing.
This is a highly transitional period for the music industry. In recent years it has been hit by rampant piracy and declining retail sales, trends the industry has been hard pressed to contain. The piracy situation seems to be improving in the Western world thanks to the U.S. Supreme Court's ruling against file-sharing service Grokster last year, and the concerted efforts of industry leaders to fight the scourge.
Still, pricing for music content remains a contentious issue on a number of fronts, with fights looming over what satellite operators are willing to pay for music (not much) and at what price points others, such as
, are selling.
While physical sales are on a slow but steady decline, digital sales are starting to jump. The IFPI, the organization that promotes the music industry globally, said Thursday that record company sales of music via the Internet and mobile phones jumped to $1.1 billion last year from $380 million the previous one. Those numbers nicely mitigate some industry negatives and are a good sign looking forward. But the good-looking prospects on the digital and mobile side won't completely solve broader industry issues.
Deals like the one made with Korn should give investors a feeling that at very least the industry is thinking about ways to work together, spread the risk, align expertise and give companies a little extra juice for their efforts. What that means for a company like EMI and perhaps Edgar Bronfman's
Warner Music Group
( WMG), should that company channel its artists through similar means, is the potential to take a greater share of an artist's revenue from concerts and associated sales on everything from T-shirts to parking concessions.
If applied to a wide range of big name acts in the marketplace, that could spell good news for EMI, Sony BMG, Universal and Warner -- along with concert companies like Live Nation that in the past have sometimes worked at cross-purposes instead of taking a unified approach to building a band's brand.
"Creating a fan-focused industry will require new approaches and unconventional deals," said Live Nation CEO Michael Rapino. "In this new era, we're bringing our branding, concert industry expertise and resources and collaborating with the best partners for one clear objective --to foster long-term artist development. Korn's years of success in touring make them a natural partner for this kind of initiative."
EMI, Live Nation and Korn seem to recognize that going beyond the traditional artist relationships has potential. Given the amount of uncertainty facing the industry, it will be interesting to see if others follow suit.