Warner Music will sign 360 deals with the winners that will cover touring, merchandise, audio, video, sponsorships, and brand partnerships.

This is a pretty interesting deal for Warner and shows the continued importance of American-Idol-esque shows to promote talent across a wide fan base. Warner is tapping right into this and is signing overall deals to be involved in all income streams for these artists. “Popstars” is a very popular show. Based out of the Netherlands, it airs in more than 50 countries and has viewership of 2 million in the Netherlands.

Martin Jessurun, president of Warner Music Benelux, had this to say:

“This partnership with SBS is a fantastic opportunity for us to be closely involved with some of the most promising local talent. Our expanded rights relationship with the finalists will enable us to create a diverse array of content and take a holistic approach to developing their long-term popularity.”

Check out this promotional video below for ‘Popstars’ in the Netherlands:

Stay tuned,
Erik
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Katherine Jenkins has just left Universal Classics & Jazz for a deal with Warner Music Entertainment. Ms. Jenkins is a mezzo soprano and has widespread fame in the United Kingdom. This new deal will not only encompass recordings, but also sponsorships and merchandise.

So, what is in it for Katherine Jenkins? Is it really wise to give up portions of her revenue streams to Warner? Will Warner offer enough of a benefit to where Katherine’s overall sales would increase, making her more money than a non-360 deal would include?

It appears that this deal has serious potential. First of all, Warner is setting Ms. Jenkins up with the producer David Foster, who has worked with a number of artists including Celine Dion, Seal, Michael Buble, and Josh Groban. Apparently, this would not be possible without working with Warner. In addition, Warner will take over her website which will be more of a “one-stop-shop” for her fans, and will offer the chance to purchase tickets and merchandise and also contain exclusive up to the minute content.

In the words of Warner Music Europe president John Reid, “By more closely aligning the interests of artist and label we can take an holistic approach to building on her massive success and broadening her relationship with her ever-expanding global fan-base.”

It is interesting to see the 360 deals move to new genres of music. We’ll see if a 360 deal for a classical musician can be lucrative for the label and the artist.

Stay tuned,
Erik
erikrostad.com

My friend said that I was missing a big point though. He agreed that there was more money to be made now in live shows, but he also mentioned the fact that some of the 4 major labels (Sony, Universal, Warner, & EMI) have very rich parents (Universal – Vivendi, Sony – Sony Corp). Not only do they have rich parents, these rich parents also own a large percentage of the media companies out there.

Take Sony Coporation for one, Sony has Sony Electronics, Sony Pictures Entertainment, Sony Ericsson, and Sony Music Entertainment. Vivendi has ownership in NBC Universal, Activision, and of course Universal Music Group. So even though Sony & Universal are losing share in album sales, they have a number of other media avenues in which to sell their songs. That is why we are seeing songs on video games, tv shows, and movies like never before. Take the popular video game ‘Guitar Hero’ for one. It is produced by Activision, which is owned by Vivendi, which also owns Universal.

I think it is telling that the top 2 record lables are Universal (32% of market) and Sony (24% of market). The others, Warner & EMI, are not owned by large media conglomerates. Warner used to be associated with Time Warner, but that is no longer the case. It seems that the strategy of Warner & EMI is to maintain their strong presence in publishing and continue to collect on royalties. Each company has a strong publishing arm. They also have less of the market – Warner 21% and EMI – 9.5%.

So Sony and Universal are part of huge media conglomerates. Warner is its own public company listed on the NYSE. And EMI was purchased by a private equity firm, Terra Firma (not a media conglomerate). It seems as though Sony & Universal have more readily available options to diversify being under the media conglomerate umbrella. We shall see how these strategies play out in the near future.

Stay tuned,
Erik
erikrostad.com

The Nickelback deal allows Live Nation to participate in merchandising, licensing, sponsorships, recording assets, touring income and 6 other revenue streams. Nickelback will provide 3 albums and 3 tours. The deal is estimated at between $50 – $70 Million.

So over the last few years, Live Nation has signed U2, Jay-Z, Madonna, Shakira, and Nickelback. On the Jay-Z deal, Live Nation paid $150 million and they expect to make $340 million. The verdict is still out. It will take a while longer to find out if Live Nation has found a new business model.

Stay tuned,
Erik
erikrostad.com

We are now starting to see Indian companies sign 360 deals with India & U.K. based artists. These deals place the company in the revenue stream of albums, concerts, t-shirts, etc. and offer a nice diversification away from reliance of the declining album. One company, Big Music & Home Entertainment, has just initiated a division for artist management, cleverly title ‘Big Talent’. This group will specialize in the 360 deals with artists and will collaborate with the group ‘Big Stage’ who will be working on the live shows.

Big Music & Entertainment was started last year and is owned by Reliance, the large India conglomerate changing the face of India. You have most likely read about Reliance ADAG recently, as they are also trying to make a foray into the US film industry through a $550 million investment into DreamWorks. In Reliance’s own words:

“Big Music and Home Entertainment plans to focus on digital platforms such as the Internet and mobile and radio networks, in addition to traditional physical formats. It will also make its foray into events and live entertainment through talent management and conducting live events. An example is its tie-up with Star Voice of India to manage the winner and other finalists with shows and albums.”

Another interesting note about Big Music & Entertainment is that they are the licensee for Universal Home Video’s. So not only is Universal investing heavily in new internet social networking start-ups, they are also establishing strategic partnerships in key international markets. I suspect we will begin to see more international deals in the near future as USA record labels will seek additional revenue streams outside of the saturated home market.

Another side note, Columbia Records (under EMI) is also operating in India and is busy signing 360 deals.

I think we will soon see Big Music & Entertainment signing deals with USA acts. It is not too far fetched to see Big Music being able to offer more lucrative deals to USA bands for tours, album sales, film placement, etc. As the Indian economy continues to expand, the DreamWorks investment will end up being one of the first big investments that Indian companies make in the USA entertainment industry.

Stay tuned,
Erik
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