Live Nation May Outsource Clients’ Distribution Rights

Updated:

June 29, 2009 1:11 pm

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Whispers around Live Nation indicate that the concert promotion company is re-thinking parts of their successful “360” deals. Sources inside Live Nation revealed that CEO Michael Rapino is contemplating outsourcing the rights to distribute future albums of mega-star clients to major music labels.

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The New York Post reports that Rapino is considering outsourcing the distribution rights back to major music labels on an artist-by-artist basis. Distribution rights of Live Nation artists such as Madonna and Nickelback could be back in the hands of the Warner Bros., the label they left for the all-in-one package of the Live Nation 360 deal.

The idea follows the Hollywood “rent-a-system” model in which one studio produces a film, and then licenses everything else over to studios that already have distribution and marketing infrastructures in place. Former Live Nation Chairman, Michael Cohl was building a company that could control production, distribution and marketing of Live Nation artists all under the control of one roof. That is, until Cohl and Rapino had a disagreement and Cohl left his post. So it’s no surprise that Rapino is talking outsourcing, especially after last week’s dismissal of three music industry vets hired by Cohl to build the necessary distribution infrastructure needed to support the 360 deals.

However, Rapino’s plan to scale back could cost a pretty penny. If Live Nation does license labels with distribution rights, the company would only be making 25-35 percent in outsourcing royalties. Live Nation would then have to pay the artists’ royalties, which can run almost equal to the amount paid in outsourcing royalties. It’s important to note amidst all this speculation that Live Nation doesn’t expect to release an album for another 18 months, so there’s no rush to make a decision.