LOS ANGELES ? In a move that reflects the anarchy sweeping the music business, the superstar rapper Jay-Z, who released his latest album to lukewarm sales five months ago, is on the verge of closing a deal with a concert promoter that rivals the biggest music contracts ever awarded.
Jay-Z plans to depart his longtime record label, Def Jam, for a roughly $150 million package with the concert giant Live Nation that includes financing for his own entertainment venture, in addition to recordings and tours for the next decade. The pact, expected to be finalized this week, is the most expansive deal yet from Live Nation, which has angled to compete directly with the industry?s established music labels in a scrum over the rights to distribute recordings, sell concert tickets, market merchandise and control other aspects of artists? careers.
As CD sales plunge, an array of players ? including record labels, promoters and advertisers ? are racing to secure deals that cut them in on a larger share of an artist?s overall revenue. Live Nation has already struck less comprehensive pacts with Madonna and U2.
In Jay-Z, Live Nation has lined up with a longtime star who, after toiling as a self-described hustler on the streets of Brooklyn, earned acclaim as a rapper and cachet as a mogul.
Live Nation?s core business has revolved around major rock and country tours, and with Jay-Z it is making an unexpected foray into hip-hop. The company is also placing an enormous wager on a performer who, like many others, has experienced declining record sales. (Last year?s ?American Gangster? sold one million copies in the United States; ?The Black Album,? from 2003, sold well over three million.)
But the arrangement would also position Live Nation to participate in a range of new deals with Jay-Z, one of music?s most entrepreneurial stars, whose past ventures have included the Rocawear clothing line, which he sold last year for $204 million, and the chain of 40/40 nightclubs.
Jay-Z, 38, whose real name is Shawn Carter, owes one more studio album to Def Jam, where he was president for three years before stepping down in December after he and the label?s corporate parent, Universal Music Group, could not agree on a more lucrative contract.
His first undertaking with Live Nation is his current 28-date tour with Mary J. Blige, his biggest live outing in more than three years. After that, Live Nation envisions integrating the marketing of all Jay-Z?s entertainment endeavors, including recordings, tours and endorsements.
?I?ve turned into the Rolling Stones of hip-hop,? Jay-Z said in a recent telephone interview.
The deal answers a question that had been circling through the rap world for months: Where would Jay-Z take his next corporate role? As part of the arrangement, Live Nation would finance the start-up of a venture that would be an umbrella for his outside projects, which are expected to include his own label, music publishing, and talent consulting and managing. Live Nation is expected to contribute $5 million a year in overhead for five years, with another $25 million available to finance Jay-Z?s acquisitions or investments, according to people in the music industry briefed on the agreement. The venture, to be called Roc Nation, will split profits with Live Nation.
The overall package for Jay-Z also includes an upfront payment of $25 million, a general advance of $25 million that includes fees for his current tour, and advance payment of $10 million an album for a minimum of three albums during the deal?s 10-year term, these people said. A series of other payments adding up to about $20 million is included in exchange for certain publishing, licensing and other rights. Jay-Z said Live Nation?s consolidated approach was in sync with the emerging potential ?to reach the consumer in so many different ways right now.? He added: ?Everyone?s trying to figure it out. I want to be on the front lines in that fight.?
The popularity of music downloads has revolutionized how music is consumed, and widespread piracy has contributed to an industry meltdown in which traditional album sales ? composed mostly of the two-decades-old CD format ? have slumped by more than a third since 2000. (The best seller in 2007, Josh Groban?s ?Noël,? sold 3.7 million copies, compared with 9.9 million for the top album in 2000, according to Nielsen SoundScan.)
© The New York Times, April 3, 2008.
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