Live Nation: "We are not getting into the record business"

From Fortune:

Live Nation responds to critics who say the giant concert promoter paid way too much for the Material Girl, reports Fortune's Paul Sloan.

Michael Cohl, who runs Live Nation's Artist Nation division and helped broker the contract with Madonna, described the deal as pure partnership and said that any money after that is a basic revenue share, although the splits vary depending on the products. The problem, he said, is that people are viewing the deal as if it's a record deal -- and everyone knows the record business is suffering.

Instead, he said, investors need to realize that the rights deal will be "cross collateralized" across dozens of products -- ticket sales, DVDs, books, t-shirts, clothing lines, streaming videos, private concerts. "Anything you can think of we can do," said Cohl, who runs tours for the Rolling Stones, among other acts.

"Make no mistake," said Rapino. "We are not getting into the record business. We are not building a system to sell 6-inch discs....We're a marketing and distribution company."

Record labels have big infrastructures around the world to get CDs into stores, but Rapino argues he doesn't need that.

He likes to point to the deal the Eagles just did to sell its 2-disc set exclusively through Wal-Mart, without having to give a cut to a label. They sold 700,000 in the first week. Whether its Wal-Mart or Starbucks or Victoria's Secret, Rapino said plenty of companies are eager to cut deals to distribute albums.

"Corporate America couldn't be more excited about the demise of the record companies," he said.

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