Rap Coalition

A HOW-TO RESOURCE FOR RAP ARTISTS, PRODUCERS, & DJs. Since knowledge is power, here is your best defense to succeed in the urban music industry...

Thursday, April 03, 2008

The $150 Million Jay-Z Deal (OK, stop laughing)

Here's Bob Lefsetz

This is not the future of the music business, this is old men trying to cash in one more time to support their egregious, expansive, expensive lifestyles.

How many times has Michael Cohl sold his company? Do you think anything different is going on here? That he's not gussying up the "assets" to sell to someone more stupid than a beer company, otherwise known as the PUBLIC?

Don't sit down and analyze the dollars and cents. This is no different from Richard Branson signing the Rolling Stones so he could sell Virgin Records for a billion dollars. An act with marquee value but very few record sales. And this was before the days of 360 deals, when it was only about the record sales...

God, if Live Nation has Madonna and U2 and Jay-Z, the company must be worth a fortune, just like Warner has Led Zeppelin, CSNY and Neil Young. The only difference being Warner doesn't share in the touring revenues... Then again, is the catalog of these classic acts a better mover than Jay-Z's? And what's this you tell me, Live Nation DOESN'T GET THE CATALOG??

Granted, Jay-Z does better live business than most rappers, whose shows are not must see events... But isn't this tour propped up by Mary J. Blige? And isn't it kind of a post exec gig victory lap from Jay-Z who has come out of "retirement"? What does the future augur for Mr. Carter? Looking into my crystal ball, not zillions of dollars. If LL Cool J finally turned to ice, don't you think Jay-Z will too? Who would you rather be in business with, Michael Jordan or a twenty one year old NBA star? Live Nation is only interested in young talent to the degree it looks like it's a full service business so they can lay the company off on the public.

Now maybe Michael Cohl is a good match for Jay-Z. Both hustlers, willing to do almost anything to make a buck. The public might not know Cohl, but he's the guy dealing with resellers, he's doing whatever it takes to get his money back. The act gives up so much control for that guaranteed payment. If this is the music business, it's not the late sixties/early seventies heyday as much as a bizarre "Jetsons" construction wherein the artists are a pawn in the businessman's game... Speaking of which, why not a deal with Mr. Zimmerman himself? He'd like an upfront payment!

Where is the benefit to the public? These guarantees result in sky high prices. Breaking a track on the road? I think Jay-Z's been too far from the street. Not enough people are in attendance and people pay a fortune to hear the HITS! They don't want new stuff, which is hard to decipher in the cavernous halls these acts play in anyway...

Sure, there's no real money in records right now, touring is where it's at. But that doesn't mean in the twenty first century it will just be gallivanting dinosaurs and no one else. There will be new acts. They will have a following. Building them won't be easy, but will be helped with Internet word of mouth. You'll have to invest in their success. Maybe with sweat equity more than dollars. And maybe arenas will be a long shot for most. But that's the future. Theatre acts with rabid followings. The meanderings of these lumbering old acts is just the final breath of an industry that's run on fumes for far too long.

Invest in Live Nation? Yup, that's who I want to be in business with, concert promoters. Known for their honesty, and upfront business practices. Then again, look at Bear Stearns and its rescue by the government. The tiny music business is just a reflection of our country at large. Run by thieving men playing with funny money believing they have a right to power and a right to lifestyle. And it's always the public that bails them out, always the public that loses.

This is a Hail Mary pass to save Live Nation's stock. To freeze AEG out of the game. To make investors think Live Nation is the only team in town. It would be like the Yankees guaranteeing they're going to win the World Series EVERY year and saying it's not worth it to invest in any other team. Then again, it's worse. You can't get a new Major League Baseball franchise. You can't buy in. But anybody can buy into the record business. Hell, a lot of the venues are open to anybody willing to pay. A new model with new acts will emerge. These old players will be gone. And it won't be soon enough for me.

Hell, one more analogy and then I'm going to go...

To build his eponymous record label, David Geffen signed three of the biggest stars in the universe, Donna Summer, Elton John and John Lennon. The first two acts' albums stiffed outright. Lennon's was headed for the dumper, but he was unfortunately killed. It wasn't until the label signed NEW acts that it truly became successful. Guns N' Roses built Geffen Records, that's what got Mr. Geffen his half a billion dollar check. If you want to get rich in the music business, you've got to invest in the NEW!



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