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Thursday, April 03, 2008

Live Nation Deal Could Make Jay-Z Bill Gates of Hip Hop

Jay-Z is leaving his longtime record label Def Jam for a $150 million deal with Live Nation that includes financing for his own entertainment ventures, recordings and tours for the next ten years. Live Nation is competing directly with the industry’s established music labels over the rights to distribute recordings, sell concert tickets, market merchandise and control other aspects of artists’ careers. Live Nation has already struck less comprehensive deals with Madonna and U2. 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. Last year’s “American Gangster” sold one million copies in the United States; “The Black Album,” from 2003, sold well over three million. He 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.

Jay-Z, 38, whose real name is Shawn Carter, has produced past ventures that included the Rocawear clothing line, which he sold last year for $204 million, and the chain of 40/40 nightclubs. His first venture with Live Nation is his current 28-date tour with Mary J. Blige. 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. 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. A series of other payments adding up to about $20 million is included in exchange for certain publishing, licensing and other rights. These are speculations from sources close to the deals because Michael Cohl, Live Nation's chairman, does not discuss terms of the Jay-Z arrangement. (The New York Times)
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