Music Industry's New Business Model?

I have told my friend, an aspiring artist, that the new way for music label to make money is not from CD's sells but from concecrts. Music labels must switch revenue models from selling CD's and Mp3, to putting together live concerts, festivals, and events. With Jay-Z signing a $150 million dollar deal with Live Nation, a concert promoter, it seems that music industry is already trying to switch their revenue model.

The deal includes "financing for his own entertainment venture, in addition to recordings and tours for the next decade."

The deal is one of several for Live Nation, which aims to directly compete with the industry's music labels. In this deal, Live Nation will have access to not just CD sales, but a larger share of an artist's overall revenue. Such deals have already been lined up with U2 and Madonna, though neither one is as comprehensive.

Live Nation, known mainly for major rock and country tours, is making its first major foray into the Hip Hop genre.

As part of the agreement, Jay will receive financing from Live Nation for the start-up of a venture described as an "umbrella for his outside projects, which are expected to include his own label, music publishing, and talent consulting and managing." Live Nation will also contribute $5 million a year in overhead for five years, with another $25 being made available to fund the rapper's other acquisitions or investments. The venture will be known as Roc Nation, and will split profits with Live Nation.

The major record labels need to pay close attention and see what happens with this. If i were CEO of Def Jam, i would focus on putting together concerts for my artist and the marketing of their music rather than distribution. Distribution is done now with a Google blog search. just type Jay-Z-the black album in a Google search bar. You will see what i mean.