April 6, 2008:

U2 ‘tie the knot’ with Live Nation
06 April 2008 By Gavin Daly
Shares in the management firm rose by almost 4% on the New York Stock Exchange after the deal was announced.

‘Why U2 are still able to make our best ever album at this point, I think, has to do with the fact that we long ago figured out the dynamics of how to work with other people,” said U2 guitarist Edge in an interview with RTE presenter John Kelly last Monday.

The following day’s newspapers showed that was indeed the case - U2 had agreed to hand over control of its touring, merchandising, and website to US firm Live Nation. The 12-year deal was reported to be worth more than $300 million to the band, although neither Live Nation nor the band would comment on the financial terms.

The deal stops short of a trend towards so-called ‘360-degree’ deals, where management firms such as Live Nation take full control of a band’s operations. U2 have held back the publishing rights to their music, and the band’s long-running recording relationship with Universal Music is not affected by the deal.

Nevertheless, shares in Live Nation rose by almost 4 per cent on the New York Stock Exchange in the hours after the deal was announced. The shares climbed steadily during the week, finishing at about $13,up from a low of $9.26 in January.

New York analysts said that investors were attracted by the potential of the deal for LiveNation.U2’s last tour, Vertigo, took in almost $400 million, so touring revenues alone should come to more than $1 billion during the life of the contract.

U2 have worked on a project-by-project basis with Live Nation since 1980, and Paul McGuinness, manager of U2, told Billboard.com that the band’s relationship with the firm was ‘‘pretty near perfect’’ to date. In a statement, Bono, the band’s singer, said: ‘‘We’ve been dating for over 20 years now, it’s about time we tied the knot.”

The deal will take Bono and bass player Adam Clayton up to their 60th birthdays in 2020, while Edge and drummer Larry Mullen will be 59 when it expires. In the RTE interview, Edge saidU2 were ‘‘operating pretty much in the same way now as we always did’’ - a major feat, considering the band was formed in 1976 after Mullen put a note on a school notice board.

The guitarist attributed U2’s longevity to a consensus-based approach, which doesn’t appear to have happened entirely by accident - he cited a book called the Evolution of Cooperation by Robert Axelrod.

While U2’s members often have disagreements, they have never once had to resort to a vote to sort out issues, according to Edge. ‘‘Most groups collapse because of envy and ego within the group, and somehow we figured that out early on. Maybe it was because we always put the songs first, rather than any of our own individual selfishness.

It’s almost like we’ve got a group ego that we buy into,” he said. ‘‘In the end, it’s the smart option to find people you can work with, and figure out how your strengths and their strengths together will benefit both individuals. It’s borne out and proves throughout nature to be a really smart strategy.”

It is also no accident that the band is handing a certain degree of control to Live Nation at a turbulent time in the music industry. ‘‘I don’t think it’s as simple as ‘the internet is killing music’; I think there are a lot of factors,’’ Edge said.

‘‘But it certainly isn’t helping that the major structures of distributing music are losing so much money and firing people every week. We are going through a period of major upheaval and it is hard to say how it will pan out. My hope is that there will be a new system in place that will supersede the old way of the record labels and the publishing companies.”

Music industry sources said the Live Nation deal was significant for a number of reasons - reflecting the shift in power in the industry from album production to touring, as well as the growing importance of the internet. Live Nation will take over U2’s online presence, which is expected ultimately to lead to concerts being broadcast online.

‘‘There’s a certain convergence taking place in the industry, and it’s obvious that the biggest part of U2’s business now is their live business - even though they’re a major, major record-selling act,” McGuinness said, adding that Live Nation ‘‘has an online vision that I believe in’’.

For a band that started out when there were no mobile phones or internet, U2 have consistently used technology to communicate with their fans, including the recently released three-dimensional film, U23D.

Bono said that the Live Nation deal would help improve the band’s website and build ‘‘a closer, more direct relationship between the band and its audience’’.

For its part, Live Nation is upfront about its ambitions. In its corporate literature, the firm says: ‘‘Live Nation is the future of the music business.”

The firm speaks of revolutionising the global music industry and ‘‘building an integrated platform aimed at further strengthening and monetizing [sic] the relationship between artists, fans and sponsors - before, during and after live events’’.

In other words - finding new ways of making money from music. The U2 deal will add to the coffers of an already wealthy business. Live Nation had revenue of $4.2 billion last year, an increase of $473.3 million from2006. It had an operating income of $82.1 million, an increase of $49 million, but made a net loss of $11.9 million after all its expenses were taken into account. It had free cash of $84.7 million at the end of last year.

When the firm announced the results in February, chief executive Michael Rapino said it expected this year ‘‘to be another healthy and growing period for the live music industry’’.

The firm has hit the ground running in that regard - theU2 deal followed a ten-year contract with Madonna, which includes rights to new music, and is reportedly worth $120 million. Live Nation wooed Madonna away from her contract with Warner Music.

Michael Cohl, chairman of Live Nation and chief executive of Live Nation Artists (LNA), said the U2 deal was similar in structure to the Madonna contract, with some money to be paid up front and LNA sharing in the profits and ‘‘substantially and materially involved’’ in revenues from rights.

Live Nation should start seeing the benefits of the deal by next year, as U2,who have sold more than 140 million copies of their 11 studio albums, are currently working on their next album.

McGuinness said the album should be released this autumn and the band should tour next year. Edge was more circumspect. In the RTE interview, he said the band recently had song-writing sessions in the south of France and Morocco, with producers Brian Eno and Daniel Lanois, but ‘‘don’t know a date’’ for the new album.

‘‘What we’ve been doing recently - and it’s been amazing - is just making music without having any sense of where it’s going to go. . . We haven’t set any agenda for what’s going to happen with the work. We’ll see, we’ll make some music and see what we’re going to do with it.”

While the RTE interview was recorded before the Live Nation deal was struck, Edge had no doubt of the benefits of being inU2.

‘‘I remind myself a lot that we, as members of the band - and our friends - are some of the luckiest people that have ever lived,” he said.
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Video: Bono - King, History Cheannel - April 06, 2008 (37 Seconds):

King, History Channel - Host Tom Brokaw brings to life the heroic story of the Rev. Dr. Martin Luther King Jr. and displays the leader's remarkable journey for civil rights and racial integration. Only the parts with Bono have been included.
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