Live Nation (NYSE: LYV) is looking for a Bono bonus.
The concert promoter is entering a 12-year deal with Irish rockers U2 that will cover everything from merchandising and touring rights to running the quartet's website and fan club.
Live Nation's deal doesn't include record label distribution the way it did with Madonna last year, but it's just as well. Live Nation will incur less risk this way.
How so? Well, established artists like Madonna and U2 rarely duplicate the commercial success they achieved in their prime. That doesn't make the legends any less compelling on stage. Some of the biggest music tours over the past year have been the likes of Van Halen, Bruce Springsteen, and The Police, which haven't had hit singles in ages.
That's fine. There is still demand to hear the artists perform their classics, and Live Nation will be the first to tell you that older music fans have a lot more money to spend to go to shows and buy concert merchandise than the crowds at the emo flavor of the month show.
U2 has been rocking for more than 30 years. They don't need to have another hit record between now and 2020 to fill up stadiums and arenas around the country, though that is also certainly possible. Wasn't Warner Music Group's (NYSE: WMG) Green Day supposedly washed up before the revival that came with its American Idiot album?
Still, this doesn't matter to Live Nation. Striking long-term partnerships with proven venue-fillers is the key. Let the labels like Warner and Sony (NYSE: SNE) pay to develop artists and cope with fading CD sales. Live Nation can treat the majors as minor league farm systems, plucking the stars when they have enough momentum to sustain themselves as hot tickets.
Live Nation isn't doing this just because it's a great business strategy. Now that it is parting ways with IAC's (Nasdaq: IACI) Ticketmaster on the ticketing side to try it on its own, it makes perfect sense to lock up the industry's biggest seasoned stars.
Live Nation gets it. It has the vision at a time when the major labels are too distracted by corporate restructurings to recognize the importance of creating revenue-sharing deals with artists. It certainly doesn't hurt that Ticketmaster's spinoff as a stand-alone company has also been interrupted by a weak market and the boardroom theatrics of Liberty Media (Nasdaq: LBTYA).
Live Nation and U2 are taking a logical step into the future, with or without you.
If "I Will Follow" is a catchy old-school U2 tune, here are some other related headlines to follow as you walk away, walk away:
