By Al Branch Jr. Based on historical data from her last few albums and tours, Live Nation believes it will generate gross revenues well...

By Al Branch Jr.

Based on historical data from her last few albums and tours, Live Nation believes it will generate gross revenues well in excess of $1 billion over the 10-year life of its new, ground-breaking music deal with superstar Madonna, the company announced in a conference call today. Live Nation is paying the singer $120 million over the 10 years, but was not the highest bidder financially for her services, according to the company. With the new deal, Madonna ends her long-term relationship with Warner Music Group, but she still owes them one more album.

The company, which produced several of Madonna’s previous tours, said her 2006 Confessions on a Dance Floor trek grossed about $200 million worldwide, and that she could mount four similar tours over the life of the new contract to generate a total of $800 million. Her previous three albums combined grossed $200 million, and the contract calls for three from the singer. Live Nation expects the first album to be delivered sometime in the next two to three years and for the first tour within the next two years.

That alone adds up to a potential gross of $1 billion, and that’s before merchandising, licensing and DVD or other media sales, and the two sides will split some of the revenue generated by those ventures. The logistics of one critical component of the deal, tour ticketing and distribution, was not addressed during the conference call Tuesday, but Live Nation vows to expand beyond its LiveNation.com ticket sale section to offer more extensive ticketing solutions in the future. Ticket pricing will continue to be decided by discussions with Live Nation, the promoter and Madonna and her camp.

The deal marks the inaugural contract between an artist and Live Nation’s new Artist Nation division, which is headed up by industry veteran Michael Cohl, who has handled successful tours for the Rolling Stones and the late Frank Sinatra. By signing an artist with as much success and global appeal as Madonna, said Live Nation CEO Michael Rapino, the concept of all-encompassing music deals was validated. “Our plan is to be a pure play music company,” Rapino said.

Currently, Live Nation works on various aspects of touring with about 1,000 different artists annually, and it hopes to bring several of those artists under the Artist Nation umbrella in the future.

With those bands and Madonna, Live Nation plans to leverage all aspects of the artist’s music and marketing repertoire to help generate revenues. “We have extensive knowledge of her [Madonna’s] brand,” said Arthur Fogel, chairman of Live Nation’s Global Music division and the promoter of Madonna’s recent tours.

Allison Reitz