With the lost of CD sales Jay-Z negotiated a 360 deal with Michael Rapino and John Malone of Live Nation in 2008; he negotiated for a cash advance of $150 million that would make Live Nation his partner and they would share in all income generating opportunities accessible to the rapper. His negotiation with the concert promotion giant is the largest for any Rap Artist and set Jay-Z up as the fifth richest artist on the Forbes list. The deal calls for Jay-Z to record 3 albums and has a length of 10 years and Jay-Z would be obligated to perform at a series of Live Nation concerts.
In this negotiation Live Nation’s position is that of an investor by offering a large cash advance for the partnership, Jay-Z position is that of someone seeking financing for his recording projects and tours and with this 360 deal he gets what he wants. Live Nation gave Jay-Z the respect he was due and in return Jay-Z did not take a hardline position because of his popularity. The negotiation went smoothly because both parties needed what the other had.
Live Nation’s interests were to secure famous musicians for their series of concerts worldwide as well as Endorsements, Merchandising and ticket sales. Jay-Z’s interests were to start his record label and financing for his recording and touring projects. This helped Live Nation to have a guaranteed roster of performers for its worldwide concert series and Jay-Z has the opportunity to start a label and get the financing he needs for recording and touring.
Throughout this negotiation both parties were able to effectively use the core concepts to achieve an agreement by separating the people from the problem they were able to focus on the deal looking at the partnership and how it would benefit both Live Nation and Jay-Z. Live Nation has set the industry standard and was able to use objective criteria to secure the agreement. They had cut similar deals with U2 and Madonna with great success, which helped to secure the agreement with Jay-Z. By being able to consolidate the different business ventures allowing Jay-Z to do what he does and Live Nation doing what they do best they arrived at a mutual benefit that they were satisfied with.
The negotiation went well because both parties realized that it would be good business to be in business together knowing that each interests matched. What went wrong is that giving 30 million more to Jay-Z than they gave to Madonna might make it harder when they look to sign other artists who might want a bigger fee than what was given to Jay-Z. When you make deals with artists who are popular you run the risk of other artist thinking that they are worth more than the artist you previously signed.
The agreement that Jay-Z and Live Nation agreed to is Live Nation paying Jay-Z $150 million dollars for a 10-year contract, which includes Jay-Z recording 3 albums and performing at Live Nation concerts. Live Nation will finance his new record label, his recordings and touring, in return Live Nation will receive a percentage of all income generated by Jay-Z through the term of their contract.
In this agreement the long term and meaningful relationship will continue for 10 years, so Jay-Z won’t have to worry about how to finance his recording or tours and Live Nation won’t have to worry about reviews or contract negotiations and if the contract is successful I see an opportunity to renegotiate in the future providing both parties are satisfied.