Warner Music Group Hoping To Divert Revenue Streams Its Way

Jun 13th, 2007 // Comment

There’s a piece in today’s Wall Street Journal about a new relationship between Warner Music Group and Chris Lighty, the chief executive of the management company Violator Management:

Brand Asset Group, as the newly formed venture with Chris Lighty, the manager of rapper 50 Cent, is called, aims to address one of the biggest complaints among record labels: Their inability to capitalize on lucrative revenue streams such as merchandise sales and image licensing that typically benefit artists and their managers.

For years, labels have been vowing to vault out of the narrow CD and download business and into the “brand” business. Executives have watched in growing frustration as their artists cash in on endorsements, sneaker and clothing deals and the like. Labels have spent millions marketing artists and building their brands, but have benefited from only one dwindling revenue stream.

“The music industry is growing,” Warner Chairman Edgar Bronfman Jr. told an investor conference last week. “The record industry is not growing.” He went on to say that his company is trying to expand into “many, many other businesses” beyond the sale and licensing of music.

Sure, it’s smart to try and break out of the “making money from music only” mind-set, but we’re sure that there will be a bunch of musicians who will line up to extend their endorsement power to the breaking point. Fergie? Jessica Simpson? Or perhaps Vitamin Water pitchman–and Violator Management client–50 Cent:

The new venture doesn’t intend to limit its services to Warner Music artists. In fact, the company’s first deal is an 18- to 24-month endorsement relationship between General Motors Corp.’s Pontiac and 50 Cent, who records for Vivendi’s Universal Music Group. That means Warner Music will receive a portion of the income of a rapper who records for a rival label. Mr. Lighty said the relationship is expected to be broad — with 50 Cent possibly having input into the design of the car maker’s Pontiac G6 GXP Street edition and likely featuring the car in places such as music videos and the CD booklet for an album he is slated to release late this summer.

But Mr. Lighty stresses there are some lines he would urge a client not to cross, no matter what the payday. Mentioning a car or other product in a song as part of a business arrangement, for instance, would be “perceived as corny,” he says. “There won’t be a Pontiac-themed song on 50′s album,” Mr. Lighty says. “Unless it just organically happens.”

“Organically,” huh? Well, now that Curtis has an extra few months of fermentation time, maybe that seed will flower. It’s a good thing, too, what with the deal between 50 and Six Flags falling through and all.

A New Spin for Corporate Music Deals [WSJ, reg. req.]

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