Monday, March 22, 2010

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Could MJ deal turnaround music industry?

Throughout the 1990s, as CDs flew off the shelves, record labels routinely signed big artists to multimillion-dollar recording contracts. Some of it was vanity: labels paid a premium to keep a big-name artist rather than risk a few wisecracks in the press for letting a star go to a rival.

And despite the precipitous drop in album sales in the last decade — about 50 percent fewer albums were sold in 2009 than in 2000 — major deals continued apace, often with bad endings. Mariah Carey’s five-record, $80 million deal with EMI in 2001 lasted one record before the label paid the singer $28 million to get out of the contract.

“If you went back 10 or 20 years ago, you could afford to do a deal that was a little outrageous,” said Russ H. Crupnick, a senior entertainment analyst at the NPD Group, a market research firm. A label’s midlevel acts could sell enough albums to cushion the financial blow. But as the number of platinum-selling albums has dwindled, from 179 in 2000 to 45 in 2009, the labels have little padding left.

“These days, it’s hard,” Mr. Crupnick said. “You can’t afford to be as generous as you might have just to have a name on the roster.”

Nevertheless, early last week Sony’s Columbia Epic Label Group, which worked with Michael Jackson for more than 30 years, announced a deal with the pop star’s estate worth up to $250 million, perhaps the largest in history.
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