Why Madge signed a record deal with a concert promoter

It used to be that every week brought a bad news story for the record companies. Now it's every hour, writes Brian Boyd.

Where to begin? Still dazed and confused over Radiohead's "here, it's free" download giveaway, we now have Ray Davies, The Kinks' songwriting legend (Waterloo Sunset and all of that), giving away his new album free in this weekend's Sunday Times. The potentially biggest blow, though, comes from a mediocre singer and dancer with a Camilla Parker Bowles accent and a very bendy spine.

Madonna has walked away from her 25-year association with the Warner Music Group in order to sign with concert promoters Live Nation (the touring wing of the Clear Channel media group). Getting over the initial surprise that anyone is still interested in the raddled old has-been, what in the name of Jimi Hendrix is a performer doing signing a record deal with a concert promoter?

Actually, the deal makes perfect sense: as with The Rolling Stones, poor Madge's terminal recording career is now merely an accessory to the main event: raking it in from touring. The new deal, to be announced shortly, will see Live Nation take a cut of Madonna's tour income, as well as her merchandise sales and any incomes generated from the licensing of her name. The odd album will also be thrown out at regular three-year intervals, but these will simply be loss leaders for the Madonna Live Experience.

At the age of 49, Madonna has signed a 10-year deal worth $120 million (€84.7 million). Almost everyone in the industry believes Live Nation to be insane to offer such an amount to an act way past her early-1980s prime, but these were the same fools who laughed at EMI for advancing Robbie Williams £80 million (€115 million) five years ago. The sobering truth is that EMI recouped it within two years. If all Madonna does is stage three world tours over 10 years, then Live Nation will turn a healthy profit on the deal.

Record companies have long been envious of the amount of cash generated by tour receipts. Traditionally, they could never get a cut of this money and were entitled only to a cut of the act's CD sales. That all changed with the Robbie Williams deal. Madonna is merely bringing the idea to its logical conclusion by actually signing directly with a tour promoter.

In her own way, Madonna probably believes that she is making musical history with her new deal. The story behind the story is that when Live Nation came in with its $120 million deal, Madonna first went to Warner and asked it to match the offer. Warner replied, "Are you mental Madge? You don't sell any records any more" (I am paraphrasing here, but probably not that much) and let her walk.

Back in February, Warner announced a massive 74 per cent fall in profits for the final three months of 2006. It made only $18 million (€12.7 million) profit during the final quarter, compared with $69 million for the final quarter of 2005.

As a marquee name on the label, Madonna could well have stocks and shares in Warner (it's what the majors do to keep their big name acts sweet). Maybe her accountant looked at the figures in February, realised what they meant for Madonna's bank balance and advised her to shop around for a new deal.

Madonna will shortly emerge at a press conference bleating on about "artistic progression" and "a brave new challenge".

It's all hypocritical rubbish. Clear Channel is a major concert promoter and the biggest radio broadcaster in the US. The company - not well liked by rock'n'roll diehards - is at the centre of numerous conspiracy theories and controversies

over its supposed Republican Party leanings and dominant market position. All are rejected in chilly corporatespeak on the company's website.