Madonna move shows music industry's 360-model

By Yinka Adegoke

NEW YORK (Reuters) - Madonna's possible move from her long-time record label Warner Brothers to concert promoter Live Nation Inc underscores how shrinking music sales are turning former partners into competitors.

Traditionally, music companies like Madonna's Warner Music Group have focused on recording music and managing publishing rights, while relying on companies like Live Nation and AEG to arrange concert tours and manage artists.

But the rise of digital music and the collapse of CD sales has forced all industry players to review their business models and negotiate wide-ranging contracts with artists to boost sales and profit margins.

Madonna is close to sealing a $120 million, 10-year contract with Live Nation, said a source familiar with talks.

The news, first reported by the Wall Street Journal, said the 49-year-old queen of pop will receive a mix of cash and stocks. In return, Live Nation will distribute three studio albums, promote concert tours, sell merchandise and license her name.

Music analysts said Madonna will be a boost to Live Nation's attempts to expand beyond concert promotion and get a share of CD and digital music sales.

The Beverly Hills company may not recoup the $120 million contract, say music insiders who questioned Madonna's star power a decade from now. But she can lend credibility to Live Nation as a full-service music company.

"It's an optimistic message to other artists that 'we want you'," said one music label executive, who spoke on condition of anonymity. "They believe digital music is going to grow exponentially and they want a piece."