Vivendi Chief says Universal will keep artists

By Yinka Adegoke

NEW YORK (Reuters) - Vivendi (VIV.PA) Chief Executive Jean-Bernard Levy said on Tuesday its Universal Music Group unit will succeed in keeping its big-name artists even though he is not surprised superstars like Madonna seek lucrative deals with nontraditional music companies.

Levy said Universal Music, the world's largest music company, will hold on to its marquee roster because it has focused on being a good partner to its artists, who include 50 Cent, Sting and Mariah Carey.

"I do not believe we'll lose a lot of artists," Levy said in an interview with Reuters in New York. "Indeed, we do so well that the artists feel good working with us."

Madonna said on Tuesday she is walking away from her long-time music company Warner Music Group (WMG.N) to sign a multi-album, touring and merchandising deal with concert promoter Live Nation Inc (LYV.N).

Levy said the music industry is at a turning point. After relying on sales of CDs for years, it now has to look at diversifying its business model. He said the Madonna deal was just such an example.

"It shows indeed the music industry is being less record-centric," Levy said.

"It used to be just focused on the record and everybody thought all the rest was just promotions in order to sell records. Now it's a more balanced business where you have records, TV shows, merchandise, touring revenues and so on."

Levy said Universal is already signing artists to similar so-called 360-degree contracts where the company shares in other artist rights and products such as image rights and merchandising, in addition to the usual recorded music and publishing rights.

In June Universal bought struggling British company Sanctuary for 44.5 million pounds ($88 million) to develop its merchandising, live agency and artist management businesses.

Levy said he expects to continue to expand his company's expertise in such "ancillary" areas by building on Sanctuary's base.

In July Universal Music declined to sign a multiyear deal with Apple Inc (AAPL.O). opting instead to sell music and videos on a month-to-month basis. The decision left open the possibility of exclusive deals with other services.

Apple's iTunes Music Store is the dominant U.S. digital music retailer with more than 70 percent market share.

Levy reiterated his company's desire to negotiate better terms with Apple and other partners.

"I have said it is not good that the current relationship (with Apple) is not well balanced," he said. "Our strategy is to try and help everybody that will respect the artists and help us to monetize our investments as we try and diversify our revenues."

(Editing by Brian Moss)