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Bobby Owsinski, Contributor

Last week it was announced that the Madison Square Garden Company (MSG) and music business mover and shaker Irving Azoff would enter into a joint venture called Azoff MSG Entertainment (AMSGE). In a move that could provide a peek into what the major record label of the future could be, it’s been reported that MSG agreed to pay Azoff Music Management $125 million and contribute a $50 million line of credit to the new company.

What makes this venture interesting is that the company will have four divisions; artist management, music publishing, television production and live event branding, and digital branding. Couple that with the many venues owned by MSG that could host concerts with the company’s artists, and you have a look at what the new world record major label looks like.

For the record, Azoff and MSG chairman James Dolan aren’t calling this a record label, but they don’t have to. It’s an outdated term for an outdated concept anyway. The traditional record label combined talent scouting, artist development, distribution and marketing, but each of those operations have changed substantially in the new millennium. Record labels now have fewer A&R talent scouts than ever, and in this one-failure-and-done atmosphere we live in, artist development is merely a nice term with little execution. Couple that with a dying brick and mortar music retail business and companies that market really well in media that mostly doesn’t matter nearly as much to music consumers as it once did, and you can see that something in the way the current music business is run has to change.

Of course Azoff brings his formidable roster of talent (including The Eagles, Christina Aguilera, Steely Dan, and Van Halen among others) with him, but more and more in the future new talent will bubble to the surface through social media (think Justin Beiber from YouTube and more recently MackLemore and Ryan Lewis) that a cognizant digital department could spot. The digital department could also take care of the heavy lifting when it comes to marketing, since the music consumer that a music company wants to reach today is primarily online.

And then there’s management. The so-called “360 deal” recording agreement where a label participates in all the revenue streams of an artist is now what major labels prefer, but AMSGE are among the best in the business when it comes to management, which labels are not. If you were an artist, which would you choose? Today’s record labels also have publishing arms, and so will AMSGE, but according to an article in the Hollywood Reporter, it will concentrate more on digital performance rights, a place where many publishers are slow to catch up.

One of the ways to expand the revenue stream from concerts is to live stream the event as a pay-per-view, or package the show and sell it to a cable network like Palladia or Fuse, which MSG owns. Consumers are already getting used to live streaming of concerts from sites like Livestream and Concert Window, and they’ll eventually adopt it as they’re doing with streaming music. Another win for AMSGE.

So when you step back and look at it, doesn’t this look like a company prepared for music’s future? Doesn’t it look like a “label” that artists would kill to be on? It’s true that physical product, which the current majors are very good at selling, hasn’t gone away completely (there were around 220 million CDs sold last year according to the RIAA), but putting brick and mortar distribution in place should be a piece of cake for this company if they feel it’s warranted. In fact, I bet the current major labels (Universal Music Group, Sony SNE +0.42% Music and Warner Music Group) would fall over themselves trying to make such a deal.

Make no mistake about it, major record labels are not going away. An artist can break online, but to go to the superstar level, you still need the infrastructure that only a major label can bring. The current majors are desperately trying to change, and on some levels they’re doing a pretty good job of it, but they’re stilled mired in the framework of the past just like any corporation that’s been around for 50 years. It takes some time for that supertanker to change course.

AMSGE offers things that no major can offer, like management, integration with venues and television, and a new outlook on publishing. That’s why I think we’re looking at the next generation record label if they can pull it off. Only don’t call it a record label. Records died a long time ago.

http://www.forbes.com/sit...ord-label/

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tA

Tribal Records

I don't know.

Seems like someone just purchased a $175m paper weight.