Madonna’s new act

Pop star Madonna’s greatest talent may be her ability to provoke, but the one that has served her best is her keen eye (and ear) for trends. Her career has been one of constant reinvention, with the Material Girl adopting a new dance-pop style with almost every release. Now she has joined the vanguard of a new movement, becoming the latest big-name act to dump her label in favor of a new kind of distributor.

Madonna’s managers reportedly told her longtime label, Warner Music Group, that she would sign a 10-year, $120-million deal with Live Nation -- a top concert promoter and venue owner that handled some of her previous tours.

That kind of money isn’t unheard of for a star of her magnitude; two years ago, Sony BMG signed Bruce Springsteen to a deal reportedly worth almost as much (a move that precipitated Chief Executive Andy Lack’s demotion to non-executive chairman). But it’s easier for Live Nation to make a nine-figure offer because it doesn’t have to rely solely on the 49-year-old singer’s ability to sell $16 CDs. Instead, it can count on her track record selling far more expensive concert tickets. Her last tour grossed $86 million in North America alone and was expected to collect twice that amount worldwide, with an average ticket price of more than $180.

The deal has risks for Live Nation too, and yet it exemplifies the power shift in the music industry.

Overall CD sales have fallen sharply since 2000, and even the top-selling acts aren’t putting up the numbers they did in the 1990s. Not so long ago, top acts routinely sold a million copies of a new CD the first week it was on the market. Now, the No. 1 spot often goes to artists selling a few hundred thousand discs.

The slump has put a crimp in the major labels’ high-risk, high-reward business model, which counted on a handful of artists racking up hits big enough to offset the losses incurred by the rest of the roster. That’s why top executives at Warner Music and EMI have talked for months about the need for a new model that gives artists a larger percentage of their CD sales in exchange for a share of the revenue from tours, fan clubs and T-shirt sales, all of which have been off-limits to the labels.

But as Madonna’s deal demonstrates, artists increasingly have other partners willing to shoulder some of the risk. Retailers are stepping up to promote and distribute CDs, as Wal-Mart did for Garth Brooks and will soon do for the Eagles, and as Starbucks has done for Paul McCartney and Joni Mitchell.

Meanwhile, a growing number of artists in their prime are forgoing record contracts and releasing songs through their own websites. The list includes Radiohead -- which invited fans to pay whatever they wished to download its new album -- Oasis and Nine Inch Nails.

The news isn’t all bad for the major labels. They recently won a $222,000 judgment against a single mother in Minnesota for sharing two dozen songs online through Kazaa. But an uncollectable judgment is cold comfort for an industry that’s losing support on both ends of its business.

Not only are customers finding other ways to fill their musical needs, so are the musicians.