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Warner Venture With Chris Lighty, Manager of 50 Cent

This is definitely a timely article, especially with the fact that there are rumors “Curtis” the album might not see the light of day. 2 add more fuel 2 the fire, Warner has also been rumored 2 be trying 2 woo 50 away from Interscope. It should be interesting 2 see how this plays out. @ the end of the day it will come down 2 the $$$$….. !YG

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Warner Venture With Top Manager
Aims to Build on Ties to Artists

By ETHAN SMITH
June 13, 2007; Page B3

A new joint venture of Warner Music Group Corp. and one of the most prominent managers in the music business is aiming to generate new revenue by linking musicians and corporate America.

Brand Asset Group, as the newly formed venture with Chris Lighty, the manager of rapper 50 Cent, is called, aims to address one of the biggest complaints among record labels: Their inability to capitalize on lucrative revenue streams such as merchandise sales and image licensing that typically benefit artists and their managers.

For years, labels have been vowing to vault out of the narrow CD and download business and into the “brand” business. Executives have watched in growing frustration as their artists cash in on endorsements, sneaker and clothing deals and the like. Labels have spent millions marketing artists and building their brands, but have benefited from only one dwindling revenue stream.

“The music industry is growing,” Warner Chairman Edgar Bronfman Jr. told an investor conference last week. “The record industry is not growing.” He went on to say that his company is trying to expand into “many, many other businesses” beyond the sale and licensing of music.

Rapper 50 Cent with Chris Lighty, whose new venture with Warner aims to cut record labels in on revenue streams from branded merchandise sales and image licensing.

As chief executive of Violator Management, Mr. Lighty, 38 years old, has brokered a string of lucrative deals between his artist-clients and consumer brands. The most high-profile of these has been the constellation of endorsements and other deals on behalf of rapper 50 Cent, who had a deal in place with Marc Ecko Enterprises for a clothing line even before the release of his debut album in 2003. The rapper, whose real name is Curtis Jackson, also recently benefited from the $4.1 billion sale of Vitamin Water parent Energy Brands Inc. to Coca-Cola Co.; his deal for “Formula 50,” a sports drink, included an undisclosed share of equity in Energy Brands. Mr. Lighty has also helped broker deals between Busta Rhymes and Courvoisier and between LL Cool J and PepsiCo Inc.’s Gatorade.

The record industry’s approach has generally been scattershot. EMI Group PLC has created high-profile partnerships with two established stars — Korn and Robbie Williams. Vivendi SA’s Interscope-A&M Records is a full partner in the multimedia juggernaut that is the Pussycat Dolls, whose brand extends to night clubs, toys and clothing. And virtually every label has tried, with varying degrees of success, to create so-called 360 deals with new artists, in which the label pays a slightly larger advance in exchange for a piece of revenue from touring, merchandise and other areas it wouldn’t traditionally benefit from.

Warner’s Atlantic Records owns a piece of the touring and merchandising revenue for a hard-rock band called Operator, while its Warner Bros. label has a merchandise division that makes T-shirts and other souvenirs for acts including My Chemical Romance.

Artist managers have traditionally been wary of signing such far-reaching deals with record labels. But with falling record sales hurting the bottom lines of labels and artists alike, managers are warming to the idea of broader business relationships with record companies. Jim Guerinot, a manager whose clients include Gwen Stefani and Nine Inch Nails, says he wouldn’t rule out a licensing relationship with a record label — “as long as they don’t assume that because of the existing relationship we’re going to give them an unfair deal.”

For his part, Mr. Lighty argues that artists and their representatives should be willing to give up a portion of their earnings because he believes he can generate more business opportunities for them than they would be able to on their own. “We’ve done every kind of deal,” he says. “Clothing, water, sneakers. You name it, we’ve figured it out.”

Brand Asset Group is slated to have a staff of six to eight people, all with Madison Avenue backgrounds, Mr. Lighty said. He said a yet-to-be-named president will oversee day-to-day operations, while Mr. Lighty himself will be the company’s chief executive. Ownership of the company is split about evenly between Mr. Lighty and Warner, which put up an undisclosed sum to fund it.

The new venture doesn’t intend to limit its services to Warner Music artists. In fact, the company’s first deal is an 18- to 24-month endorsement relationship between General Motors Corp.’s Pontiac and 50 Cent, who records for Vivendi’s Universal Music Group. That means Warner Music will receive a portion of the income of a rapper who records for a rival label. Mr. Lighty said the relationship is expected to be broad — with 50 Cent possibly having input into the design of the car maker’s Pontiac G6 GXP Street edition and likely featuring the car in places such as music videos and the CD booklet for an album he is slated to release late this summer.

But Mr. Lighty stresses there are some lines he would urge a client not to cross, no matter what the payday. Mentioning a car or other product in a song as part of a business arrangement, for instance, would be “perceived as corny,” he says. “There won’t be a Pontiac-themed song on 50’s album,” Mr. Lighty says. “Unless it just organically happens.”