EMI Buys $15 Million Stake In KORN

According to today’s LA Times, the "EMI Group, the world’s fourth-largest music corporation, is expected to announce today a deal with the rap-metal band Korn that some say would fundamentally change how record companies profit from the superstars they help create."

"The deal, which would give EMI a stake in almost every dollar the band earns worldwide over at least the next five years, would represent the first time a high-profile American band has wholly partnered with a record company, although similar experiments have been initiated with foreign and first-time performers."

"Sources close to the band said that under the terms of the deal, EMI would pay the four-member band an estimated $15 million upfront — more than twice what the band might expect from a traditional recording contract. In return, EMI would get more than 25% of the band’s publishing, merchandising and touring revenue as well as profit from the group’s albums."

Some are skeptical, "…The Korn contract "might be one of those deals that revolutionizes the music industry," said Rick Sales, a manager at Sanctuary Artist Management, told the LA Times "Or, EMI might wake up one day and wonder why they just handed Korn 10 years’ worth of profits."

"…as album sales decline and record labels look for new sources of revenue, many labels have begun exploring partnership deals similar to the Korn-EMI agreement. Music executives and artists say that if all-encompassing agreements become common, they could significantly shift the focus of the $11-billion recording industry and bring new heavyweights to the concert, merchandise and music publishing worlds…"

HYPEBOT: One has to wonder how the need for return on investment will effect a band’s artistic and touring descisions when one outside entity like EMI who must answer to shareholders holds such a large stake.

Read the entire LA Times article here.