By Yinka Adegoke

NEW YORK (Reuters) - Live Nation Inc said on Monday it had signed a 12-year global contract to handle the merchandising, digital and branding rights of Irish band U2, along with its touring.


The deal with U2, one of the world's biggest rock bands, comes just five months after Live Nation announced a comprehensive partnership with pop star Madonna, which included her coveted recording rights.

But Live Nation said U2 will continue the band's long-term recording and publishing relationship with Universal Music Group, a unit of French media giant Vivendi.

"It's not a do or die situation that we have to be involved in the recordings," said Live Nation Chairman Michael Cohl in an interview with Reuters. "We'd prefer to, but it's not always available."

The company would not reveal financial terms of the U2 deal.

The deal with Madonna, which included the recording rights, was estimated to be worth $120 million over 10 years including a three-album commitment after the artist submits her last album to her current music company, Warner Music Group.

Live Nation has been expanding its business model to develop more far-reaching and deeper relationships with artists beyond just handling their touring.

Its partnership with U2 will now include merchandise and licensing rights, sponsorship and strategic alliances, digital rights, fan club/Web sites and other marketing and creative services.

Cohl said the new model will help boost the overall company's profit margins. Analysts have said that touring and ticketing have traditionally been a low-margin business.

Several of the company's executives had managed U2's tours for more than 20 years.

DIVERSIFICATION

Live Nation's attempts to diversify its business and win artists from music labels, come as the major labels are also trying to reinvent their business and win control of touring, digital and merchandise rights of their artists.

The music companies are keen to replace lost revenues caused by falling recorded music sales. Fans are buying fewer CDs and are not purchasing enough digital music to make up for the shortfall.

The major labels have started signing some artists to so-called 360-degree deals which, as well as recording, includes publishing, touring, digital and other rights.

Cohl said his company will focus on signing other major artists rather than developing new acts such as a traditional music label or publishing house.

"Our intention is to work with artists who are already making it or on their way to making it," he said.

Live Nation said its new strategy will also include its Web site LiveNation.com, which Cohl said was aiming to become the biggest music portal on the Web through a mixture of ticketing, merchandise sales as well as fan clubs and other features.

(Additional reporting by Justin Grant; editing by Jacqueline Wong and Sue Thomas)
© Copyright 2007 Reuters.