The lesson of Rolling Stone’s fifth-annual list of music’s biggest moneymakers? Touring, more than ever, is where the money is: The vast majority of artists in our Top Thirty made the bulk of their cash on the road in 2005. Album royalties pale in comparison. “The music business has changed,” says Paul McGuinness, longtime manager of U2, who came out on top last year, taking in an estimated $154.2 million after selling out more than 100 arena and stadium shows around the world. “Our recording income is not insignificant, but it’s less than we make from touring. The figures used to be closer together.” U2 make an estimated $15 million in advances for each album they release, plus additional royalties; they grossed $139 million on the road in North America in 2005 — including as much as $150,000 per night in merchandise sales.
The Rolling Stones, whose touring in 2005 was limited to forty or so U.S. dates, came in at Number Two, earning $92.5 million. The rest of the Top Ten is occupied almost exclusively by veteran artists, from the Eagles (No. 3, $63.2 million) to Rod Stewart, still riding the success of his Great American Songbook albums and tours (No. 8, $40.3 million). The two rock artists under forty nearest the top were Dave Matthews Band (No. 9, $39.6 million) and Green Day (No. 12, $31 million). Mariah Carey, who had the year’s best-selling CD with The Emancipation of Mimi but didn’t tour, is nowhere on the list; 50 Cent, who had the year’s second-highest-selling album, landed at Number Nineteen. In contrast, Neil Diamond’s Rick Rubin-produced album 12 Songs sold fewer than 500,000 copies, but he still hit Number Six, earning $44.7 million — thanks almost entirely to an extensive world tour. Touring is simply far more profitable than selling CDs, explains Jim Guerinot, who manages Gwen Stefani (No. 16, $23.9 million). “With CDs, you’re making between fifteen and twenty-five percent royalty,” he says. “On the road you get a royalty of eighty-five to ninety percent” [from ticket sales].
Why do artists with lengthy histories outgross their younger, more fashionable counterparts on the road? “People want to see artists that they’ve seen before and who they know,” says Rod Stewart’s manager, Arnold Stiefel. “They want a show where they’re going to hear things that are signposts of their life and experience.” McGuinness points out that fans themselves are aging. “The audience is expanding demographically upward,” he says. “People don’t stop listening to rock & roll in their forties — they continue.” And it doesn’t hurt that mature fans have more disposable income. “Only the older audience can afford ticket prices at the highest level,” says Dennis Arfa, president of concert agency Artists Group International, which reps Stewart, whose touring income has quadrupled in the past decade.
Side businesses and endorsements were another lucrative source of income, and the king of that approach is Jimmy Buffett (No. 7, $44 million), who not only grossed $41 million on his annual amphitheater tour but also earned around $15 million from his ten Margaritaville restaurants (which also sell merchandise such as Parrothead hats), a deal with Sirius Satellite Radio and other ventures. Buffett also owns his own record label, Mailboat Records, enabling him to earn as much as $5 royalty per record sold, as compared to the standard $1 to $2.50. “Jimmy Buffett is a cottage industry by himself,” says Arfa. Says Guerinot, “It’s a lifestyle thing. It’s every thirty-eight-year-old with a BMW spending his seventy-five dollars on a ticket.”
Despite the lackluster performance of his movie, Get Rich or Die Tryin’, 50 Cent saw Buffett-like diversity in his earnings: He took in at least $10 million from entrepreneurial ventures, including his G Unit clothing line, Reebok sneaker deal and a video-game deal, plus ticket sales from his tour with Eminem and his salary for his movie debut. And Eminem and Dr. Dre each shared in 50 Cent’s record profits, thanks to interlocking label deals. Other entrepreneurial artists included Stefani, who earned an estimated $8 million advance after licensing her name to a clothing line, L.A.M.B.
Two of this year’s top earners, Celine Dion and Elton John, made huge money from contracts for residencies at Las Vegas casinos. Vegas is an increasingly lucrative market for top-tier acts: The surviving Beatles have signed a deal for a Cirque du Soleil production based on the band’s music. And Stewart is considering a move there in the future. “Vegas is exploding,” says Stiefel, Stewart’s manager. “We’ve had lots of offers, and Rod would love to have a sit-down engagement there.”
Jay-Z earned as much as $3 million for serving as president of Island Def Jam, sources say, while also taking a cut from the company’s $10 million buyout of Roc-A-Fella Records, and profits from his $350 million Rocawear clothing line. Similarly, Sean “Diddy” Combs made the list largely because of the cash he took in from selling his Bad Boy Records to Warner Music Group for $29 million, and his earnings from Sean John clothing. Touring is still a modest income source for hip-hop artists; 50 Cent and Eminem earned around $5 million each from their cut-short Anger Management Tour, and Kanye West grossed $8 million from his forty-two-city arena tour.
West, Stefani and Green Day were notable newcomers on the list, with the latter scoring their biggest year ever, thanks to their first stadium dates and continued sales of 2004’s American Idiot. But Stefani, who embarked on her first solo tour in 2005, and Green Day, who first played arenas in 1994, both have a lengthy history. “People who have worked on the road and cultivated a live fan base are the ones who make these lists,” says Guerinot. “Those who haven’t, don’t.”
Additional reporting by Steve Knopper
Rock’s Top Thirty Moneymakers
Compiled by Rob LaFranco
U2, $154.2 million
The Rolling Stones, $92.5 million
Eagles, $63.2 million
Paul McCartney, $56 million
Elton John, $48.9 million
Neil Diamond, $44.7 million
Jimmy Buffett, $44 million
Rod Stewart, $40.3 million
Dave Matthews Band, $39.6 million
Celine Dion, $38.5 million
Kenny Chesney, $31.5 million
Green Day, $31 million
Coldplay, $30.1 million
Destiny’s Child, $24.8 million
Diddy, $24.3 million
Gwen Stefani, $23.9 million
Toby Keith, $22.2 million
Motley Crue, $22 million
50 Cent, $19.7 million
Bruce Springsteen, $19.6 million
Eminem, $17.8 million
Jay-Z, $17.5 million
Barry Manilow, $17.2 million
Hilary Duff, $17.1 million
Kanye West, $16.9 million
Dr. Dre, $16.9 million
Rascal Flatts, $16.3 million
Aerosmith, $16.3 million
Bon Jovi, $15.8 million
Tom Petty, $14.9 million
Our Method The list was compiled using interviews with record executives, managers, lawyers and agents. It uses figures from Nielsen SoundScan, Pollstar, the Recording Industry Association of America, Amusement Business/Billboard and other sources. Net figures reflect performers’ earnings after expenses have been deducted and managers, agents and lawyers have taken their cuts. All figures should be considered estimates. LaFranco, a former editor at Forbes, wrote the 2004 “Rich List” in RS 968.
Credit: Rolling Stone