R.E.M., the hottest free agent in the music business, signed a five-album contract Saturday with Warner Bros. Records worth an estimated $80 million--the largest recording contract ever awarded, sources said.
The Grammy-winning band's deal surpassed the $70-million mark achieved seven months ago by pop diva Janet Jackson as well as other mega-deals by such superstars as Michael Jackson and Madonna, whose six-album pacts included film and joint venture record label components.
The signing was announced unexpectedly at the Anaheim Convention Center on Saturday, where Warner Music executives were gathered for their annual strategy summit. Delighted at the news, thousands of employees leaped to their feet and broke into a standing ovation.
"This is a watershed moment for Warner Bros. Records--an incredible new beginning for the company," said Steven Baker, president of the Burbank-based label. "R.E.M. embodies everything important about the culture of this company. They are a tremendously hard-working, successful band with integrity and vision. I can't describe how proud we are that R.E.M. is allowing Warner to continue our association with them."
The Athens, Ga. rock quartet, which recently delivered the last of six albums under its previous Warner Bros. contract, has been the target of a fierce bidding war for the past two weeks between such companies as DreamWorks SKG, Capitol Records and Sony Music.
Like Hollywood's movie studios, the major record companies find themselves forced to pay astronomical sums--even at the risk of losing some money on the deals--for the industry's top stars. For the major companies, the superstars are magnets for new talent and offer the firms clout in distributing their entire roster of artists around the world.
Formed in 1980, R.E.M. has sold more than 30 million albums and has been unusually strong in international sales for a rock group. But the pact is so large, with $10-million advances for each of five albums, that some record industry analysts wonder whether Warner Records can make a profit over the life of the deal. By the time the final album is delivered, the R.E.M. musicians will be nearing 50.
One reason R.E.M. was able to secure such favorable terms from Warner is that the band became free agents at the apex of their careers and the deal was negotiated at a time when the firm, trying to recover from two years of corporate upheaval, could not afford to lose the band.
