Madonna: The Business Behind The Music

Madonna’s music career started with a very small deal with Warner Bros. Records in 1982: a $15,000 advance per single, with an option to pick up three singles and an additional $2,500 publishing advance to cover her songwriting. That’s right, the Queen of Pop, then a dead-broke 22-year-old, didn’t even land a full record contract on her first go-around. Within a decade, she would sign a huge deal with a reported $60 million advance from Time Warner plus $5 million per album for her next seven records, a 20% royalty rate on album sales, a massive jump up from the industry standard — oh, and her own multimedia entertainment company, Maverick. At the time, it was one of the biggest advances ever doled out — said to be “comparable in scale” with Michael Jackson’s 1991 Sony deal.

In the end, the wage gap didn't apply to Madonna, who is the last '80s megastar standing and still creating, following the deaths of Jackson, Prince and Whitney Houston.

In 1984, before the crazy record deals and global fame, she went on American Bandstand and told Dick Clark that she she planned to rule the world. She wasn’t kidding. And she didn’t intend to just do it by dominating culture.

For over three decades, Madonna has been known as a chameleon who constantly reinvents herself, a provocateur who pushes the envelope, and a brilliant, visionary artist who created — and then broke — the mold for female pop stars. But she doesn’t get enough credit for being all those things and more in business. That’s probably because she doesn’t talk about her uncanny business sense directly, though she references it all the time — “Material Girl” and Blonde Ambition take on a whole new tenor if you think of them as financial manifestos.

Madonna’s multi-faceted revenue deals followed the blueprint of the Beatles, who launched Apple Music in 1967, and were on par with what Sony offered Michael Jackson. But the singer also managed to negotiate these deals so they were uniquely tailored to her wishes and padded with wads of cash, befitting a pop star of her level. Her personal involvement in her business ventures and finances is paralleled only by the Rolling Stones — who were driven in that arena by lead singer Mick Jagger, a London School of Economics grad.

One of Madonna’s lucrative early lessons concerned songwriting royalties, which are a core revenue source for any artist. Among the hits in her early catalog, the only ones she had a co-writing credit on were “Lucky Star” and "Into the Groove.” By her third album, 1986’s True Blue, she made sure she was a co-writer on every song. The confidence gained after becoming a Beyonce-magnitude star with Like A Virgin likely bolstered her at the negotiating table.

The haters (and a few disgruntled songwriters who have had their work rewritten and recorded by her) have long dragged Madonna’s songwriting abilities – likening them to changing a word or two and then using her clout to take a large percentage of the songwriting credits and accompanying royalties. (These same charges are flung at successful female singer-songwriters even today: just ask Beyoncé, Taylor Swift, or Katy Perry.)

Coming to her defense? Patrick Leonard, whose relationship with Madonna spans co-writes on dozens of tracks, production duties, and work as music director on her early tours. According to Leonard, their songwriting process on albums like 1989’s celebrated Like A Prayer was completely collaborative and 50/50. He generally came up with a musical idea that Madonna would write lyrics to. “She would write the lyrics in an hour, the same amount of time it took me to write the music,” Leonard told Billboard. The duo finished writing all of Like a Prayer in two weeks, writing a song a day – very efficient for a project with such enormous artistic and monetary payoff.

In the ‘90s, Madonna set her sights on becoming not just a musician but a mogul. When it was time to renegotiate her record deal in 1992, she didn’t ask Time Warner, the parent company of Warner Bros. Records, to just cut her a check; she wanted to start her own media company under their umbrella. Since she was hands down the biggest female pop star in the world, they had two choices: say yes or lose her.

That company, Maverick, was originally created to support a record label, book publisher, music publisher, film, and merchandising. It released Madonna’s bestselling (and highly controversial) Sex book as well as the coinciding Erotica album. The record label was the most commercially successful part of the venture, releasing smash albums from Candlebox, The Prodigy, Michelle Branch, William Orbit, Deftones, and Muse’s debut album. It famously signed Alanis Morissette, whose first album, Jagged Little Pill, was both a commercial juggernaut with lifetime sales at over 15 million copies, and a cultural touchstone for a generation. The album’s influence lives on even today; it was recently adapted into a musical that could be Broadway bound.

Madonna was divested from the company in 2004, after a round of lawsuits with Time Warner over mismanagement in which accusations flew from both sides. It was a time of particular financial confusion in the music industry, with the business starting to feel the heat of streaming eating away at their profits thanks to Napster (YouTube wouldn’t launch for another year, and Spotify was a good four years away from launching in Europe). Additionally, her longtime label, Warner Music Group, had just been purchased away from Time Warner by an investor, Edgar Bronfman, Jr. Time Warner bought her shares and, in the end, Madonna won, taking the check for her percentage of the company and running.

By the new millennium, Madonna, never one to repeat herself, was on to the next thing. As album sales dipped in the age of streaming, the part of the industry still generating huge dividends was touring. Live performances are, even today, where artists now seek their primary income. Many started doing 360 deals with their labels, in which the label got a portion of their live and merchandise sales in exchange for monetary support, but Madonna was not about to do anything of the sort.

In 2007, she signed what Billboard called an “unprecedented” deal reportedly worth $120 million with Live Nation, the entity that promotes concerts and owns venues all over the world. This was a next-level 360 deal, partnering her with Live Nation to handle her touring and merchandising, plus new studio albums, music-related film and TV projects, sponsors, and fan clubs and websites (which would soon morph into social media management).

Though Live Nation had to defend the huge payout at the time, it was proven to be a brilliant money-making move for both artists involved. Madonna’s 2008 Sticky & Sweet Tour made $408 million — then (and now) the highest total ever for a solo artist. Her 2012 MDNA tour, packaged with a 2011 album and a Super Bowl performance, made a remarkable $305 million.

Madonna is locked in a race with Bruce Springsteen for highest-grossing solo touring artist, having bested him again after her Rebel Heart Tour in 2016. However, that tour only brought in $170 million — no small amount, but significantly less than her previous tours. Madonna’s deal with Live Nation spanned 10 years and expired in 2017, and only someone completely unfamiliar with her history would imagine she might want to sign the same type of deal again. Now, Madge has room to reinvent the business terms and areas of focus on her next venture.

Outside of music, Madonna has created a slew of diverse revenue streams for herself: the MDNA Skin line, which makes skin care products and fragrances; her children’s book series; a stake in Jay-Z’s TIDAL; the film production company X; the M by Madonna clothing line for H&M; her MG Icon clothing line at Macy’s; a sunglasses line with Dolce & Gabbana; her Truth or Dare lifestyle brand that produced everything from purses to footwear to the Coty fragrance launch; Hardcandy Fitness, a joint-venture for workout fans. In 2018, Madonna is sliding into 60 with an estimated net worth of $590 million with over 300 million records sold. Among other honors, she is Billboard's all-time top performing female artist for Hot 100 singles.

With her touring profits on the wane, we also look to Madge to, yes, once again reinvent herself creatively. That could mean doubling down on developing and producing film projects or more books and perfume. What if the former Basquiat and Haring confidante delved into a side hustle promoting avant garde visual artists, helping them translate their talent into the mainstream art world? She could drop in on a different creative world that might benefit from her trendsetting eye, and it could help inspire her musically, as well.

As the music industry fully transitions to streaming, Madonna’s next move could very well be a big money partnership with a streaming outlet. Though she owns a piece of TIDAL, it’s more likely that she would swoop in on an opportunity at the immensely popular Spotify, who recently announced they are open to doing deals directly with artists. It’s a sweet opportunity for musicians: they retain their master rights to the music, which enables them to directly collect all money from licensing deals for TV, movies, and ads; it also helps them maintain control over usage of the music and enjoy a higher royalty rate, all with a worldwide distribution partner. But, being Madge, she’ll want to do it with a twist — something that ups the ante beyond the traditional deal.

Madonna has also been teasing new music, telling fans back in May she’s got a track called “Beautiful Game” on the way, which Genius says is a co-production with her old producing partner Mirwas. On top of that, she’s dropped hints about finding inspiration from her residence in Portugal, indicating there’s more than just one single brewing. Surely the announcement of her next trend-breaking business venture isn’t far behind.