Nothing has been signed, says Live Nation spokesman John Vlautin, but he confirms that the company is in "deep talks" with the 38-year-old rapper and entrepreneur, who would not comment. Def Jam, Jay-Z's longtime label, also declined to comment until a deal is official.

Under the proposed deal reported by The New York Times, Live Nation would finance and share profits in start-up venture Roc Nation, the umbrella company for a record label, music publishing, talent consulting and managing.

The agreement also includes an upfront payment of $25 million; an advance of $25 million, which includes fees for his current tour with Mary J. Blige; and an advance payment of $10 million per album for at least three albums over the next 10 years. Additional publishing, licensing and other rights add up to $20 million.

Industry insiders say it's an excellent opportunity for both Live Nation and Jay-Z. The deal also gives record labels beset with declining CD sales something new to worry about.

"Jay-Z is one of the few guys who could actually pull something like this off," says Steve Rifkind, founder of urban-oriented Loud Records and CEO of SRC Records. "Jay-Z is successful at everything he touches. His tours sell out. He knows merchandising. He's sold clothing.

"Some people may look at that number and say Live Nation is taking quite a risk. But I don't think so. Jay-Z is a proven winner."

Jay-Z's future business plans had been the subject of speculation since he stepped down as Roc-A-Fella/Def Jam Recordings president at the end of 2007, when his three-year contract expired. He still owes it one more album. His last, American Gangster, released in November, went platinum. He ranked ninth last year on Forbes magazine's annual Celebrity 100, earning $83 million on his various ventures.

Felicia Palmer, CEO and founder of hip-hop news site SOHH.com, says the immediate effect of the deal will be felt by record labels, which will have to protect their top artists from these new rivals. But she says it will be tough for even the largest labels to keep up with deals like this and previous Live Nation agreements with Madonna (a reported $120 million over 10 years) and U2 (estimated in the $100 million range but doesn't include albums or music publishing).

"Live Nation says the value here is really outside of record sales," Palmer says. "It's the concerts and other things that make it viable. Record labels, whose core business is selling records, are not really poised to exploit touring and merchandising to recoup the money that they would put up to match these deals."

For years, "labels bankrolled artists' businesses, but they were never vested in the artists' growth from a celebrity angle," says James Cruz, president of SRC Marketing. "The labels are seeing that they have to be more creative and decide who they want to be in business with for the long term."

Cruz, who manages such artists as 50 Cent, Busta Rhymes and Missy Elliott, says the deal is a boon to Live Nation as it pushes into the urban market.

"Getting in bed with Jay-Z is great for them, because he speaks to a different demographic and he speaks to something called the psychographic: individuals who might not be in the same age group, but think the same way."

Contributing: The Associated Press

Enlarge By Mike Segar, Reuters Jay-Z: He's not talking, but experts say both the rapper and Live Nation will benefit — and other labels had better watch out.

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