FORTUNE Exclusive: Inside the Business of the Rolling Stones; Story Reveals Why Stones Keep Touring--and How They Make More Money Than Any Other Band.

Business Editors

NEW YORK--(BUSINESS WIRE)--Sept. 17, 2002

What CEO of a large, multinational company can swivel-hip his way through "Midnight Rambler?" The Rolling Stones' Mick Jagger, that's who.

And though some may think he's getting a trifle old to rock and roll--he'll turn 60 next July--from a business perspective Jagger and the Stones are at the top of their game. The band, far and away the most successful act in rock and roll today, is a thriving enterprise--"a combustible mix of talent and intense labor," writes FORTUNE editor-at-large Andy Serwer in "Inside the Rolling Stones, Inc.," an in-depth look at how the band dominates the business of rock and roll. The story appears in the September 30 issue of FORTUNE, available on newsstands September 23 and at www.fortune.com on September 15.

Since 1989, the Rolling Stones have generated more than $1 billion in gross revenues, a total which includes record sales, song rights, merchandising, sponsorship money and touring. The Stones have made more money than U2, Bruce Springsteen, Michael Jackson or the Who--more than any band, with the possible exception of the Beatles. And unlike some groups, says Serwer, the Stones carry no "Woodstock-esque, anti-business baggage." Instead, they have deep roots in American business, cutting deals with Anheuser-Busch, Microsoft, and Sprint. And like many other large businesses, the band is global, pays taxes--grudgingly--and litigates.

"Spend time with the band's senior entourage and you quickly realize how the Stones got so market-wise," says Serwer. Though Mick Jagger attended the London School of Economics, "his greatest talent, besides strutting and singing, is his ability to surround himself and the band with a group of very able executives."

The Rolling Stones, reports Serwer, are a private and secretive organization, and many of their executives, such as chief financial officer Joe Rascoff, tour manager Michael Cohl, and Prince Rupert Lowenstein, a London-based banker who has been the band's business advisor for over 30 years, stay out of the public eye. But they are crucial when it comes to "interlocking" the various businesses linked to the band: touring, merchandising, publishing rights, etc. They oversee a group of four companies--based in the Netherlands, which has a more favorable tax code than the U.K.--each dedicated to a particular side of the business

Touring, which today is totally professionalized, complete with immigration lawyers, a staff of travelling accountants, and real-time budgets, is the biggest money-making part of the Stones' operation. Since the 1989 Steel Wheels tour--when Cohl took over managing the band's shows--the Stones have grossed over $750 million on the road. Though exact profit margins are hard to come by, it's safe to say that tens of millions of that total flowed directly to the band members, according to Serwer.

When Cohl took over, new streams of revenue were created by selling skyboxes, bus tours, and TV deals, as well as through innovative merchandising. Cohl also brought in corporate sponsors like Volkswagen and Sprint. Most importantly, he stitched these operations together, through cross-promotion and the like, to maximize their earnings power. The Steel Wheels tour itself made over $198 million, a record for a rock tour.

On the new Licks tour, which kicked off in Boston last week, the band will play three types of venues: stadiums, arenas and small clubs, each with a unique set of songs (they've rehearsed over 130 for this tour), staging and lights. Revenues from Licks won't approach the monster Voodoo Lounge tour in 1994/1995, which brought in close to $370 million, nor the 1997/1998/1999 Bridges to Babylon tour, which did over $390 million. But merchandising will be more sophisticated than ever, with about 50 items available.

But with tours only happening every few years, the steady profits--"the Microsoft part of the Stones business empire," according to Serwer--come from performing rights. The Stones have dozens of songs that are played on FM radio, still a vibrant medium. And anytime a song is played--at a skating rink, on a jukebox, at a club--the Jagger/Richards cash register goes "ca-ching," says Serwer. All this--the tours, the records, the rights--have made the Stones the wealthiest rock band on the planet. Jagger alone is said to have a fortune of some $500 million.

"So what keeps the Stones going?," asks Serwer. "Money, yes. But the band could make big bucks simply by licensing commercials instead of touring. Going on the road is about ego gratification." And when the Stones stop touring, concludes Serwer, "it will mean not only the end of the world's greatest rock band, but also a winding down of the most successful enterprise this crazy business has ever known."

Complete interviews with Mick Jagger and Keith Richards will be available at www.fortune.com, along with related features not found in the magazine.