Today they New York Post carried an article about Live Nation's recorded music division and its search for a way to sell its music.

The one thing in the article that I did not know was that the recorded music division, Live Nation Recordings, was gutted last week. Bob Ezrin, Bob Cahill and Bill Hein, all hired by now-gone chairman Michael Cohl, were let go. (I don't believe that was reported last week.) With them gone, signals point to Live Nation outsourcing and licensing as much as possible, and more than the distribution deal the company was probably always going to have to sign with one of the four majors' distribution companies (that's what happens when you sign artists that appeal to older, CD-buying audiences).

No idea what this means for Zach Brown, the Atlanta-based artist who did a deal with Live Nation Records and currently has a song on the country chart.

The bigger question mark is what this means for Live Nation's operating margin. Concert promotion has the margin of office paper. Live Nation spends billions in order to break even (or lose a bit) on talent and make a few points on promotions, merchandise and other revenue streams. Recorded music is one of the rights that Live Nation plans on using to increase operating margin from its current four percent. But recorded music is only one of the rights (and not even one of the rights for the U2 deal).

Without recorded music, there would still be plenty of opportunity to increase margins. The Jay-Z deal, which Live Nation expects will bring in $340 million over ten years (a forecast based on historical data) with an 11% operating margin, includes ticketing, secondary ticketing, merchandise, sponsorships, endorsements, DVD, TV broadcast, fan club, website and publishing. Rapino told the WSJ's Ethan Smith the Madonna deal is modeled at a 9% operating margin.

If recordings are licensed to major labels for sales and distribution, Live Nation will have a harder time squeezing out much margin. There are other options -- retailer exclusives, for example -- and this would be a fantastic time to do something different than a typical retail strategy. If driving ticket sales is the goal, bundling or giveaways are options.

Live Nation won't be in the recorded music business for a few years, so it has time to figure these things out. Investors are not worried by the news. LYV was down 2.9% today and is up 15.5% since signing Nickelback on July 8 and is up 33.4% from its 52-week low earlier this month.