McGuinness helped U2 find everything they were looking for

"A gang of four but a corporation of five" is how U2 singer Bono always described the band's relationship with manager Paul McGuinness.. But with McGuinness standing down as manager the band will be looked after by concert promotion giant Live Nation, with Madonna's current manager, the formidable Guy Oseary, taking over day-to-day management of U2.

The music world is now a “radically different place” to the one in which McGuinness guided U2 to stardom, and with the band due to release a new album early next year “this makes perfect sense”, a well-placed source said.

As bands look to concert revenue, merchandise sales and digital outlets to compensate for the worldwide slump in album sales, a company such as Live Nation is best placed to guide U2 through the new economic landscape.

Transition
U2 have worked closely with Live Nation since 1997, with the company handling all the band's touring and merchandising revenue, so the transition to management of the band is likely to be smooth.

McGuinness (62), who was educated at Clongowes Wood College and TCD, first met the band after a 1978 gig at Dublin's Project Arts Centre. Having managed the folk-rock band Spud, McGuinness was looking for what he called a "baby band" to shepherd to maturity. Uncertain about U2 before he met them, he recognised their potential as soon as he saw them perform, and agreed immediately to manage them.

In 1981, before the release of U2's second album, October, McGuinness had to talk Bono, the Edge and Larry Mullen out of breaking the band up – the three members, who were committed Christians, felt a rock lifestyle was incompatible with their faith. McGuinness was also responsible for focusing their attention away from the UK market to the US, where they broke big with The Joshua Tree in 1987.

He was behind U2's first major financial coup, when Island Records was unable to pay £5 million in royalties for The Joshua Tree. Band and manager got 10 per cent of Island instead and when the company was sold in 1989 this netted them £30 million.

Five-way split
While most bands pay their manager a percentage of earnings, from the start U2 and McGuinness split their money five ways.

While the band never wanted their music used in advertisements, McGuinness got them into "partnership" deals with Apple and BlackBerry. Following the last government's decision to cap artists' tax exemption in 2006, the band moved some of their music publishing to the Netherlands to minimise their tax liability, a move that remains controversial.

Besides U2, McGuinness has managed acts as diverse as PJ Harvey, Paddy Casey and the Rapture through his company, Principle Management.

Live Nation is reportedly paying $30 million for Principle and Madonna's management company, Maverick. The tour behemoth has long proved itself to U2 – the band's most recent tour, 360, was the highest-grossing music tour in history, taking in more than €550 million in ticket sales.

Oseary is preparing the promotional campaign for U2’s new album, due in the spring with a world tour to follow.