U2's manager Paul McGuinness is the man behind the band's artist-friendly record and touring deals. He also carries considerable clout in the music industry. His current preoccupation is to find ways to make digital music work for musicians. He talks to BRIAN BOYD.

‘WE ARE a gang of four and a corporation of five,” says Bono of the band’s 30-year relationship with Paul McGuinness. U2 are looked up to by almost every other band for their streamlined business operation and the unique artist-friendly deals they have struck with their record label and publishing company.

It was McGuinness who realised the importance of the band owning the copyright to their songs and recordings (something even The Beatles never managed) and when the band were re-signing with their record label in the mid-1980s, they made this a condition of them extending their contract with the label.

When McGuinness began negotiating label and publishing deals for the band, he found – like many a manager before him – that the music industry is notorious for strongly stacking contracts in favour of the label and publishing company. Over the years he has shifted the balance of contractual power back to the band, and U2 now have unprecedented control over their affairs and one of highest royalty rates in the entertainment industry.

As the main shareholder of the band’s management company (Principle Management), a founder-shareholder of TV3, part-owner of Ardmore Studios and a member of the consortium that won the licence for the “alternative” Irish radio station, Phantom FM, McGuinness has broadened his base over the years.

He carries considerable clout within the music industry, and was one of the first high-profile figures to warn about illegal downloading and how it would severely damage the industry. He has spoken about how the legal download sites could be the industry’s saviour if managed properly and is critical of any industry move which seeks to “devalue music”.

For the new U2 album, McGuinness was intent on restoring a sense of importance to its release. “We will happily work with any technology which makes the release of the new record as interesting as possible,” he says. “But for U2, physical sales are still an enormous part of our business, and we still sell a lot of actual CDs.”

It annoys him that the record shops have been the big losers from the illegal downloading of music. “Wherever I travel now, I find that some of the really good record stores – Tower Records and Amoeba in Sunset Boulevard, Los Angeles, for instance – have closed down,” he says. “And then you now have situations where bands do deals to make their albums available exclusively in certain chains of stores such as Wal-Mart, Best Buy and Target. But what about the fans? There are no Wal-Mart stores in Manhattan, so the fan has to get into a car and drive to New Jersey to get the album.”

In line with his thinking on the importance of the physical product, the new U2 album is being released in five different formats. “There’s the vinyl edition, the standard CD edition, the digi-pack, the magazine and the box set editions,” he says. “The idea was to add on material to the editions that couldn’t be downloaded. There’s also something new in there, which is the Anton Corbjin film that will accompany the music. This came from Bono playing his iPod through his television set and realising that the blank screen could be used for something interesting.

“We got Anton Corbjin to make a film – there’s no dialogue or plot as such – but it’s something that will come up on your screen when you play the album. It’s a visual accompaniment – and a great way to use that free space on the screen.”

In a speech at the 2008 Midem music industry conference in Cannes, McGuinness spoke about how internet service providers, telecommunication companies, mobile phone handset makers and technology centres were building “multi-billion dollar industries on the back of content without paying for it”. He called on governments to make internet service providers (ISPs) accountable for allowing people to illegally download copyrighted content.

He believes that the recent Irish court case brought against the ISP Eircom by the major record companies (whereby Eircom agreed to terminate the broadband connections of people who persist in filesharing) will have far reaching effects.

“I think you’ll see that this will be the first of many court cases brought against the ISPs in Europe and America. The future should be a partnership between the ISPs and content owners where the ISPs collect revenues on behalf of the content owners.”