Does Live Nation have an answer for the troubled music industry?

It certainly appears to be confident that it does, betting the house in signing mammoth deals with artists like Madonna and U2 in recent months. Now, Jeff Leeds of the New York Times reports that the company is about to embark on its biggest gamble yet, a $150 million deal with rapper Jay-Z.

Live Nation will be providing financing for a Jay-Z entertainment venture as well as for recordings and tours for the next 10 years (when Jay-Z will be 48!), Leeds says.

"I've turned into the Rolling Stones of hip-hop," Jay-Z  told the Times.

Live Nation's bet is on rising touring revenue, as well as getting a share of merchandise, publishing, and related businesses. CD sales, for Jay-Z and other artists, have fallen off a cliff—and there's no safety net in sight.

And Live Nation will be backing the most entrepreneurial player in the hip-hop nation. Jay-Z sold his Rocawear line last year for $204 million, and he has had success with a chain of nightclubs. He was president of Def Jam Records before stepping down last year. Live Nation will get a piece of any new ventures.

Douglas A. McIntyre of the 24/7 Wall St. blog is skeptical, saying that "if he is no longer a popular rapper, he has lost the coin of the realm which makes new enterprises more easy to open."

Jay-Z, he says, should be paid in Live Nation stock. "At least then he could lose money too."

Indeed, investors have been lukewarm about Live Nation, a spinoff of Clear Channel Communications, over the past year. Live Nation had revenue last year of just $4.2 billion, and the margins in the concert business are very thin. A year ago, its shares were trading above $21, rising to $24 in October. Now they are trading just above $12.

But Martin Schaedel, a former venture capitalist, admires Live Nation for its boldness. "The price for acquiring real unique talent is almost never too high," he says on his blog.