How 360 Record Deals Work in the Music Industry
In the music industry, 360 deals, are contracts that allow a record label to receive a percentage of the earnings from all of a band's activities instead of just from record sales or money-making activities that the record label had a hand in.
How a 360 Record Deal Works
Under 360 deals, which are also called "multiple rights deals," record labels may get a percentage of revenue that may have been previously off limits to them, such as:
- Digital sales
- Tours, concerts, and live performance revenue
- Merchandise sales
- Endorsement deals
- Appearances in movies and television shows
- Songwriting, lyric display and publishing revenue
- Ringtone sales
In exchange for getting a bigger cut from the artists they represent, the labels say they will commit to promoting the artist for a longer period of time and will actively try and develop new opportunities for them. In essence, the label will function as a pseudo-manager and look after the artist's entire career rather than only focusing on selling records.
Similar to traditional recording agreements, the 360 deal allows the label to acquire the copyrights in the artist’s recordings and options for multiple albums. In addition, the 360 deal agreement also includes the traditional deal agreements where producer royalties, net sales, foreign sales, reductions for packaging, budget records and "new technology" are all deducted from the artist's royalties.
Under traditional deals, artists would be paid a small royalty by the record label, which was even smaller after all the deductions were made for producing an album or track. Unless the artist's album was a major commercial success, no recording royalties were expected for the artist. Instead, profits from publishing, merchandise, touring, endorsements, and other sources of revenue all belonged to the artists.
The Controversy Around 360 Deals
360 deals are controversial for a lot of reasons. First of all, they're often seen as a cynical money grab by labels that are facing dwindling sales and high overhead. The charge is that labels have survived a long time without these kinds of deals, so it would seem that they're suffering from a failure to manage their businesses and react appropriately to the changing industry — asking the bands to foot the bill hardly seems fair.
Other people object to the whole "band branding" notion that makes 360 deals so potentially profitable for labels. A great example is the all-female burlesque-group-turned-successful-music-group, The Pussycat Dolls. The expansion and branding for the group was a huge success by music business veteran Jimmy Iovine as executive producer, alongside Antin and A&M Records president Ron Fair — but where exactly did the quality of the music fit into the big picture?
Record labels counter that these kinds of 360 deals let them sign different kinds of artists because they don't have to be so focused on recouping their investment from album sales. They can stop chasing the instant number one and work with an artist for the long haul because they don't need to rely on big sales figures alone to make signing the artist profitable. Controversial or not, 360 deals are becoming increasingly common in major label contracts.