Rewriting Record Contracts: The 360-Deal

Since 2001 record sales have staggered in decline at an estimated 25%. Record labels invest a large amount of money into acts, and for the past few years it has not being paying off. What once was a deal of artists agreeing to hand over about 85% of album shares, but pocketing profit from tours, merchandising and publishing has been morphed into what is called the “360-Deal” or the “Multi-Rights Deal”. What this means is that not only do record labels get about 70-85% of album sales, they will also receive a cut of tour sales, merchandising, and publishing.

The 360 Deal allows labels to capitalize on artists as a brand and push more paths of revenue, thus giving the label more incentive to push the success of an act and market them in every way possible( this is due to the growing "mogul" trend amongst most current artists). The label will now own the act in everything they do and pocket a rough estimate of 30-50% of net earnings.

Well what exactly does that mean? Here’s a break down of a typical 360-deal:

Album Sales: The artist will get somewhere between 15-30% which is an estimate of $1-$3 per album sold. The larger percentage goes into the label’s pockets and covers production expenses.

Publishing: Artists get about a dime for writing their own songs and music, more if the song is featured in film or television. The labels now get a cut of that.

Touring: After all standard “touring” expenses are covered (travel, equipment, set costs, staff) the label will now get 10% of what’s left over

Merchandising: We’re no longer just talking T-shirts here. We’re talking endorsement deals, clothing lines, fragrances, energy drinks.. whatever the artist puts it’s name on the record label takes 10% of.

So what’s the verdict of the 360-deal? Is it healthy for new artists or is it screwing them over royally?

At first thought one may think the artists are getting screwed in the 360. It’s not terribly difficult to gain recognition as a musician these days with the phenomenon of Internet marketing and music distribution. An act can simply upload a video on Youtube or add their songs to Myspace and create a nice-sized fanbase without the help of a label.

On second thought, digging in deeper to the specifics of 360-deal the advantages are kind of handsome. The label now has more incentive to work harder for an act because they are now a major investment. In the 360 acts are groomed more carefully in hopes to promise longevity and success in their careers, music and otherwise. They are marketed in more ways than ever, and marketed harder; in order to push sales and generate profit. To cover the inevitable lack of initial finance acts will also receive a larger advance and up to 30% of album royalties (double the standard percentage).

Whichever side you decide to take 360 is spreading throughout the music industry like wild fire. Robbie Williams as a 360 contract, as does Madonna, the Pussycat Dolls, Cartel and Paramore. Labels are even on the lookout over Internet blogs in search for the “Next Big Band Brand” scouring through emo, indie, pop-punk and jam acts. The reason being that these types of bands collect large fan bases quickly and do well on tours and in merchandising, which means more cha-ching for the labels. So be on the lookout if you’re e-promoting your band you just may be 360-ied