The 360 Deal: Is signing one with a major label really worth it?

2010-08-23T15:36:00.000-07:00

This posting is courtesy of PhrozenPharaoh.com originally posted 3/1/2010

Picture this scenario:

Let’s say you are an up and coming artist who has laid a solid foundation for yourself. You have a marketing campaign in place that is yielding great results. You are performing regularly, and sales of your music constantly rises each week. Your grind has grabbed the attention of your local fanbase and even generated interest from XYZ Music Group, a major record label. Through your excitement and visions of being the next star on MTV Cribs, you hear them offer you a 360 contract. The A&R executive says this is a good thing and standard practice for the label’s new artists. What’s your next move? Do you simply have your manager and lawyer look it over while you stress to them you really want to sign? Or, do you take the time out to fully understand what is being offered to you?

By definition, the 360 deal (also known as the “branding deal” and “multiple rights deal”) is a commonplace practice due to the decline of CD sales. In order to find new ways to make money, record companies are now experimenting with different avenues to generate income from the marketing and branding of the newly signed artist. The reason behind this is the company’s logic that if it were not for their hand in the development of the artist, the artist will not be able to secure income or succeed in other ventures.

Unfortunately there are many artists who are oblivious to the legal and economic implications of a freshly inked 360 deal. Their focus is their affiliation with a major label. They are signed! There is the looming assumption that the marketing and distribution team of their new label will guarantee success. Let’s be real, folks. The good ol’ days of going to auditions in someone’s basement for a hit and becoming an overnight success are gone. The notion (and security) of signing over your music with a guaranteed royalty check are gone. Guest appearances on television, radio, and other outlets is on the fast decline thanks to digital downloads. Live shows and concerts, remain one of the top extra income generators left from that era. In short, signing a major deal in today’s industry is complicated.

It is important when going into potential contract negotiations with a label that you fully understand the basics of the 360 deal. It is also important to know what the company considers “income.” This should be one of the first questions asked and discussed. Whatever money you earn, a percentage will be given to the company. They will want a percentage of your merchandise sales, endorsements, concerts, and online sales, etc. Labels are now laying off their staff at an alarming rate but still will want the same percentage from the artist as if they were fully staffed. You need to know if that percentage is set or tiered. If it is tiered, make sure you fully understand the limits as to how much you must surrender over to the company. Gain an understanding of who is on your marketing, branding, and promotions team. Ask about their experience and, if possible, who they have worked with in the past.

There is an upside to landing a 360 deal, however. The record companies are more likely to offer long term deals to the potential artist with the hope of developing new avenues for the artist to make more money, and, in turn, the company. If you go along with the label and get your name and brand out to the masses when the time comes to redo your contract you can then negotiate a lower percentage rate that will be paid to the company or leave completely and work as an independent artist.

“As always, Walk with Kings!”

Everything Music

The 360 Deal: Is signing one with a major label really worth it?