360 deals, or multiple rights deals, can take many forms. At their core, a 360 deal is one in which a single entity (such as a record label or promoter), negotiates a contract with an artist to receive a percentage of the artist’s income from various sources, such as concert revenue, merchandise sales, endorsement deals, publishing, and more.

360 deals can be a good option for some artists. Concert promoter and live venue owner Live Nation famously signed Madonna, Jay Z, and Shakira to 360 deals in 2007-2008 for massive upfront advances. (The $120 million they reportedly paid for Madonna over 10 years was much more than Warner would have paid for her.) But the jury is still out on whether a 360 deal is in the best interest for nonsuperstar artists who depend on this nonrecording income for survival.

For labels, a 360 deal is a hedge against the downfall in traditional record sales. 360 deals have been viewed by some as a money grab by the labels, particularly if the labels are not providing value in the areas where they are taking a percentage of income. Labels counter that 360 deals provide an additional income stream, which they can use towards extending the marketing campaign for their artists, as well as allowing them to work with a broader pool of artists. Many artists are firmly against the 360 trend. “Artists should never give that money up,” says Natalie Maines of the Dixie Chicks. “The companies are all scrambling because of the Internet, and they will screw the artist to meet their bottom line.

One of the most significant changes occurring within the music industry is the opportunity that independent musicians now have to pick and choose partners to help them further their career in specialized areas, depending on their needs and what stage they are at in their career. In effect, creating a “360” deal with themselves. No longer are labels the sole gatekeepers of marketing, distribution, and sales.

Interview with Don Passman

Don Passman

Don Passman is an entertainment lawyer who has represented some musical titans, including R.E.M., Tom Waits, Tina Turner, Quincy Jones, Green Day, Bonnie Raitt and many more. He’s also an author who has written one of the most thorough and practical guides to understanding the music industry. His All You Need To Know About The Music Business is now in its 7th edition.

 

Mike King, Berklee Professor and Author of the Music Marketing Book, recently interviewed Mr. Passman to discuss his thoughts on traditional label 360 deals.  The following is an excerpt from that interview:

Mike King:  The major labels’ traditional source of revenue, selling recorded music, is drying up. 360 deals are viewed as a way for labels to engage in other revenue streams, but are 360 deals a good option for artists? Is that something that an artist should be interested in if they are going to be signing a development deal with a major?

Donald Passman:  Whether they are interested in it or not, if they’re going to sign with a major or even an independent, they will have to make one of these deals, as none of these companies will sign them without it. The labels are essentially trying to position themselves as branding companies, and are saying that they are not just a record company; i.e. we’re people that are investing in your career, we’re going to help you build your brand, and when you get benefits from that brand we should share in them.

Mike King:  This seems like a contradiction to me. The majors have downsized over the past few years, they have fewer resources, yet they are promising more with the 360 deals. Can they deliver?

Donald Passman:  No. In fact, they quit making promises a while ago. They started out by saying they would give you more attention, that they would give you a better record deal if you gave them 360 rights. They wanted the 360 rights to hedge their bet. That’s all gone. Now it’s just a record deal that looks pretty much like a stand-alone.

Mike King:  Are you saying that if you provide a label with the rights to merchandising, touring, or ticketing there is no guarantee they will provide in turn marketing support and help increase new sources of revenue?

Donald Passman:  Correct. There are two kinds of 360 rights, active and passive. Some of the labels are actually taking the merchandising rights to manufacture and exploit, some the publishing rights, and others are just taking a part of income–meaning that you make your own deals for a piece of the pie. In the situations where they have a merchandising company, they are of course going to give you those services. They’ll do the manufacturing, the distribution, and the marketing. If they have a passive interest, however, they’re not really going to do anything.

Mike King: That looks like a pretty tough deal for artists. In the past, the only possible option was to work with a major label to get worldwide distribution, marketing support, tour support and more. So, do you think that now is a good time for artists to be working with independent labels, which might be less constrained by the concept of multiple rights?

Donald Passman:   Well, the independent labels have gotten just as aggressive as the majors in terms of 360 rights. So you don’t actually get much comfort by going to an indie label. You may make a better deal, but they are still going to want the 360 rights as well.

Is there another way?

For Musicians and Songwriters, most labels (independent and major) require artist to sign 360 degree deals.  The best way to get out of it is for the artist to develop a career on their own.  We will be discussing different ways for artist to develop their own careers over the coming weeks.   Sign up for our Mailing List to be notified when new articles are published.

About the Foundation for Musicians and Songwriters

The Foundation for Musicians and Songwriters is an IRS 501c3 Public Charity that is dedicated to helping Musicians and Songwriters develop their careers in the Music Industry.  We do so without taking a penny or rights from the artist we represent.

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Jimmy Kerr is President and CEO of the Foundation for Musicians and Songwriters. He is a tech entrepreneur who has started dozens of companies including Orbitz.com. Mr. Kerr is a musician and Berklee College of Music trained Recording Engineer and Record Producer.