The “360″ Deal

» Posted by on Jun 21, 2013 in General | Comments Off

The term “360 deal” has gotten a lot of mileage over the last couple years in the music industry. “Mark thought I should write a blog on it so here we go. Lets answer the obvious questions: what is it; why is it here: what does it do, and should it be feared?” A “360 deal”  is an agreement between an entertainment company/record label and an artist in which they share in all forms of revenue streams available to that artist. “In exchange for the record label’s promises, they are rewarded with a percentage of recording, publishing, merchandising, tour, fan club and other entertainment related income. “The 360 deal is here because income from sales and licensing of music recordings are down dramatically.  A record label can no longer expect to earn significant income from one source and now seeks to partner in other areas.

The 360 deal operates by allowing the company to share in any percentages of income (of the defined areas) set out in the contract. It must be understood and if so, should not be feared.  The well negotiated artist deal will offer a higher than standard percentage of recording income to the artist in hopes to offset some areas of income now shared by the record company (i.e. touring.) Armed with knowledge, the 360 deal should not necessarily be feared by the artist. To the contrary, the artist needs to negotiate within the parameters of a mutually beneficial deal to obtain good representation, production and marketing from their record company’s partners.

The above is not to say that there are not evil 360 deals out there.  Sometimes described as a  land grab , 360 deals can go way too far.  For instance: Look at the record royalty and determine if it is average (baby act 12-15% of retail).  The artist should want to push this higher.   Are deductions associated with digital downloads?  I have personally seen packaging deductions tied to downloads when no packaging actually exists.  Is the deal 50/50 across the board for all non-record sales income?  That’s a heavy price.  In the end, get a knowledgeable attorney who is up on these deals and the digital age. As I have told clients for almost 21 years: Signing a good deal is good, but avoiding a terrible one is better.