Music Trends that concern Artists, audio engineers, producers, & musicians
The 360 Artist Recording or Deal
The 360 Artist Recording ordeal is arguably the most overarching deals that not only could make or break an artist, but record labels alike. However, it appears that today’s record label executives see this type of deal as their life jacket in an ocean of artists competing on a level playing field. Gone are the days of exclusivity and dominance major labels have long experienced in the music industry, and with it out went the traditional recording deal, which simply obligated an artist to achieve a multi-platinum selling status. Unfortunately, as record sales plummeted, labels began looking at greater exploitations of artists and their resources rather than adaptation through research, forecast, and transformational models. In this post, I am going to discuss the history of the 360 deal, the 360 contract, criticism of the 360 deal, and what the future holds for this controversial deal.
Historically, as early as 1950, record labels have been benefiting financially from their artist’s extracurricular revenue streams. 2002 marked the earliest 360 contractual agreement between an artist and major record label; however, more and more labels began to incorporate varying degrees of the 360 artist recording deals targeted towards new talent. Soon after, the 360 deal became the standard recording artist deal. This is due impart to the drastic decline of record sells resulting from technological advancements.
The 360 Contract is an agreement that provides a record label the authority to generate revenue streams from their artist at every degree of their artistic and professional endeavors. This includes revenue streams previously exclusive to the artist under the traditional recording contract. This contractual agreement provides labels with a vested percentage of artist’s earnings based on gross, adjusted gross, or Net income generated as dictated under the 360 deal.
Critics of the 360 deal agree that record labels have commandeered rights to their artist’s intellectual and physical properties. Labels are criticized for being ill-equipped while lacking management skills and developmental influence over artist ventures all the while reaping a financial harvest. This is contrary to the roles they have played in times past where they simply invested financially among other things. Labels have increasingly found themselves privy to financial shares generated from income areas beyond their scope and function. This is the major argument that is causing the most discord.
The 360 deal is the future, because record labels remain the major movers, makers, and shakers of the recording industry. They are king and the king has the final word. Recognizing this, labels also know that the 360 deal has become essential to their survivability. Moreover, the recording industry is gearing towards a social networking, service based, peer to peer model now more than ever. To this end, artists that desires the clout that a major record label provides will continue to line up for their opportunity to be siphoned of their artistic talents and virtues.
Artists that agree to the 360 deal forfeits a share of their revenue generated from a minimum of seven streams. These streams are as follows: “Touring, Merchandise sales, book publishing, Fan Club Fees,sponsorship money, promotional ventures,and Motion Picture Acting.” Additionally, collateral entertainment activities are important to understand and is defined as “activities in and throughout the entertainment industry , as a performer, singer, musician, writer, composer, author, publisher, lyricist, producer, mixer, re-mixer, DJ, producer or otherwise, including in connection with Tour Events, songwriting and music publishing, visual Performances, the exploitation of all rights related to such activities, including Personality Exploitations, and Merchandising Rights and Fan Club Rights.”
A few specific revenue sharing streams and their percentages are provided to give you a real world view of agreements offered by Warner Brothers, UMG, and Columbia Records. “Warner Brothers commissions an 8% share of publishing if the artist is not already signed to an exclusive publishing deal with Warner/Chappell, 9% share of revenues generated from Touring, with a de-escalation to 7.5% once 500K or greater is reached. However, reductions are applied if the artist earns less than 8K per night on de-escalations with 0% if earnings are less than 2K. 25% of other Entertainment net income and additional reductions thereafter on income generated after or as a result of the event.”
“UMG commissions a 25% share of entertainment revenue which is defined as; merchandising, endorsements, sponsorship, touring, acting, and music publishing. This includes a few exclusions that are both specific and general (i.e. one off events the pay 7.5K or less) to a given artist.” “Columbia Records commissions a 15% share of the artist’s adjusted gross earnings generated from acting, performing; merchandising, websites, fan club, endorsements, sponsorships, partnerships, books and magazines, video games , record production, record labels, or talent scouts.”
To get ahead of the issue of taking corresponding rights, Warner Music Group developed a service package which includes, “purchasing management companies, including a video production section, adding sponsorship brokerage firms, endorsement, licensing, mobile service partnerships, and website distribution networking.” This has blurred the lines that previously separated the roles of the artist, writer, record label, publisher.
The artist, writer, record label, publisher are no longer clearly defined due to a collapse in their traditional roles and functions. The 360 deal enables record labels the ability to benefit financially from areas they neither are willing to invest in financially, nor participate in developing. A typical artist under a 360 deal might also be required to share earnings from small businesses that they own or are in partnership in, such as beauty salons, or clothing designing. Beauty salons and clothing designing comes to mind because they are most prevalent in the music industry of today.
Artists are now called to audits at the request of the record label where all of the artist’s earnings are subject to review. If they happen to be artist/writers, the label often times will require that the artist arrange for payments from their publishing be routed directly to them. The artist/writer’s willingness to surrender their publishing and copyright protection to the record label diminishes their unique distinctions all the more. In my mind, this shows a cause for governmental intervention on behalf of the artist, who's aspirations clouds their logic. This is clearly approaching exploitation on a level of servitude. Artists that agree to this type of deal truly will not understand the magnitude of what they are giving up until their dreams come true in the midst of the 360 deal and they wake up to find that they have agreed to a nightmare deal.
Thankfully, recording artists of today have a viable alternative to accepting a 360 deal. With the advent of social media, an artist can build their own brand through peer to peer networking. Once the artist realize that they have the very same resources at their disposal, their future will be limitless. For a small fraction of what it would normally cost under a 360 deal, an artist’s music could be trending across the globe having never stepped foot on ground. I always say; “How else would a company like McDonalds become the brand that it is today if the creators didn’t take control of their vision and follow through doing what ever it took to bring it to fruition.”
In this research paper of the 360 artist recording deal, I discussed the history of the 360 deal, the 360 contract, criticism of the 360 deal, it’s future outlook, and my personal take on the whole idea of the 360 model. Recording Artists of today are confronted with a major decision when shopping for the deal of a life time. Perhaps they might just be shopping for a deal that they may regret for the rest of their life. 360 deal shoppers; buyers beware.