Subject: “360’ Deal” a.k.a. “Multiple Rights Deal”
Some of you may, or may not have ever heard of this deal before.
In the video I found at artistshousemusic.org, Clinical Professor of Music Industry at USC’s Thornton School “Mr. Mark Goldstein” gives an almost 6 minute brief about how this type of deal came to be in existence. This deal was materialized in thought first off by, “The Warner Music Group”, during the mid to late nineties. With their own rough first draft in place, one of the first artists to encounter this new deal and actually agree to it was the legendary artist we all know as Madonna (I cannot say I am her biggest fan).
The 360’ deal was not highly publicized or even brought to much light during the late 90’s time period. No one it seemed at that time was really paying attention, suffice it to say. The basic premise of the deal was brought forth in though for record companies (labels) to find a more lucrative way of capitalizing on different financial income generating streams, so that record companies (labels) could make more money off of their artists (have a bigger piece, chunk, or cut, of the pie).
For some artists this is not an overall issue, of which is really of great concern to. Artists like (Madonna, Jay-Z, and Robbie Williams), plus countless others, have been in these types of deals, for over the past 15 years in the music industry and when you achieve that super stardom level of fame and fortune, say like, (Lady Gaga, Little Wayne, Justin Bieber, The Jonas Brothers, and Madonna listed for those of you to be familiar with those artists of today reading this) then giving up more money in lieu of some of the other perks you might receive, is not an overall issue.
Unless you are an up and coming artist trying to debut, then things can become a bit, well muddied to say the least, from what I have seen as of late. Now according to Former CEO of Capital Records “Mr. Jason Flom” the reason for this type of deal is because “The record label is creating a career for the artist.” I have a problem with this statement and I will tell you why.
Yes in one instance I can see what he is saying but, when you stop and think about what he just said, is it that, they are truly creating careers for artists and giving them a platform to build a future upon or, is it that they are just looking to make more money off of artists in all aspects of revenue generation as another way to maintain control while giving these artists less and less? As you can tell there are some differing schools of thought on this subject matter.
All of this information was relevant and current as of 2007. Things significantly changed though in the year 2008. In that year the production company known as “Live Nation” which hosts numerous events throughout the U.S. and some parts internationally around the world, resurrected the seemingly almost dead “360’ deal.” Now a whole host of new artists are being told from the start that this is the deal they are getting now, no way out of it. Costs that have been associated with trying to break the deal are an astounding number you would not believe (almost did not believe it myself).
Recently in the past 10+ months I did some heavy digging around on this issue. I’ve read many articles on this story and I believe the biggest parts of information I have retrieved have been from artists themselves, who are not happy about this deal in the industry. What I found is a bit shocking! Simply for the fact that some of these artists are not being told particulars on some of the necessary information they need to know about.
Now in my own personal opinion here for a moment, I believe that if your not smart enough, as an artist, to see the reality of the way things are going, then you may wind up getting what you deserve in the end. If you need conformation of this fact please see, some of today’s younger talents that are always featured on shows like “Entertainment Tonight”, “The Insider”, and “Access Hollywood” and you will see what I am saying in how these artists are spending the money faster than it comes in.
Now following below is some of my findings on this unique subject matter. As of today (from what I am told by insiders) this deal is now an optional type of deal, but quickly becoming mandatory in today’s suffering economy and slumping music sales.
“In the “360’ Deal” an Artist, Band, Solo Artist, Musician, signs away almost all of their rights over their projects. The record label issues a contract that you (have the option) to sign, with lots of dollar signs usually, and in turn this is what they receive from you. They will take a cut, or portion (percentage of their own determination) of everything you make financially.
Everything from CD albums (Intellectual Property), Music Videos you may cut for Album Singles, Performances you do within and around the world, Online sales (Digital Downloads) of any albums you have ready and available for download, even Product Endorsements, and or merchandise (purchased from online Company Websites), so on and so forth.
What seems most interesting to me (enough for me to raise an eyebrow) is that they literally have this power over you for 10 years (one decade). You cannot break this contract. Nothing you make will essentially be yours in this time period. You will also have limited to no creative input in any of your projects that you are involved with.
Math breakdown: “360’ deal.”
Let’s say that you work for a record label, and you make $11 Million Dollars in net sales for them.
Let’s also say that they advanced you $1 Million Dollars up front before you began.
Now the $1 Million Advance Upfront has to cover costs that you as the Recording Artist incur (Promotion, Marketing, Living, etc.). The first $500,000 is the average price you will use to record your album. You then have the other $500,000 left over.
Well let’s say you pay your manager 20% Commission for the year, so he or she will see $100,000 Dollars in payment for that year. Of course you will have lawyers (entertainment attorney’s), and they are usually paid somewhere in the range of $25,000+ (USD) Dollars per year for their services. Yes folks, even when you are signed to a major label, you usually will almost always incur the costs associated with these individuals, not the label, they are on your team, so it is your responsibility.
So now you have $375,000 Dollars left to split between an average of 4 people (in a band) after all of these costs in the beginning. After income tax, yes folks, you have to pay tax on the money you earn, as this is seen as income by the I.R.S., you will then have $243,750 Dollars to split between 4 people after the usual government (33 1/3% Tax) and the appropriate taxes are taken out by the record company (label).
If you then take $243,750 Dollars and divide this between the average of 4 people that are usually in the band, each member in the band will take home a grand total of $60,937 Dollars.
Congratulations everyone, and for all of your hard work and sacrifice. You may have made your record label $11 Million Dollars, and all you will see of it will be $60,937 Dollars for the year. Not to mention the personal income tax that you and or each band member will be personally taxed each year on that principle amount.
The math gets a bit complicated when you really get into it but it comes out to a range of around $23.40 you will be paid from your major record label per every $1000 Dollars you make for them in the course of this “360’ Deal.”
And as “Mr. Walter Cronkite” used to say (for those of you old enough to remember)
“And That’s The Way It Is.”
References Cited:
#1. Goldstein, M. (November 2007). Mark Goldstein. “Are 360’ Deals Worth It?” artistshousemusic.org. Retrieved on this date of: January 23, 2011, from, artistshousemusic.org.http://www.artistshousemusic.org/videos/are+360+deals+worth+it
#2. Flom, J. (October 2007). Jason Flom. “Why 360 Deals Are Good for Major Labels” artistshousemusic.org. Retrieved on this date of: January 23, 2011, from, artistshousemusic.org.http://www.artistshousemusic.org/videos/jason+flom+former+ceo+of+capitol+music+group+on+why+360+deals+are+good+for+major+labels
#3. McDonald, H. (2010). Heather McDonald. “360 Deals.” musicians.about.com. Retrieved on this date of: January 23, 2011, from, musicians.about.com. http://musicians.about.com/od/ah/g/360deals.htm
#4. Jurgensen, J. (January 29, 2010). John Jurgensen.online.wsj.com. “The Lessons of Lady Gaga.” Retrieved on this date of: January 23, 2011, from, online.wsj.com.http://online.wsj.com/article/SB10001424052748704094304575029621644867154.html
#5. Cole, T. (November 24, 2010). Tom Cole. “What Exactly Is A 360 Deal?”npr.org. Retrieved on this date of: January 23, 2011, from, npr.org. http://www.npr.org/blogs/therecord/2010/11/24/131574836/you-ask-we-answer-what-exactly-is-a-360-deal
- JB BROCK
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