360 Deals Aren't All Bad
Now, before you get your pockets in a bunch. 360 deals are not for everyone, but they are also not going anywhere any time soon. As much as we all frown upon 360 deals, trust me a few of your favorite artists have been signed to a 360 at one point or another, or may still currently be signed to one.
Now, what exactly is a 360 deal?
The 360 Deal, also known as a Equity deals, Participation deals, or Multi Rights deals is when the label gives said artist a large(hopefully large) advance, in exchange for a percentage.
A 'partnership' is formed between label and artist, many may say it's an unfair partnership but it depends on the deal and what the artist is actually looking to get out of the deal.
In most cases, the label does not sign the artist for a long period of time, but for a predetermined time or a specific amount of albums. The label pays for everything and invests in the artist as a brand that can be used as a source of advertising revenue. Basically, the label is loaning you money that they WILL GET BACK!
During this time, or until the artist hits certain benchmarks, the label takes a percentage of various streams of income that the artist produces, which can come from; recording, touring, merchandising, ancillary activities, publishing, books, movie/TV appearances, hosting etc..
Any and Everything.
Labels created these types of deal, out of necessity. When they realized not every artist is going to be around 1, 5, 10 years from now, but has an audience now and can generate revenue now. This thinking has resulted in labels trying to figure out how to maximize profit from artists , and minimize risk and loss. Especially for artists that the label "breaks" in and has invested large amounts of money in, they justify these 360 deals as a way of reassruring they get their
ROI(return on investment). When artists have been with labels from the start under "development" deals and are finally gaining traction, the label wants their money back, as soon a possible. The best way to achieve this is by taking a % of everything the artist does, because technically they may have helped get the artist to that point.
The artist that are most likely to sign these deals are artists without their own teams. Artist that want to scale their audience and grow at a fast pace may be attracted to label deals. Therefore, they need the label push their projects, fund marketing campaigns, plan touring, create merchandise etc.. Now, if you are ever presented with a 360 deal, know that you are able to negotiate certain things, such as, percentages given, the length of the deal, sale targets, distinctive social numbers, and what exactly they are getting a % of.
If done correctly, a 360 deal can be your way into a label situation, if that is your goal. During the term of your 360 deal, the artist can make sure to set themselves up to be in a better position when it's time to negotiate again. How? By building their own contacts and relationships that the label brings to the table. They can also make sure to learn as much about the business side of Music through these deals.
You never want to give the label complete control. You always want to make sure you have someone who has your best interest at heart always in the conversations, meetings, email threads, offices etc.. when the label is speaking with others on your behalf, and YOUR OWN LAWYER! Never use the same lawyer as the label, not only is it a conflict of interest but you become a small fish in a big pond.
On the flip side, 36o deals does give the label more of an incentive to support and push an artist, if they know they are getting a % of everything coming in, which means the more money the artist makes, the more money the label makes and faster.
If you are in a position to do everything on your own, and have the team, knowledge, and capital to fund your own career and are okay with the a slower, but maybe more impactful growth then 360's may not be best.
360 deals are not the best deals, but every deal and every label is different and has its pros and cons. What works for one artist may not work for another. Know what you are going into, understand your options, and always make sure you have an exit strategy in case things don't go as planned.
It is our hope that artists take their careers into their own hands and are able to gain as much knowledge as possible to protect themselves in the long run.
That being said, if you need more on the topic, or would like us to refer you to an entertainment lawyer please contact us at 360Info.