360 Music deals give labels their standard cut of CD and digital download sales, but also give them a percentage of event ticket profits, merchandise sales, endorsement deals and anything else that uses the artist’s brand or music.
A year ago they were still seen as controversial and experimental. Labels defended them as justification for investing in an artist in a time of decreasing CD sales.
Today, though, those deals are becoming mandatory. Warner Music Group CEO Edgar Bronfman told the Web 2.0 Summit audience that his label now requires all new artists to sign 360 Deals, and that about a third of their signed artists are under those contracts.
Bronfman argued to a hostile crowd that it doesn’t make sense for labels to pour money into artist development when CD sales, their primary source of revenue, continue to decline (although he did say that digital sales now make up 20% of their revenue). Without other ways to make money from an artist, he said, they wouldn’t continue to promote artists.
Bronfman also said that 360 deals give labels the ability to give away music for promotional purposes to spur event and merchandise sales.
And that, for me, is the key. Bronfman, an outsider to the music world until recently, sees the writing on the wall - music downloads will eventually be free, and will serve as little more than marketing collateral to other revenue streams.
360 deals give labels a place in the new music economy, and there’s nothing wrong with their attempt to keep their businesses alive over the long run. Artists can choose to go with them or not, depending on their own opinion of the benefits. If labels really can bring enough marketing and promotional benefits to the table, artists will take those deals. They may be slaves to the labels, but they have a chance (albeit a very small one) of becoming rich slaves, at least.
“360″ Music Deals Become Mandatory As Labels Prepare For Free Music