Artist you must read this...
Music Row Lawyer (C. Stephen Weaver)
The '360' Record Deal
By now I'm sure you've heard and/or read about the '360' record deal. There are at least two approaches to this type of deal. One is where the Record Company will not only control and profit from the sale of the artist's recordings and related products, but will also participate to a greater or lesser degree in the Artist's non-record income streams (e.g., touring income, merchandise sales, endorsements, songwriting, publishing, etc.). The label's non-record income participation in the more modest type of deal is usually relatively small. The Label simply gets an override percentage from all artist income streams. The argument is that it is primarily the Label's marketing and promotion efforts that are driving the upward value of all income streams and that they are taking the biggest financial risk. The Labels argue that they will be able to put more development and marketing money behind the new artists.
However, there are "360 deals" and there are "360 DEALS"! The latter is the second type where the record company not only participates in non-record income as much as allowed, it "partners" with the Artist both in sharing the profits and in the decision making in as many areas of the Artist's career as it can get the Artist to agree to. The Record Company's share of non-record profits might run the range from 5% or 10% of the Artist's Net income to as high as 50%. Most beginning Artists will have no real strength when it comes to this type of deal. The Label will have all the negotiating power. The Label has the money and is taking the biggest risk -- and can therefore pretty well have its way with the new artists. But there is really nothing new about that is there now? Artist lawyers and managers who find themselves in this weak bargaining position can only do the best job they can, in the back of their minds only hoping for that their Artist will experience success so phenomenal that the deal can be renegotiated later.
I and a major manager just finished negotiating one of the power 360 Deals with a Major Label. We certainly have the experience and reputation to take this on, the manager with over 30 years in the business and me with over 25. It took over 2 months of almost daily negotiations, both by telephone and email, just to come to an agreement on the major deal points. I'm afraid part of that might have been because of the newness of this type deal to all of us. And by "us" I mean not only the Artist representatives but also the Label.
We are on a new frontier. It will be a difficult adjustment for some of us -- maybe all of us. I can only believe, however, that these types of deals are the future--both in the sense of what will be and in the sense of what will be at least a partial answer to the woes of the record busines. These deals will be modified with experience and time. Those of us who have the experience and years in this business will have to adust our thinking and get beyond concepts of what seems "fair" by yesterday's standards and get in the game to help Artist's and Labels both survive and prosper. We all still need the Majors as the surest way to beat the odds and reach the widest audience for exceptional artists. Instead of whining about the changes, I choose to jump in and continue to the best job I can for my clients--under any model presented to me.