What’s the Deal on 360 Deals?

It’s no secret how musicians make money. Day jobs.

But musicians “lucky” enough to have recording contracts make money through other means; means that do not include selling records. Of course, some money comes from the sales of CDs and downloads, but depending on the artist’s contract, the album may never sell enough to recoup the advance received; especially with illegal downloads still rampant.

How else does an artist make money? Touring and merchandising. Some industry heavyweights take home about 30% of the price of the ticket and close to 50% of the profits off T-shirts and posters sold at the concert.

A few years ago record companies started wondering why they pay an advance and take the risk of developing new artists, and get none of the money from touring and merchandising?

Enter the 360 deal. Sometimes referred to as a “multiple rights deal,” this contract is becoming more and more common in deals signed with major labels.

A 360 deal is an agreement between the artist and the record label whereby the label shares in responsibilities other than creating the disc that holds the music. The label, in these deals, serves as a guardian of sorts over the act’s career. The record company will, supposedly, nurture an artist or band over the course of years, as opposed to looking for the quick buck with each artist. This means more time to develop your following, develop your music, develop your career.

What does the label receive for this good will? An increased share of the profits created by touring, merchandise, endorsements and so on. In fact, the deal Madonna signed with Live Nation even gives Live Nation a portion of her income from future movie or TV projects. U2 signed a deal with Live Nation last year which gave the company the rights to the mega-groups’ web site. So the labels say it’s good for the artists because they benefit from a longer career and the label has a bigger piece of the pie in the band’s career, i.e., earnings. Win-win?

The criticisms abound for these types of deals, but one question I’ve not heard: Could these deals truly signal the beginning of the end of musicians as artists? It’s clear that most of the people currently running record labels view music as a product as opposed to an art, but ten years from now, with record companies taking a percentage of everything, will we see artists being pushed into developing 4 perfumes, two sodas, and 6 sneaker lines over the course of a career?