The 360 Deal- An Exorcism Won’t Help!!

By Camille Barbone

There was a time when a record label derived income from the sale of pre-recorded music and nothing else. But today, the labels have taken a page from a rare 2002 deal playbook making 360 deals the rule, rather than the exception. Simply put a 360 deal entitles record labels to revenue from music sales as well as a number of other income streams earmarked for the Artist’s bank account. 360 income can include merchandise, publishing, live performance, film, television, licensing, TV commercials, endorsements, sponsorships and anything else an artist can turn a coin doing. This “multiple rights” deal was predicated on the record industry's belief that it needed to replenish its earning power after it neglected to properly respond and react to new technologies and music delivery platforms. While crying “poverty” may seem ludicrous when you consider the earning power of the “only show in town” positioning of record companies, labels have indeed taken a hit due to the advent of online technologies such as streaming. Albeit not as big a hit as artists have taken but record companies exist in a constant state of instability because of ever-evolving technology.

The rationale of the 360 deal, from the label’s point of view, is that an artist will receive more attention, will get longer-term contracts and receive much-needed artist development expertise in return for a percentage of multiple income streams. If a 360 is the only type of deal on the table, and for the most part it is, then it may be necessary for the artist or band to bite the bullet, muffle the screams of outrage and sign on the dotted line.  

But there are ways to lessen the blow and minimize the financial hemorrhaging. You can take a bad situation and make it better, curb a label’s insatiable appetite for more and be in a better position if you hit it big and go the way of multi-media superstars. First, make sure an attorney or manager with a solid 360-negotiation track record is part of your team. Go after advances that are proportional to the percentages the label wants to take from you. Do not allow the label to collateralize your advances. Simply put, cross-collateralization means that the label can only recoup advances against the income stream for which the advance was given. To explain, if in the 360 deal the label gives you a $25,000 advance against publishing revenue, they should be limited to recoup that advance from publishing income only and not record sales, downloads, live performance, merchandise or any other income stream. 

 If you are killing it in the live performance arena and selling out shows all over the country, see if you can get that stream excluded. Exclusions are also referred to as “carve-outs” and your attorney or manager should be aggressive and go after them as if he or she was catering Thanksgiving dinner for a thousand guests. Just keep carving.

If touring is one of the 360 income streams, insist on the label’s percentage being based on Net NOT gross income, meaning that all touring expenses should be deducted before the label calculates its share.

Finally, be sure to demand that specific income stream are excluded if and when the label recoups the advance that you were given. For example, If the label advanced you $25,000 on copyright licensing and you have earned it back, make sure the contract contains language that stops that income stream once recoupment or repayment has occurred.

The 360 is a painful reality in the Music Industry but it is a reality none the less and pretty much here to stay. Understanding the business from an artist’s creative point of view is difficult. As a coach with a lifetime of management experience, more and more artists come to me to get a handle on the business of music. It’s your life. Make it work for you. Learn so that you can earn what you feel your art and soul are worth.