Entertainment Law

The Rise Of The 360 Deal In The Digital Age

Once music went digital, labels began losing money due to a drop in album sales, and to make up for these costs, labels found a way to take a cut of all profits with 360 Deals.

Modern music offers a wide variety of innovations, genres, styles, and sounds that are more available to the public then ever before.  Not only has the Internet made this wide world a smaller place, but technology has made it both easier and more affordable for bands and artists to record their music at home.  In one classic Weezer song, Rivers Cuomo sings:

“In the garage, I feel safe.

No one cares about my ways.

In the garage where I belong.

No one hears me sing this song.

In the garage.”

Artists primarily have three options today. First, an artist may never leave the safety of his garage and his music would never reach the general public.  More likely than not, artists want to have their music heard.  To do this, an artist can either take a “do it yourself” approach, or sign a 360 Deal (assuming someone is interested in signing that artist).  360 Deals are the norm for record labels today.  In fact, both majors and indie labels use them, and even non-label organizations such as Live Nation have signed artists to 360 Deals.

360 Deals are contracts where the record label gets a cut from all of the artists profits: record rights, touring, merchandising, sponsorship, endorsements, fan clubs, music publishing, and the list goes on.  Many artists feel like 360 Deals are like signing their lives away and would rather take the “do it yourself” approach.  However, there are multiple advantages to the 360 Deal as long as an artist signs the right contract.  Namely, the artist will have an experienced organization label perform all the functions an artist needs to go big.

While 360 Deals are the norm today, this was not necessarily the case just a decade ago.  Where did these Deals come from and why are they so common now?  A good place to start is Motown.  Berry Gordy, founder of Motown, was at the forefront of the 360 Deal.  Motown managed the music, touring, and just about everything else for its artists.  Other forms of 360 Deals that took place in the 60’s and 70’s include the made-for-TV groups such as the Monkeys and the Partridge Family.  A record label or TV network creates the band, then the label writes the songs, manages and controls all the touring for the band they created.  This style of a 360 Deal is present today with groups such as the late 90’s Backstreet Boys, and the winners of reality shows such as American Idol.

Though hard to believe, music was not always instantly available on a computer.  Until recently, consumers were not able to buy just the single they wanted, or have access to any song legally for free.  In that distant age (pre-2001), labels did not use 360 Deals all that often.  An artist would sign a record contract and the label would receive a cut of the record sales.  The artist would then be free to have whomever he wanted to manage touring, merchandising, or even song writing.  This all changed once music went digital.  Labels began losing money due to a drop in album sales, and to make up for these costs, labels found a way to take a cut of all profits with 360 Deals.

Not all 360 Deals are the same.  While some artists have signed their lives away, other artists, such as Paramore, have become amazingly successful with a 360 Deal.  They have had several singles, play a busy tour schedule at large venues, and have merchandise sold in retailers across the country.  While 360 Deals are sometimes viewed negatively, this is not the music industry of old.  An artist is more capable of managing the “do it yourself” approach to making it in the business, and records deals are not as necessary as they were for artist ten to fifteen years ago.  This gives today’s artists leverage to wait and strike the right 360 Deal for them.  Both major and indie labels are now more capable of managing each facet of the music business, and with touring companies like Live Nation participating, artists can receive a large boost from today’s 360 Deals.