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Exploring Music Contracts: What Is A 360 Deal?

July 31, 2023 
Last Updated on July 31, 2023

In the music industry, many different types of contracts signed between the artist (or band) and the record company exist. Some of those deals have a reputation for being a potential rip-off, but how about 360 deals? What is a 360 deal anyways?

A 360 deal (sometimes known as multi-rights) is an exclusive contract that entitles a record company to a percentage of the artist’s revenue streams. These revenues include live concert ticket sales, merchandise, publishing royalties, endorsement deals, etc.

In this article, we dig deep into this type of music contract and give you some tips on navigating such a deal. So, keep reading.

What Is A 360 Deal?

Music artist in the studio in front of a microphone laying down tracks.

As the name suggests, a 360 deal involves everything, not just the artist’s music sales. It gives the record company rights to have a cut of all the revenues a music artist makes from all types of ventures.

Mainly, there are two types of a 360 deal. The first type is where the label takes a commission on all the artist’s income sources without managing them. It’s a type of deal favored by major U.S. labels, such as Sony, Universal, etc.

Depending on how the negotiations go, such a deal entitles the record company to 10%–35% of the artist’s net revenue.

The other type is where the label gets involved directly in all the parts of an artist’s career. It acts as the manager, publisher, producer, and so forth. This kind of contract usually involves the transfer of exclusive rights, which isn’t the best.

Generally, record labels spend an enormous amount of time and money on promising artists at the beginning of their careers. A 360 deal is just the label’s way of recouping what they’ve spent gambling on the success of particular musicians.

In return for such a deal, the company provides support to the artist, including promotions, marketing, and touring. Unlike traditional recording contracts, a company supports artists up front with a much larger investment.

However, if you (as an artist) aren’t careful, similar deals may not be the best thing for your career. Thus, you might want to steer away from suspicious businesses that may prey on your need to become successful.

Ventures of revenue a 360 deal benefits from include:

  • Publishing
  • Digital sales
  • Touring and concerts
  • Streaming royalties
  • Endorsement and advertising
  • Acting and TV appearances
  • Merchandise

360 Deal History

Back in the day, record contracts were much less complicated. They only gave labels the right to have a percentage of the record sales. On top of that, a record company could only make money from any revenue-generating activities they were directly involved in.

Otherwise, artists were on their own, cashing any revenue from other deals to themselves.

Yet, after the significant decline in music album sales in the early 2000s, other types of deals emerged. That was a result of the music marketplace transitioning from physical to digital sales. After all, record labels needed to find other ways to make a profit.

According to the head of Silent Majority Group, Jeff Hanson, the first 360 deal with a new artist was for the rock band Paramore. At first, the band and their label, Atlantic Records, were resistant to the idea. However, Hanson was able to make it happen.

Having said that, other major 360 contracts signed in early 2000 included Robbie Williams’s deal with EMI and Live Nation’s deal with Madonna.

Related Article: Music Sync Licensing: How To Make Money From Your Music

Pros And Cons

Some artists prefer to take it slow and grow to fame at their own pace. On the other hand, many musicians dream of touring the world with millions of dollars in marketing budget.

A 360 deal with one of the top record companies might be your ticket to success, but is it your best choice? Take a look at the advantages and disadvantages of such types of contracts.

  • The record company acts as your manager, so you don’t need to worry about finding someone to manage your career.
  • They enable you to have the time you need to work on creating your art and develop as an artist.
  • Depending on the contract terms, you may not have to cover all your costs (the company can book tours on your behalf and market your merchandise).
  • They give you the needed experience to become successful as an independent artist later on.
  • They give you access to industry professionals, from marketing professionals to producers and engineers.
  • The label’s relationships with other media companies give you many exposure opportunities to make more money.
  • The record company takes a percentage of everything you make (that’s why you should negotiate the terms of non-music-related revenues).
  • You may lose your music copyrights and spend years fighting for them afterward.
  • You may also have to give up creative control over your music (the production methods, track lengths, how the songs sound, etc.)
  • It’s only you to blame if the music isn’t a huge hit or your concert doesn’t make the desired ticket sales.
  • Some companies may try to take advantage of you (that’s why a lawyer should be present to review the contract).
  • Although the labels have the right to drop the deal at any time they see fit, you don’t.

How To Navigate A 360 Deal

Now that you know the pros and cons of a 360 contract, it’s important to learn how to navigate such a deal. That’s because, as a new artist, you need to ensure that you still get to make money after the company’s cut.

So, take your time to understand the contract terms and look for exemptions. For example, if you have a non-music business that the company has nothing to do with, it shouldn’t count as a source of revenue in the contract.

Such a tricky part can be disguised as a blanket term in the contract. That’s why hiring a lawyer is a great idea, especially one who’s familiar with the industry.

A good lawyer guides you through these kinds of deals and discusses the terms on your behalf. What’s more, your lawyer can spot any contract flaws and negotiate better terms for your own benefit.

If you already started making revenue as an artist, this increases your chances of landing a decent 360 deal.

Here are a few tips to consider before negotiating a 360 deal.

  • Avoid cross-collateralizing the revenue and aim for having separate accounting.
  • Strive for fair terms and retain your rights by clearly defining the splits on paper (make sure the exact numbers are clarified on the contract with no vague terms).
  • Don’t hesitate to negotiate the terms and demand additional perks in exchange for the percentage requested.
  • Negotiate the number of income sources covered by the agreement.
  • Try to reduce the percentage requested by the label.
  • Secure a favorable contract length for non-record income.
  • Exclude pre-existing revenue sources (for example, actors pursuing a music career should exclude their acting income from the contract).

Alternatives To 360 Deals

Several music records sitting on a table.

If you think a 360 deal isn’t suitable for you, there are many other alternatives. Check out the following most common types of music contracts and what they entail.

1. Recording Contracts

This is the old-school type of music deal and is often quite specific. Containing tons of papers, such a contract isn’t as common as it used to be. This kind of deal is usually more beneficial to the record company. Yet, it includes paying a generous fee to the artist to sign the contract.

2. Artist Development Deals

Also known as a demo deal, it’s where the record company invests in the development of a promising new artist. Since the artist is still unknown at that point, these types of deals are often kept private.

3. 50/50 Deals

This is one of the best options available for artists. Also known as profit split deals, 50/50 deals obligate musicians to give half their revenues to the record company. At the same time, they entail artists to recoup at all costs.

4. Anti-360 Deals

This type of deal lets the artist have it all in exchange for exposure. Such types of contracts allow the record company to make money through indirect routes linked to associating its name with the famous artist (for example, Hard Rock Records’ main goal is to promote their cafe).

5. Single Deals

Just as the artist development deal goes, a single deal involves the release of one single song
(or more) instead of a whole album. This deal allows the company to test artists before fully committing to them. At the same time, it can be beneficial to the label.

Related Article: From Pen To Profit: How Much Does A Songwriter Make?

Final Thoughts

As a musician, you hear about all the different types of contracts and wonder if they’re any good. Without the help of a professional lawyer, many of the deals can end up trapping you in an unwanted agreement. So, what is a 360 deal?

A 360 deal involves signing a contract with a record company where it gets to take a percentage of all your revenues. The most important thing is to understand how to navigate such deals to make the most of them.

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