creative deconstruction

Are 360 Deals the Answer for the Music Industry?

Posted on 29. Apr, 2009 by refe in MUSIC INDUSTRY

No – probably not.

What is a 360 deal? It is basically an arrangement where one entity facilitates every aspect of their artists’ business – including marketing, pr, distribution, merchandise and live performances – and takes a cut from each of these revenue streams. Madonna was the first to sign a deal like this with concert promoter Live Nation, and since then a few other big acts have followed suit.

The benefits of this arrangement are obvious from the perspective of the corporate entity. They get a piece of every penny that an artist generates by providing a wider range of services than the traditional record label. With record sales declining but live performances still making money, this makes a lot of sense.

From the artist’s perspective there are pros and cons. The pro – probably the only pro, really – is that they are able to outsource just about everything to the company they are contracted to. They get a one stop shop. This can make life a lot easier for someone like Madonna whose career is very multifaceted and involves a whole host of different ‘products.’ The downside is that whereas under a traditional record label deal, the label is only entitled to squeeze an artist on one front – record sales. A 360 deal allows them access to other revenue streams which were traditionally off limits. In Bob Lefsetz words:

The vaunted 360 deal is basically a land grab.  Challenged financially, major labels are forcing acts to fork over interests in ancillary rights, most notably touring and merchandise, and delivering almost nothing in return.

What’s funny about this is that when young artists or bands first start talking to record labels, they often think that what they will be getting is something more like a 360 deal anyway. They don’t realize that a label is really only there to help you cut, market and distribute recorded music. I was talking with Chris Parker of Chicago label Window Licker Records, and he was telling me about some of the expectations he often finds during the first few conversations they have with bands they are considering for their roster. The bands would ask about booking, merchandise, etc. and they quickly began having bands sign a document that clearly stated that they would not be assisting them with any of those things because that’s just not what a label traditionally does.

Those are young bands, though – still green. Most seasoned acts recognize the danger in signing over every facet of their livelihood to a single corporate entity. They realize the hefty price this can carry. If you have ever been in the studio and had to put up with an overly controlling record label you understand why you might not want the same control extended over your live performances and merch.

So, no. I don’t think that 360 deals are the Answer to the music industry’s need for a new model. If anything, they are just a step further on the path that led us to where we are today – centralized resources and greedy corporations with no regard for music as art and musicians as artists.

Tags: 360 deals, business models, music, MUSIC INDUSTRY, record labels