WHAT IS A 360 DEAL and WHAT DOES IT CONSIST OF?
A 360 deal is a type of music industry contract between an artist and a record label that gives the label control over multiple aspects of an artist’s career. It is an increasingly popular form of contract that is used by the music industry to maximize the potential of an artist’s success.
HOW DOES A 360 DEAL WORK?
In a traditional record deal, the label only takes a cut of the revenue from the sales or streams of the artist’s music. The label also provides the artist with an advance, which is a loan that the artist has to pay back from their royalties. The label also covers the costs of recording, marketing, and distributing the music.
In a 360 deal, the label still takes a cut of the music revenue and provides an advance, but it also takes a percentage of other income streams that the artist generates, such as:
• Merchandise sales.
• Touring revenue.
• Licensing and placement fees.
• Endorsement deals.
• Songwriting and publishing royalties.
• Advertising revenue.
• And more.
The label provides more support and services to the artist, such as:
• Acting as a manager or hiring a manager for the artist.
• Developing the artist’s brand and image.
• Securing opportunities and partnerships for the artist.
• Providing legal and financial advice to the artist.
• And more.
The exact terms and percentages of a 360 deal vary depending on the negotiation between the artist and the label. Some deals may be more favorable to the artist than others, depending on their bargaining power and leverage.
WHAT ARE THE PROS AND CONS OF A 360 DEAL?
A 360 deal has both advantages and disadvantages for both the artist and the label. Here are some of them:
– PROS FOR THE ARTIST:
• The artist may receive a larger advance and more funding from the label.
• The artist may benefit from the label’s expertise, connections, and resources in various areas of their career.
• The artist may have more exposure and opportunities to grow their fan base and income.
• The artist may have more creative freedom and control over their music.
– CONS FOR THE ARTIST:
• The artist may lose a significant portion of their revenue from multiple sources to the label.
• The artist may have less autonomy and flexibility over their career decisions and direction.
• The artist may have to commit to a long-term contract with the label that may be hard to get out of.
• The artist may have to deal with potential conflicts of interest or exploitation by the label.
– PROS FOR THE LABEL:
• The label may generate more revenue and profit from multiple sources from the artist
• The label may reduce its risk and recoup its investment faster by diversifying its income streams
• The label may have more influence and control over the artist’s career and brand
• The label may have more incentive and motivation to invest in the artist’s development and success
– CONS FOR THE LABEL:
• The label may have to spend more money and resources on providing services and support to the artist.
• The label may have to share some of its revenue with other parties involved in the artist’s career, such as managers, agents, or publishers.
• The label may have to deal with potential backlash or criticism from the artist or their fans for taking too much from them.
• The label may have to deal with potential legal or ethical issues arising from its involvement in multiple aspects of the artist’s career.
WHAT TO NEGOTIATE WHEN CONTEMPLATING A 360 DEAL:
A 360 deal can be seen as a way for the company to invest in the artist’s career and provide them with financial and other support, such as marketing, promotion, touring, and development. In exchange, the company expects to recoup its investment and share in the artist’s success across multiple income streams.
However, a 360 deal can also be seen as a way for the company to exploit the artist and take advantage of their creative work and personal brand. The company may claim a large percentage of the artist’s revenue, even from sources that the company has little or no involvement in. The company may also acquire the artist’s copyrights or have excessive control over their artistic decisions.
Therefore, it is crucial for artists to negotiate the terms of a 360 deal carefully and protect their interests and rights.
Here are some key points to consider when contemplating a 360 deal:
1: The Percentage
One of the most important aspects of a 360 deal is the percentage that the company will take from each revenue source. This percentage can vary depending on the type of income, the level of investment and support from the company, and the bargaining power of the artist. Generally speaking, the higher the percentage, the more favorable it is for the company, and vice versa.
For example, a typical percentage for music sales may range from 10% to 25%, depending on factors such as the format (digital or physical), the territory (domestic or international), and the distribution channel (direct or third-party). A typical percentage for live performance may range from 5% to 20%, depending on factors such as the size of the venue, the ticket price, and the expenses involved. A typical percentage for merchandise may range from 10% to 50%, depending on factors such as the cost of production, the quality of design, and the exclusivity of distribution. A typical percentage for endorsements may range from 15% to 50%, depending on factors such as the popularity of the brand, the duration of the deal, and the scope of exposure. A typical percentage for publishing may range from 25% to 50%, depending on factors such as the ownership of copyrights, the administration of royalties, and the exploitation of opportunities.
Artists should negotiate these percentages based on their own goals, expectations, and needs. They should also compare them with industry standards and benchmarks, and seek professional advice from lawyers, managers, or consultants. Artists should aim for lower percentages that allow them to retain more of their income and have more financial freedom and stability. Artists should also avoid signing deals that give the company a fixed percentage regardless of their actual contribution or involvement in generating that income. Artists should insist on having clauses that allow them to audit or review the company’s accounting and reporting practices to ensure transparency and accuracy.
2: The Duration
Another important aspect of a 360 deal is the duration that it will last. This duration can vary depending on the number of albums or projects that the artist agrees to deliver to the company, or the number of years that the artist agrees to be bound by the contract.
The duration can affect how long the artist will have to share their revenue with the company, and how long the company will have to provide support and services to the artist.
Generally speaking, the longer the duration, the more favorable it is for the company, and vice versa.
For example, a typical duration for a 360 deal may range from three to six albums, or five to ten years, depending on factors such as the genre of music, the pace of production, and the market demand.
Artists should negotiate the duration based on their own vision, ambition, and potential. They should also consider the risks and benefits of a long-term or a short-term commitment, and the possibility of a renewal or a termination option. Artists should aim for a shorter duration that allows them to have more flexibility and leverage in their career, and to renegotiate or exit the deal if it becomes unfavorable or unsatisfactory. Artists should also avoid signing deals that lock them in indefinitely or indefinitely extend the duration based on vague or unfair conditions. Artists should insist on having clauses that allow them to terminate the deal for cause or convenience, or to renegotiate the deal based on performance or market changes.
3: The Scope
A final important aspect of a 360 deal is the scope that it will cover. This scope can vary depending on the types of revenue sources that the artist agrees to include or exclude from the deal, and the types of support and services that the company agrees to provide or withhold from the artist. The scope can affect how much control and influence the company will have over the artist’s career and creative work, and how much value and benefit the artist will receive from the company’s involvement and assistance. Generally speaking, the broader the scope, the more favorable it is for the company, and vice versa.
For example, a typical scope for a 360 deal may include all or some of the following revenue sources: music sales, live performance, merchandise, endorsements, publishing, advertising, film and TV, video games, fan clubs, websites, and more. A typical scope for a 360 deal may also include all or some of the following support and services: recording, production, distribution, marketing, promotion, touring, management, legal, accounting, and more.
Artists should negotiate the scope based on their own strengths, weaknesses, and opportunities. They should also evaluate the quality and quantity of the support and services that the company offers or promises to provide. Artists should aim for a narrower scope that allows them to keep more of their rights and revenues from sources that they can manage or monetize independently or with other partners. Artists should also avoid signing deals that give the company too much power or interference in their artistic decisions or personal affairs. Artists should insist on having clauses that allow them to approve or veto any deals or arrangements that the company makes on their behalf, or to opt out of any sources or services that they do not need or want.
Hip Hop Artists who have signed 360 deals with different labels and companies in recent years:
• Lil Nas X, who signed a 360 deal with Columbia Records in 2019, after his viral hit “Old Town Road”. The deal reportedly gives Columbia a cut of his music sales, streaming, touring, merchandising, and endorsements
• Megan Thee Stallion, who signed a 360 deal with 1501 Certified Entertainment in 2018, before she became a mainstream star. The deal allegedly gives 1501 a 60% share of her recording income, as well as a percentage of her publishing, merchandising, live performance, and sponsorship revenue. Megan has been trying to renegotiate or terminate the deal since 2020, claiming it is unfair and exploitative.
• Drake, who signed a 360 deal with Cash Money Records in 2009, as part of the Young Money Entertainment imprint. The deal gave Cash Money a share of Drake’s music sales, streaming, touring, merchandising, and endorsements. Drake had been vocal about his dissatisfaction with the deal, and has reportedly fulfilled his contractual obligations with his 2018 album “Scorpion”.
• Kanye West, signed a 360 deal with Def Jam Recordings in 2012, after his successful album “My Beautiful Dark Twisted Fantasy”. The deal gave Def Jam a share of his music sales, streaming, touring, merchandising, and endorsements. Kanye has been trying to get out of the deal since 2019, claiming it is oppressive and unfair. Kanye West and his G.O.O.D. Music imprint are no longer a part of Def Jam Recordings. According to a statement from Universal Music Group that was published by The Hollywood Reporter, “Def Jam’s relationship with Ye as a recording artist, Def Jam’s partnership with the GOOD Music label venture and Ye’s merchandise agreement with Bravado all ended in 2021.”
• Nicki Minaj, who signed a 360 deal with Cash Money Records in 2009, as part of the Young Money Entertainment imprint. The deal gave Cash Money a share of her music sales, streaming, touring, merchandising, and endorsements. Nicki has been loyal to the deal and has praised Cash Money for their support and guidance.
• Lizzo, who signed a 360 deal with Atlantic Records in 2016, after her indie EP “Coconut Oil”. The deal gives Atlantic a share of her music sales, streaming, touring, merchandising, and endorsements. Lizzo has been happy with the deal and has credited Atlantic for helping her reach mainstream success and recognition.
•Kendrick Lamar, who signed a 360 deal with Interscope Records in 2012, as part of the Top Dawg Entertainment imprint. The deal gives Interscope a share of his music sales, streaming, touring, merchandising, and endorsements. Kendrick has been satisfied with the deal and has maintained a strong relationship with Interscope and Top Dawg.
• Cardi B, who signed a 360 deal with Atlantic Records in 2017, after her viral hit “Bodak Yellow”. The deal gives Atlantic a share of her music sales, streaming, touring, merchandising, and endorsements. Cardi B has been grateful for the deal and has expressed her appreciation for Atlantic’s support and investment.
A 360 deal is a complex and controversial type of contract that can have significant implications for an artist’s career and income. Therefore, artists should be careful and cautious when contemplating a 360 deal, and negotiate the terms of the deal to their best advantage. Artists should consider the percentage, duration, and scope of the deal, as well as other factors such as advances, recoupment, expenses, royalties, copyrights, creative control, and exit options. Artists should also consult with professionals such as lawyers, managers, or consultants who can help them understand and protect their interests and rights.
A 360 deal can be a win-win situation for both the artist and the company if it is fair and balanced. However, it can also be a lose-lose situation if it is unfair and exploitative. Therefore, artists should be aware of the pros and cons of a 360 deal before signing one.