Read this before you sign your life away!
There was a time that 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 and now 360 deals are the rule, rather than the exception. Simply put a 360 deal entitles a record label 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 merch, 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 what labels perceived as a way 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 power and “only show in town” positioning of record companies, they have indeed taken a hit with the advent of online technologies such as streaming. Albeit not as big a hit as artists have but the record company model is in a constant state of instability thanks to ever-evolving technology.
The rationale of the 360 deal, from the label’s point of view, is that the Artist will receive more attention, enjoy 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 scream of outrage and sign on the dotted line.
But you do not have to go silently into that “goodnight.” There are ways to get a better deal, to curb the label’s hunger for more and stem the financial bleeding 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. Make sure advances are proportional to the percentages the label wants to take. Do not allow for cross-collateralization which means that the label can only recoup advances against an income stream from that same income stream.
To explain, if they give you a $25,000 advance against publishing revenue, the label should be limited to recoup that advance from publishing income and not record sales, downloads, live performance, merch or any other income stream. If you have advanced your career in areas such as live performance or publishing, see if you can get that stream excluded.
Exclusions are called “carve-outs” and your attorney or manager should go after them as if he or she are catering Thanksgiving dinner for a thousand turkey lovers. Just keep carving. If touring is one of the income streams, insist on the label’s percentage being limited to Net NOT Gross Income, making certain that touring expenses are deducted, and the label is collecting on actual income to you.
Finally, ask for a specific income stream to be excluded if and when the label recoups the advance that you are given. For example, If they have advanced you $25,000 on copyright licensing and you have earned it back, make sure the contract has language to exclude that income stream upon recoupment or repayment.
The 360 is a painful reality 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, I have 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.
About Camille M. Barbone
Camille is a music industry professional with over 20 years of experience. She has worked for major labels such as Sony and Universal, Warner Chappell and other major publishers, owned two “state of the art” recording studios, developed and managed high profile artists such as Madonna, produced major concerts and provided music for major motion pictures such as Scream, Steven Spielberg Productions, and Cinepix Films. She has conducted numerous seminars, panels, and workshops at SXSW, the New Music Seminar and other industry conferences. She has been featured in many books and has appeared on many news and talk shows. Camille consults via her company, Camille Barbone Coaching and Consulting a business that provides guidance and structure to those aspiring to successful careers in the Entertainment Industry. Contact Camille at email@example.com