With the rapidly growing online music community virtually eliminating major profit from hard copy record sales, traditional recording contracts are becoming obsolete. There is no longer financial incentive for record labels to offer contracts through which their main source of revenue is album sales. In its wake, an alternative type of contract is becoming more and more propositioned by record labels. These are referred to as “360” or “multiple rights” deals. But while these new contracts prove to be far more fruitful for the labels, are they really in the best interest of the artist?

In order to accurately answer that question, it is imperative to first understand what 360 deals are. 360 deals allow record labels to collect a percentage of the profit from all of a band/artist’s activities, rather than merely collecting royalties on record sales alone. Traditional recording contracts did not entitle labels to any revenue a band/artist generated from things such as merchandise, concert ticket sales, ringtones and ringbacks, or even endorsement deals. In exchange for a cut of these activities, the label promises to promote the artist for a longer period of time than deemed typical in traditional record contracts. They also pledge to continue to develop the band/artist and actively pursue new opportunities for them. In 360 deals, the role of the record label becomes more that of a manager, where it oversees the band/artist’s entire career, rather than focusing solely on record sales.

The financial benefit to the band/artist depends on the terms of the individual contract. Some labels might give a band/artist more money up front. Some may grant the band/artist touring subsidies that would not be offered in traditional contracts. In many cases, bands/artists are allotted more time to develop the skills and abilities critical to maintaining a long career in music. In any case, a 360 deal will allow the label to cross market items like CDs, ringtones, V.I.P. concert packages and other merchandise, which could very likely make for a larger overall profit.

Many industry professionals believe 360 deals to be a desperate attempt by labels to regain some of the financial control they have lost due to declining record sales and crippling overhead. Others fear that with so much focus being placed on “band branding”, actual music will be tossed to the wayside. They feel these 360 deals focus on selling anything that might possibly turn a profit, rather than taking the time to develop the music. Not to mention, with labels already losing so much money as it is, how much weight can their promise to work with a band long-term really carry?

However, labels argue that 360 deals allow them to sign a wider variety of bands/artists. Since they no longer have to rely on recouping their investments via record sales, they can focus on developing bands/artists long-term, rather than signing only those with potential radio-ready singles. They also maintain that with less pressure to recoup their development costs immediately, they will be able to promote more bands/artists at once, thus increasing the label’s overall chances for success. If they have a variety of avenues from which to make their money back, then they can take a slow and steady approach to building a band/artist which, in turn, will give the band/artist more space and time to become a success and decrease their likelihood of getting dropped from the label.

While 360 deals can be offered to virtually all bands/artists, the likelihood of obtaining one will only emerge if you are an act that already has a loyal, ticket-purchasing fan base or has already attracted attention from businesses for possible endorsements. Yes, a label will theoretically have more time to devote to a band/artist, but they are only going to invest in it if the opportunity to generate financial profit is already in place.

The emergence of 360 deals does hold the potential for more bands/artists to obtain record contracts. However, it is still unclear as to whether these deals will truly benefit the band/artist long term. Revenue from touring, merchandising, endorsements, etc, used to go solely to the act. With 360 deals, the label now retains a cut of every profit stream a band/artist may have. Will such control also provide the label with unjust creative control?

Still, the potential to obtain revenue from multiple sources does put more responsibility on the labels to seek out such opportunities for the band/artist. Being signed to a 360 deal could likely provide bands/artists with far more promotion than they could obtain on their own.

Whether a 360 deal is the right decision for a band/artist depends on the individual terms of the contract and their need for financial backing and promotion from an outside source. If you are in a position where a 360 deal has been offered to you, be sure to read it carefully and assess your needs as a band/artist thoroughly before signing.

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