Monday, April 19, 2010

The Perils of 360 Deals

Bob Donnelly, music attorney, very cleanly explains 360 deals that major record labels are offering musicians. He cautions against them for a number of reasons. In these deals the labels not only take approximately 85% of your record sales, they also want a piece in some cases as high as 50% of the artist's other revenue streams such as merchandise, touring, publishing, etc. If record labels were set up to work these areas, it might make sense, but they are not. The labels staffs are dwindling by the day. The labels also want their % on the artist's gross, not the net! In that case, all touring costs such as crew salaries, per diems, hotel and travel costs would all be carried by the artist, the label would assume none of these costs, yet they could commission on those very costs. Even if the label offers tour support to a musician, they would still be commissioning on the money they "loan". Make sense? I don't see how it does for a musician.

Mr Donnelly noted in the Lefsetz letter that the first paragraph of his Billboard post was left off, so here it is.

A new type of record label contract has come to be known as a "360 deal" (as in "360 degrees in a circle") since it seeks to make the label a participant in revenue streams from every quarter of an artist's career. In his popular music industry blog, Bob Lefsetz wants to know why artists would consider such a contract. With typical humor, he writes: If you're contemplating a major label deal and your success is not based on terrestrial radio play, and you don't make pop music, YOU'RE A FUCKING IDIOT!... But where were the attorneys? Oh, I know they were afraid of pissing off the labels, not eating themselves. Are they interested in their clients or THEMSELVES?


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