The Author and Lawyer Buddy at South by Southwest
While most people were out enjoying amazing music, free beer (if you had a pass) and great weather, my lawyer buddies and I were huddled in a chilly windowless convention center discussing the future of music recording contracts. And it was….Awesome!
Seriously though, 360 deals were the hot topic amongst the industry and legal types at SXSW and there are many reasons why. Due to the tremendous drop in physical sales of music, labels are scrambling to find new and inventive ways to share in the money that musicians earn. Enter the 360 deal.
Essentially a 360 recording agreement means that the label who signs or invests in an artist shares in all the income derived from a band or musician; merchandise, licensing, touring, record sales (then the REAL interesting sharing begins). acting or tv/movie appearances, book deals or works of non-fiction written by or with the artist, commercial appearances, endorsements and on and and on. The best example of what 360 deal is and how it could be disastrous for an artist is to look at our buddy Will Smith again.
Let me preface this by saying that in a lot of ways, I think 360 deals are a good idea and can give a lot of flexibility and opportunity to artists. However, just as with any other agreement you enter into, think it through from start to finish before you jump all over the deal. Will Smith started out as the Fresh Prince with his buddy DJ Jazzy Jeff. As was discussed at one of the panel meetings this weekend, one of the first deals Will aka the Fresh Prince entered into was roughly a 360 deal. The label he prematurely signed with had the rights to income from absolutely anything and everything Will ever did. Even after the label was bought out on the music side of Will’s career, the label crept back in when Will made the leap to the silver screen. Litigation was the only way that Will could get out of the deal or his first label would have had the rights to a large percentage of his income from Men in Black.
Obviously there are not a lot of Will Smith’s out there. Yet, the point remains, you must think ahead and negotiate to achieve a fair result. There is something to be said for a label who takes a relative unknown, shells out tens of thousands of dollars on a huge media campaign and turns the unknown artist into a commercial commodity a-la Pink or Eve or, dare I say it, Britney. If that artist will make money through various streams of income and not primarily through traditional record sales, the investor, or in this case the label, believes that it should share in the wealth.
If written correctly and skewed toward a partnership rather than a free-for-all by the label/investor, a 360 deal may offer the artist the big break they have been dying for and the label a well balanced stream of revenue. To take it the next step, it may open the seemingly stapled shut eyes of the industry to the fact that a musician is not just means to sell music; rather a musician in today’s ever changing and increasingly interchangeable global market is a brand. If the focus is put on selling the brand rather than CD’s at Wal-Mart, everyone benefits.