Photo by Arthur Miranda on Unsplash
Watch the video below as Wendy Day Explains 360 Deals. This excerpt is a portion of Chapter 5 from Wendy Day’s e-book, The Knowledge To Succeed: How To Get A Record Deal. Chapter 5 discusses the different types of Record Deals available today (this portion of the chapter discusses 360 Deals, what they are, why they exist, and the financial realities of having one).
360 Deals In the early 2000s, the music industry went through a severe change. Music sales plummeted, the importance of the internet reigned supreme, and there was an influx of artists into the industry causing an over saturation never seen before. It’s gotten worse, not better, for the major record labels. Once used to a healthy profit margin that afforded grand lifestyles for those at the top of the food chain, the major labels became disgruntled as sales dropped while they missed the boat on less profitable digital sales. Taking on the role of dinosaurs fighting for survival, they tried everything from stopping the new digital revolution, to fighting it, to suing fans, to band wagon jumping too late. Nothing worked for them. And they still haven’t learned from their mistakes—they still continue to fight the ways the consumers want to receive their music. So to justify their continuing existence, they decided to take an even larger share of the pie from the ONLY aspect of the equation that they controlled—the artist (or the “content” provided for digital download).
Back in the day, labels took roughly 88% of the pie while giving the artists 12% of the money AFTER the artist paid back from that 12% share, almost everything spent on them (that’s called “recouping”). This means that if the artist sold $500,000 worth of CDs, and it cost $50,000 to market and promote that CD (a very unrealistically low example), the artist share of $60,000 (which is 12% of $500k) would be divided between paying the label back that $50,000 and a check for the remaining $10,000 for the artist. The label would receive $490,000 for its investment and belief in that artist while the artist made $10,000. In exchange for giving up the lion’s share of the sales in the past, the labels always told the artists that they’d make 100% of the touring. Any show money, was the artist’s to keep! Not so with a 360 Deal! When the shit hit the fan financially for the labels, they decided to tap into the show money, and all other streams of income for the artists, as well. After all, if the company’s profit margin is made smaller, they need to eat more of everyone’s income to keep the fat cats at the top, and the stock holders, happy. Most 360 Deals share in endorsement income (15% to 30% depending on the artist), performance income (10% to 30% depending on the artist), merchandising income (20% to 50%) and Film/TV money (15% to 40%). Before I go any further, I have to thank the good folks at Warner Bros Records for leaking me two major label contracts for different artists’ 360 Deals. This enabled me to write about REAL contracts instead of just what I’d heard from lawyers, artists, and label folks... [more at https://wendyday.wordpress.com/2013/0... ]
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