360 Deal Contract

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360 Deal Contract

A Brief Introduction About the 360 Deal Contract

360 Deal Contract is also referred to as “multiple rights deals,” wherein the record labels receives a percentage of revenues under 360 deals that usually have off-limits to them, including:

  • Digital sales
  • Tours, concerts, and live performance revenue
  • Merchandise sales
  • Endorsement deals
  • Appearances in movies and television shows
  • Songwriting, lyric display, and publishing revenue
  • Ringtone sales

Who Takes the 360 Deal Contract?

In return, the labels are committed to promoting the band or the artist for a longer period of time in exchange for a bigger percentage from the artists. The label also functions as a pseudo-manager, looking after the artist’s entire career to, in addition to selling records. The 360 deal allows the label to acquire the copyrights of the artist’s recordings and options for multiple albums.

The Artists would be paid a small royalty by the record label under a traditional deal.

Purpose of the 360 Deal Contract

A 360 deal contract is made between a label and an artist. In the music industry, this contract is a business relationship entered into by an artist and a music industry company.

Contrary to other contracts that guarantee a fixed and small percentage from record sales or from money-making activities, This contract allows a record label to receive a percentage of the earnings from all of the band’s activities.

Contents of the 360 Deal Contract

The inclusions are:

  • All sources of income.
    • This even comprises the income from a book an artist writes or the movie an artist stars in.
  • Percentage of everything the artist is involved with, which includes revenue from record sales, ticket sales, merchandise sales, and endorsement deals. While considering your particular deal, it is vital to ensure that the label is only getting a percentage from streams of revenues in which they are actively contributing.

Having stated the above, a label must not be allowed to benefit from a particular source of revenue if the artist is conducting all of the work himself!

How to Draft the 360 Deal Contract

You must consider a few points before drafting a contract, which includes;

  • The Time Period of the Contract: Many record labels would like to sign you on for as long as possible. Thus you should know how long the contract is intended to last. It is recommended that you try to negotiate a short term contract when you first begin with a label.
  • Revenue Streams: You must also pay attention to which revenue streams are included in a 360 deal. Record label firms are recognized to collect a great percentage of record sales, whereas the artist receives a percentage of royalties. A few other revenue streams that are normally included in this deal are live performances, sales of merchandise, composer copyrights, product endorsement, and production of music for other artists, a possible book contract, and a movie or television role you might play.
  • The Production Process of Royalties: Royalties are made through your Royalty Account. It would be your accountability to pay back that sum (with how much money you have made through these investments) before you make a profit from any royalties.
  • Inspection Clause: An inspection clause gives you the right to look at your record firm’s financial accounts to ensure that they are not making up expenses to reduce your gross amount. This music inspection clause is specially used in an event where you feel as though your net worth is not exactly what it is supposed to be.
  • The Assignment Of Your Rights To Another Label: A clause that most 360 Deals consist of is the liberty to assign their rights in your career to another firm. If this is the case, make sure that you could view and approve the new deal (financial aspects).

Recording contracts which are referred to as the 360 Deal are becoming progressively popular. The major labels treat 360 deals as standard. Independent labels have been actively utilizing 360 deals as a way towards increasing their revenues as well as protecting their investments.

Benefits and Drawbacks of the 360 Deal Contract

This contract helps new artists seeking a break into the traditional music business. It helps the artist to make choices that are best for his career.

  • The greatest benefit of signing a 360 deal contract is that the new artist will have the required support, resources- capital, experience, and will be acquainted with the know-how and an association with a major record label.
  • The greatest disadvantage is that the artist is forced to include the label and assign additional income to him, which an artist makes beyond selling records.

To counterbalance the provisions of the deal, the artist must have a good attorney and properly negotiate to avoid serious drawbacks that could be embedded in the deal.  The artist should be aware of the following:

  1. If an artist is already earning money from a particular source, then the artist’s attorney should seek, if possible, to carve out that revenue stream from the contract.
  2. Regardless of the splits or percentages, the record label should commit to providing some benefit for a share of each income stream.

Of course, negotiations depend on leverage.  The artist’s attorney may only be able to improve a 360 deal based on the artist’s leverage, such as a bidding war among two labels for the artist, or depending upon the attorney’s bargaining chip – his or her hefty experience, reputation, knowledge of the industry and negotiating skill.

What Happens in Case of Violation?

In a 360 Deal contract, most major labels would try to take your copyrights for a prolonged period. This means you no longer own the songs you wrote neither the recordings of those particular songs. This implies a loss of control as to how your songs, band name, brand status could be used.

If any of the parties breach the contract(1), either party may terminate the contract.

A 360° contract seeks to permit the record company in receiving revenue from all the four streams of income mentioned above and, ideally, helps the artists in maximizing their opportunities.

If an artist is offered a 360 deal, he or she must go over the deal carefully, preferably with an attorney.  Considering a choice between 360 or no deal, an emerging artist may always consider the 360 deal worth accepting, but with a negotiation!