Tuesday, November 13, 2007

The Art of the 360 Deal

Jeff Leeds in The New York Times has a nice look at what's known as the 360 deal, whereby a record label profits not just from its artists' record sales, but merchandising, endorsements, touring, and anything else they can get their hands on. In return, the theory goes, the artist is given more time to develop, rather than immediately pressured to sell millions of albums.

From the article, an idea of what makes up a typical 360:

Atlantic’s document offers a conventional cash advance to sign the artist, who would receive a royalty for sales after expenses were recouped. With the release of the artist’s first album, however, the label has an option to pay an additional $200,000 in exchange for 30 percent of the net income from all touring, merchandise, endorsements and fan-club fees.

Atlantic would also have the right to approve the act’s tour schedule, and the salaries of certain tour and merchandise sales employees hired by the artist. But the label also offers the artist a 30 percent cut of the label’s album profits — if any — which represents an improvement from the typical industry royalty of 15 percent.

Not so bad on the surface, with the understanding that thirty percent of album profits is just as likely to equal zero as the original fifteen percent. And it's hard to trust a label to commit a year and a half or more to developing an artist when turnover is as high as it is. Still, as Coolfer notes, it's early yet, so we'll need to check back in a year or so to see how bands like Paramore are doing under the deal.

By far the scariest quote comes from Craig Kallman of Atlantic Records: “We used to look at jam bands as bands that absolutely we shouldn’t sign,” Mr. Kallman said. “Now all of a sudden I’m saying: ‘Guys, you absolutely must find the next hottest jam band. I need the next Phish. Urgently.’”

Do. Not. Want.

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