What to Know Before You Sign a 360 Record Deal

Pop Musicians Signing a Contract at a News Conference With Their Manager

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Since it is getting harder and harder to make money in the music industry by selling albums alone, record labels are turning to so-called 360 deals. These deals let a record label take a piece from all of the income earned by a musician, not just their album sales.

The Basics of 360 Record Deals

Under 360 deals, also called "multiple rights deals," record labels may get a percentage of things that were previously off-limits to them, like concert revenue, merchandise sales, endorsements, and ringtones.

In exchange for getting a bigger cut from the artists they represent, the labels commit to promoting the artist for a longer period of time and are supposed to actively try to develop new opportunities for them. In essence, the label will function as a pseudo-manager and look after the artist's entire career rather than only focusing on selling records.

Should you sign a 360 deal? Before you put pen to paper, ask these questions.

What Income Is on the Table?

The whole point of a 360 deal is that the record label gets a cut of most, if not all, of a musician's revenue streams. However, push to get down to the specifics of what exactly that means. Hammer out a specific list of what income is included in the 360 deal and work to keep the whole pie for income that the label is not helping you earn.

Who Will Be Handling the Responsibilities?

These 360 deals are being embraced by labels at the same time many of them are laying off staff. In other words, labels are taking on more work when they are reducing the number of workers around to do it. Get some assurance that the label has the manpower and the expertise to get involved in managing every aspect of your career they will be benefitting from. If they don't, this isn't a good deal for you. You will need to bring on extra help and pay them to do work you are already paying the label to do. Again, only split the pie with the people who helped bake it. Anything less isn't a fair deal for you.

What Percentages Are We Talking Here?

Of course, you will want to know exactly how much of your money the label wants. Is it a flat rate across the board? Is there a tiered system for deals they land for you and ones that you negotiate without them? You may not find a lot of wiggle room here since labels often have a standard deal that they don't negotiate with individual artists. But you need to know what you're looking at, and it never hurts to at least try to shave a few points off.

Run it By a Lawyer (Your Lawyer)

Without question, 360 deals are complicated. You are potentially signing away the rights to lots of different revenue streams, which could come back and bite you in a big way. Don't assume you understand everything. Getting legal advice before you sign a 360 deal is a must. And don't let the label send you to their lawyer, either.