HIP-HOP EDUCATION: 360º OR 360 AGREEMENT

The 360º or 360 deal is a type of exclusive recording agreement.

In previous articles, we’ve looked at traditional Recording Agreements, Artiste Advances, and Royalties. This article will look at the 360 deal; definition, provisions, benefits, and disadvantages. The knowledge will help as a guide. For real-life situations, I recommend you engage the services of an entertainment lawyer to break down the contents of an offered recording contract.

In the early 2000s, the birth of digital media negatively impacted CDs sales. Record Labels and distributors (wholesale and retailers) were experiencing low sales due to digital or online piracy – free downloads and streams. Hanson created the 360º business model between Paramore band and Atlantic Records. The label provided financial support for artiste advance, development, promotions, tours, bookings, merchandise, and other types of support for the band in return for a percentage of all the band’s revenue streams to recoup all of their expenses. It worked.

What is 360º Agreement?

Essentially, it is the business relationship between an artiste/band and a music company where the company provides financial and other support for the artiste’s career in return for a 15-30% cut of their revenue; streaming, endorsements, performance, tours, and other none music streams – acting, modelling, etc.

The traditional deal entitles the record label to only a percentage of the sound recording royalties. The inability of labels to recoup their advances led to the development of this model that reduces the risk of companies investing in the artiste, their brand promotion, tours, merchandise, image rights, etc., for a percentage of the artiste’s revenue streams. It felt like a win-win deal. It is being practised and offered by labels and music companies in the present day.

Record Label

Music Companies believe for providing financial and other forms of support for an artiste to build their career, they’ve earned a right to recoup all those expenses by taking a split in all of the artiste’s revenue streams. If your music stardom brings endorsement deals, they take a split. They get a cut if it leads to movie roles or fashion runways.  

The company might offer to take between 15-30% of the revenue pie or varying cuts across different areas – 50% for merchandise, 30% for touring and bookings, 20% for management or streaming royalties, etc.

Ensure you have an entertainment lawyer break it down for you.

Artiste

Artistes with new or existing brand and career strategies, 360º deal is a huge opportunity to achieve their set goals. The artiste is provided with the necessary support they need to achieve their career success goals. If the artiste decides to dabble with acting, the company provides resources such as an acting coach and casting agent for them. In return, the artiste gives up a percentage of their acting income.

The artiste is allowed to fail in terms of record sales targets if the company sees the potential in the artiste’s vision and definition of success. The artiste also has leverage in terms of the percentage and extent of support the music company provides.

The music company may provide the cost of some or all of the following;

• Recording sessions
• Music video
• Promotion and marketing
• Artiste development (music production, songwriting, acting, fashion designing, etc.)
• Branding
• Tours
• Bookings
• Merchandise

While the artiste focuses on executing their strategy with the resources made available by the music company.

Negotiations

The artiste has the right to negotiate some contract terms.

1. Rights and Images

Some music companies are known to trick artistes into signing away all forms of rights and images in exchange for lower splits and carrying some costs. An artiste can drive a hard bargain such as production, distribution and marketing costs of materials in exchange for some rights to the music company. Consider holding on to the creative rights or signing away your rights to determine what goes where in the development and production of a verse, song, or project; some companies are known to determine the titles of songs and projects released by their artistes.

No offer is worth that trade.

2. Development Cost

The artiste can push for more development expenses covered by the music company. If the company wants 30% of the merchandise revenue, it must be willing to carry the production and distribution costs. The label is your venture capital firm or Angel investor with the startup capital and resources for the artiste.

An artiste with, “starting a Fashion House,” as part of their Vision, will have the production and development costs covered. The bigger your clout, the more coverage you can negotiate and get.

3. Revenue Control

It is surprising to know the artiste can determine the areas of their revenue the company can lay calm via the 360º deal. Revenues from thriving side businesses before the offer will not be split with the music company. The artiste owned a thriving digital marketing firm or interior decoration business before the 360º offer was made. The revenues generated by these businesses will not be split with the label.

A consistent artiste will have created enough audience to determine the areas of revenue to control. A new artiste may not have side businesses by the time they receive their first recording contract, hence, they have less control over their revenue split but have the advantage to build a career they want with the resources of the record label. Access to people who know what they are doing be it engineering, production, music video, promotion, marketing, content, artiste development, tour management, bookings, etc. It helps a new artiste quickly build a valuable network in the industry.

Conclusion

It’ll be amiss to tell you not to consider signing a 360 deal. Similar to telling a startup founder not to seek funding for his product or service. Artistes must be willing to work to benefit from this type of deal. This covers recording and practice sessions, performances, tours, press and media runs, video shoots, public appearances, diet and fitness, health (medical and mental) checkups, etc.

Again, the bigger your clout, the more specific the offer or company offering the deal. A distribution company might offer a huge advance and development expense for three albums and their tour expenses in return for the rights to those albums and a slice of every other revenue of the artiste within the three albums cycle period. At the end of the cycles, the artiste and the company will be left with sound recording, publishing, and performance rights revenue until it becomes public domain.

Get an entertainment lawyer to break down the contract for you; what are you giving up?; what are you getting in return?; what do they control?; what do you control? No cost-cutting is worth not hiring a good lawyer. They’ll save you a lot more in earnings and freedom.