Some would argue that it is dead and what we have now is a Zombie nightmare. Large record companies argue, that like Dr. Frankenstein brought the Prometheus to life with lightning from the sky, their voltage are 360 deals.
360 degree deals present major disadvantages for artists, but faced with a choice of the 360 versus no deal, artists usually take the deal and give away part of their soul alon
g with a lot of a money. First, let me give every artist and manager a quick primer on what a 360 degree deal is. Basically, the 360 is an exclusive recording contract between a record company and an artist in which, in addition to monies from sales of the artist’s recorded music, the label shares in other income streams such as touring and live performance, merchandise, endorsements, appearances in movies and TV, and if the artist also writes songs, publishing. A traditional recording agreement only provides an income stream for the label from record sales. But similar to the traditional recording agreement, under the 360 deal the label acquires the copyrights in the artist’s recordings and options for multiple albums. The 360 deal also usually includes all the same deductions from record royalties as the traditional deal, including producer royalties and reductions for packaging, “net sales,” foreign sales, mid-price and budget records, and even “new technology.” Originally applied to CD royalties and now to digital sales). Under the traditional paradigm, the label would pay the artist a small royalty which was even smaller after all the deductions. The artist could expect to receive no recording royalty at all unless his album was a major commercial success. But he got to keep everything else: publishing, merchandising, touring, endorsements, etc. Record labels argue (and majors who pay big advances have more credibility in making these arguments) that they make significant investments in an artist’s career by, among other things, putting up considerable sums for recording including paying advances to A-level producers, getting the artist’s music on commercial radio, securing invitations for the artists to perform on popular television shows, paying for one or more top quality videos for YouTube and other outlets, and providing tour support before the artist is popular enough to demand significant sums for live performances. What makes Tow Path Music Group Different
The artists and Towpath Music Group are going to work for the money together. Here’s what other labels are doing on a 360 deal:
• 50% Merch
• 25% Touring and live performance
• 25% of “digital products” such as ringtones and sales from the artist’s fan site
• 25% Publishing
• 25% of Endorsements
• 25% of any other income from the entertainment business including appearances on TV and movies, theatre, book publishing, etc. Our label is committed to doing something to deserve a share of each income stream. And we take smaller percentages than the norm and leave money on the table for artists. For instance, in return for its 35% (industry norm is 50%) the label should commit to manufacture merch and sell it at retail, via the Internet and supply the artist with merch for sales on tour. In regard to publishing, a 360 deal may include a “co-publishing” agreement in which the label has exclusive control of any songs that the artist writes during the term, and the label retains 25% of any monies generated from the songs. Or, the label may demand 100% of the “publisher’s share” or 50% of all income generated by the artist’s songs. Are you kidding me? Again, our end is much lower - and we work for it. In exchange for these arrangements, Towpath Music Group has a dedicated committment to collecting monies generated by the artists songs, and can pitch the songs to music supervisors for placements in movies, television, video games, etc. Tow Path will provide support in respect to any income stream; and unlike a lot of labels our percentage is based on net, not gross. In many of these 360 deals, the record company will demand that their earnings come out of gross revenues. This means that if the cash the labels actually receive has been reduced by any parties in the middle of the transaction (even if those parties themselves add value, as, for example, many music publishers do), then the label will add those amounts back in before calculating the percentage of revenue they retain. Think about that for a moment. The manager doesn't get paid on gross, and the artist certainly doesn't get paid on gross. Why then should the record company be paid on gross? For instance, if a tour earns the artist $25,000 but her expenses added up to $20,000 (for hotels, transportation, booking agent fees, sound and lighting, etc.), the label should only commission the $5,000 in profits not the entire $25,000. Indeed, if the label’s commission was 25% and that was based on gross, the amount due to the label would actually exceed the artist’s profit.
