Still Skeptical of the 360 “Record Deal”
A couple of weeks ago when I wrote about the music industry possibly being defined too narrowly, I talked a little bit about the new contracts that artists are signing with record labels. These contracts are called 360 deals because instead of a traditional record contract, where record labels make money from the sale of recorded music, these new contracts also demand a percentage of an artists touring, merchandise, licensing, and other sources of revenue. Record labels want a percentage of the whole pie so to speak, rather than just a slice.
An article in yesterday’s New York Times will surely add to the discussion as to whether it is in an artist’s best interest to sign one of these 360 deals. While the labels claim that these new deals will allow them to concentrate on developing an artist’s career, I am not buying into it.
These 360 deals have less to do with developing an artist’s career, and more to do with trying to tap into the areas of the music industry that are still profitable. The record companies are more concerned with their own survival than the artists on the other side of these 360 deals.
Record labels claim that they will be able to devote more resources to artists under these new contracts. This seems unlikely. Do you realize how many people have been laid off by the major record labels in the last five to seven years? Thousands. So they probably aren’t devoting human resources to these artists. I suppose the record labels can still “give” these acts money, and under these 360 deals, the lump sum an artist receives is supposed to be bigger than traditional advances.
But wait, record labels don’t give artists money. That $200,000 the label “gave” you is an advance against future earnings. The artist is $200,000 in debt to the record company. Basically, the artist is in the same position he/she/they would have been in with a traditional recording contract, but now the artist has surrendered a percentage of their touring, merchandise, and who knows what else.
And why are record companies suddenly so concerned about developing an artist’s career over the long run? They haven’t cared about career development for years. Maybe they have realized that the only way to ensure longevity in the music business is to focus on artist development.
Despite what they say, I still don’t think that major record labels will be able to focus on developing an artist’s career. As long as major record labels have to answer to share holders or the private equity groups that own them, they will be more focused on survival and the bottom line. The days of a pretty face behind a microphone backed by an enormous media campaign to sell records are over. Music fans are more sophisticated now and are harder to fool. I hope artists are savvy enough to stay away from these 360 deals, and brave enough to pursue their careers without the prospect of a major record label.
