Essentially it involves artists sharing every type of income stream they generate, whether it is from the sale of recordings, songs, live performances, merchandising, sponsorship or endorsements – the lot!
This is a departure from what has happened historically, where artists would normally enter into separate agreements with record companies, publishers, live agents and promoters and get paid by each one. The fundamental challenge for labels is the transition from traditional record label to entertainment company.
Being an entertainment company requires innovation and new skill sets. It requires a different mentality and contacts; it requires 360-degree thinking.
360-degree deals are now recognised as an important business model for the music industry. With declining physical record sales and widespread digital piracy, they provide a potential opportunity for labels to work in conjunction with artists to help maximise income from publishing, merchandising and sponsorship and so provide new revenue streams to keep the business of being an independent record label viable during this difficult transitional period.
360-degree deals can be structured in many different ways. At one end of the spectrum it may be presented as a traditional recording agreement including just an additional paragraph entitling the label to a share of the artist’s non-recorded income. At the other end it could be a joint venture between label and artist. At present there is quite some fluctuation and variation in both structure and commercial terms on offer.