The 360 deal.....Good or Bad??? What do YOU think....

Quite simply, a so-called "360 deal" in the music business refers to the recent modern practice of record companies brokering deals with artists that are "all encompassing" in terms of revenue streams. Live Nation's signings of Madonna and Jay-Z are high-profile 360 deals...the long-term success of which remains to be seen.

Tennessee's young band Paramore, fronted by Hayley Williams, have stated their “360” deal has helped them develop as a group.

Still, the practice is novel and barely tested.

Traditionally, record companies were in the business of selling records (including all formats such as vinyl, tape, and CD). The CD (Compact Disc) was the most profitable for the labels as they are the cheapest to produce (compared to vinyl or tape) and, for the first few years of CDs at least, brought a retail price as high as $20 or more! That enormous profit margin (we now know that a blank CD costs just pennies!) provided record executives with the glut, the excessive lifestyles and the fame which from the mid-sixties to around year 2000 was synonymous with the "Music Biz."

But the glut is over. CD sales are on a downward spiral that many think won't stop until virtually no CDs are sold through traditional retail outlets. And the retail value has come down dramatically. Those traditional record profits are gone.

This fact of life has forced the enterprising record labels to try to get a piece of all the ancillary action surrounding a hit recording act: publishing, concert receipts, merchandise sales (which can be huge) and other related artist revenue sources. Thus the name "360"...as in the whole pie.

"Particulars of a 360 deal might differ from label to label, but a recent Atlantic offer to another act provides an example of how one might be structured.

"Atlantic’s document offers a conventional cash advance to sign the artist, who would receive a royalty for sales after expenses were recouped. With the release of the artist’s first album, however, the label has an option to pay an additional $200,000 in exchange for 30 percent of the net income from all touring, merchandise, endorsements and fan-club fees.

"Atlantic would also have the right to approve the act’s tour schedule, and the salaries of certain tour and merchandise sales employees hired by the artist. But the label also offers the artist a 30 percent cut of the label’s album profits — if any — which represents an improvement from the typical industry royalty of 15 percent..."