360/Full Rights Contract
All in One
360 deals set out the conditions in which a music company engages an artist in respect to the services the artist may provide, such as recording, songwriting, performing live and those related to their image/brand/merchandise rights. Every 360 deal contract is a highly customised agreement that reflects the set of skills and assets of the artists and the capabilities of the label to exploit said skills and assets.
For example: (1) An artist that is a great live performer with good presence in social and traditional media can sign a 360 deal agreement for his: recording and live performer services and for their brand/image assets. (2) In contrast, an artist that is an established songwriter for other acts and also a recording artist, but that due to advanced age chooses not to tour anymore, can sign a 360 deal for her recording and songwriting services and for the exploitation of his/her image assets.
360 deals came around in the early 2000’s as the record labels response to three major trends in the music industry (1) the steady decline of revenue from record sales due to piracy, (2) a change of customer preference from physical to digital formats (3) the increase in prices of tickets to live events and fan expenditure on merchandise and (4) the strengthening of the capabilities of the collecting societies and publishers which translated in income from public performance and synchronisation becoming more significant.
Case: Robbie Williams
Robbie Williams’ £80m deal with EMI in 2002 was described by industry experts as unprecedented, and it was said to have changed the way the business works.
EMI did not only sign Williams’s next six releases, it also got a cut of his lucrative merchandising, publishing, and touring rights. In effect, it became a multi-interest entertainment business rather than just a record label. EMI’s president, Tony Wadsworth, said: “It means record companies and artists are much more clearly on the same agenda. It may signal a change in the business, as investments we make in artists are realised in a greater range of potential income streams instead of solely recorded music sales.”
Industry sources at the time said: “Labels have financial problems with enormous overheads and staffing levels, so they have to work out ways of reinventing themselves. It’s no longer about manufacturing records out and sending them to shops. They need to evolve into entertainment companies, and that includes the whole shooting match.”
360 Deals and Indie Labels.
360 deals are appealing to independent labels which use them as a way of acquiring a variety of rights, increasing their income streams and improving their bargaining power when negotiating major partner’s involvement later in time. The main concern for artists is that independent labels may not have the capabilities to realise the full potential of the rights acquired and to monetise them. In other words, 360 deals are better implemented by companies with experience, contacts and industry leverage and those who can financially subcontract services when needed. Independent labels without experience and infrastructure may in good faith licensed the artist’s rights but struggle to realise their full potential.
With every right comes responsibility and for labels having different sets of rights assigned should mean they have to work really hard to exploit each set of rights assigned to them.
360 Contract key points
Royalties: When a label is looking to have different types of rights assigned to them (such as copyright, merchandise, live work agency rights, etc) they have to pay different levels of royalties depending on the type of rights assigned.
Broadly speaking, an artist should not accept less than 70% of net-profits for publishing, 50% of net income for record sales and merchandise and around 80% of net income for live work. Ideally, artists should be allowed to shop around for other deals and give the company a chance to make a new deal matching the terms of third-party offers, i.e. give the label a ‘matching right’.
Cross-collateralization
‘Cross-collateralization’ means using income for a certain type of activity to cover costs related to another activity, e.g. using merchandise income to cover outstanding recording costs or using a money advance from a sub-publisher to fund the making of merchandise. Cross-collateralization must be avoided in the interest of the artist getting their remuneration sooner or in fact ever getting paid at all. The risk of having less or not profitable activities (money holes) should be borne entirely by the label and not alleviated by taking money from a profit-making-activity that would otherwise be payable to the artist.
Labels are advised to keep and maintain separate, distinct and non-cross collateralised sets of accounts, in respect of:
- Services in relation to activities as recording artists;
- Services as songwriters and composers;
- Services related to live performance.
- Services in relation to merchandise.
- Services in relation to other activities.
Difference between 360 deals with indie labels and major labels.
Below is a comprehensive list of differences that a 360 deal may display depending on whether it is offered by a major or an independent label.
| Major Label | Independent Label | |
| Term | May have a long term with more option periods to extend or terminate the contract. | May only be for a couple of option periods or for a set time to exploit a certain number of recordings commissioned or already made by the artist. |
| Licence or Assignment | Will more likely involve assignment of copyright | May only be for a couple of option periods or for a set time to exploit a certain number of recordings commissioned or already made by the artist. |
| Length of copyright assignment | Above 25 years to life of copyright, depending on whether there is a significant advance being offered. | Less than 25 years |
| Advances | Will very likely have a provision related to the payment of advances of future royalties | May not provide for payment of advances |
| Services artists is engaged for | The major label will try to sign the artist for any and all services and set of rights that the artist has. The major may also try to put a manager’s agreement in place to oversee all of the artist’s | In ideal scenarios, the independent label will only sign an artist for the rights the label is set up to exploit and will not try to overreach to areas with little expertise/contacts/infrastructure. |
| Recording budget | Will very likely have a provision related to the payment of a recording budget. | May not provide for payment to make recordings. The artist may have already funded the making of their own recordings and just deliver them to the label. |
| Royalties | Some payment of royalties, such as those related to record sales for example, may still be based on PPD (Price Published to Dealer) models. | Payment of royalties will most likely be based on a split of Net Receipt models. |
