It’s a well known fact that 360 Deals are pretty much the norm these days for any artist wanting to align with a major label. Mainly out of curiosity I’ve always wanted to see how one broke down, because outside of ponying up for recording costs, what else can you say a major label does for an artist? They don’t develop them anymore; instead stepping in after the artist has some semblance of a following and selling them a dream. Industry jack of all trades, Wendy Day, feels the same way & penned an enlightening article on the subject. Using her contacts and knowledge from her time served, she compared a traditional deal vs. a 360 deal.
Back in the day, labels took roughly 87% of the pie while giving the artists 12% of the money AFTER the artist paid back everything spent on them from that 12% share. This means that if the artist sold $500,000 worth of CDs, and it cost $50,000 to market and promote that CD (a very low example), the artist share of $60,000 (12% of $500k) would be divided between paying the label back that $50,000 and a check for the remaining $10,000. The label would receive $490,000 for its investment and belief in that artist while the artist made $10,000. In exchange for giving up the lion’s share of the sales, the labels always told the artists that they’d make 100% of the touring. Any show money, was the artist’s to keep!
When the @!%* hit the fan financially for the labels, they decided to tap into the show money, and all other streams of income for the artists, as well. After all, if your profit margin is made smaller, you need to eat more of everyone’s income to keep the fat cats at the top, and the stock holders, happy. Most 360 Deals share in endorsement income (15% to 30% depending on the artist), performance income (10% to 30% depending on the artist), merchandising income (20% to 50%) and Film/TV money (15% to 40%).
While those percentages can go pretty high, they’re even more eye popping when she applied some numbers to them:
Example of a “360 Deal