The 360-Degree Deals in the Music Industry
Are These Deals the “Way Out” only for the Artists with an Established Reputation?
After the production companies and labels experienced the years of lost revenues in the CD sales, they decided to reinvent the contracts’ agreements, based on the income, which can be received by the artists from ancillary sources and shared with the other agreeing side (Stein & Evans, 2010). Moreover, the privacy issues forced the labels to reconsider engaging investments in the risky business of developing new talents, who have a potential in selling off the tickets for the concerts and in the merchandise areas, even though these musicians cannot be considered as the superstars (Fitterman Radbill, 2012).
Regardless the fact that, the recording companies claim these 360-degree deals will relieve the musicians from the pressure of returning the invested money immediately, the labels are trying to move from the traditional single-recording control of the recording management process into the control of the multiple oversight over the superstar’s income (Stein & Evans, 2010). This can be considered as the record companies’ attempts to partner and profit from the every part of the artists’ music industry practise, and require the future income of this practice to go beyond the level of the traditional recording numbers (Fitterman Radbill, 2012). Furthermore, in order to offset the profitable artist and provide an immediate return of investment, the label company should contract the artists with an established reputation, who can get sufficient amount of money, while performing on tour or revolving his/her single’s ringtones (“Thinking outside the Record”, 2011). For example, Madonna have signed $ 120 million deal with the concert promoters Live Nation and earned an estimated $ 194 dollars worldwide from her tour alone (Stein & Evans, 2010).
Despite the fact that, these deals provide healthy advances and funds for the tours and other merchandising ventures, these contracts take revenue streams, which are traditionally reserved for the musicians (Fitterman Radbill 2012). What’s more these agreements do not create a legal obligation to develop these revenue streams, making upcoming musicians consider the possibilities of the voluntary sharing of their active and passive interests.
Financial and Legal Aspects that the Artist should Consider Upon Signing the 360-Deal
The current conditions do not imply that the artists’ success can be measured by the number of the record sales, since the physical product of the recordings has lost its value, the recording companies have moved toward such services as financing of the streaming music, promotion of the cell-phone ringtones, and distribution of the concert tickets (“Thinking outside the Record”, 2011). Therefore, the contacts predetermine that the musicians must be ready to grant the recording company the right to manage and control some of the outside promotional and marketing rights, and yield a percentage of revenue, derived from merchandizing (“Thinking Outside the Record”, 2011). These interests are called active and passive respectively.
For that purpose, the artists must determine whether the contract is worth signing, and whether the deal ameliorates the artist’s promotion or impedes the artist’s successful activities (Stein & Evans, 2010). Moreover, the artist must analyze whether the deal creates an affirmative obligation to assist him/her, straightens the sponsorship, and allows managing only small pieces of the collateral business, related to the creative work of the musician. Therefore, the artist may negotiate particular excursions in which the recording company does not charge any revenue above or below the set threshold (“Thinking outside the Record”, 2011). For example, the artist may officially prohibit the label to collect the interest from the live performance activities that net less than $ 10,000 (Knopper, 2009). Furthermore, the artists can retain direct ownership and licensing of the releases and chose which master recordings can go on the record. The music directors and managers claim that these measures are great options for the artists to earn and restrict the label companies’ control over their decision-making outcomes (Knopper, 2009).
Furthermore, some musicians like the Eagles who want to hold against the cruel prevalent conditions and can sign the overseas labels, cannot bypass the recording companies yet, even though they do not require promotional support in launching the videos, and initiation of the partnership management to develop endorsement and licensing opportunities (Peisner, 2008). Current dominance of the computer business, force the artists to seek ways of “staying on track” and accept conditions of the recording companies.
Creation of the Sufficient Promotion for the Different Types of the Artists
Regardless the fact that, the labels overcharge the artists, the recording companies that use 360 deal models have become the appealing one-stop facilities that offer music distribution on the digital and networking platforms, help to earn partnership and sponsorship in the marketing and promotion industries, subsequently increasing the products’ production capability (Peisner, 2008). Therefore, the upcoming artists have the alternative way of creating and developing their show business careers through sufficient marketing and proficient distribution machine from the supported label companies.
Furthermore, non-mainstream bands that do not want burden themselves with the conditions of these deals, still have to distribute their music products through the major labels, even though these are independently released CDs (Peisner, 2008). Hereby, the recording companies have to become the artist-oriented centres and offer useful services for the stars of the different music styles in the context of these deals. For example, some adolescent hip-hop artists can make good sells in the ringtones patterns, but cannot gather huge stadiums during live performances. On the other hand, some contemporary alternative rock artists have success with the huge crowd of the fans, but their music is not widespread in the pop mainstream.
Therefore, the record companies and labels have to focus on what is right for the specific artist and distribute these musicians’ products, considering the customers’ preferences. Furthermore, the current conditions of the music industry envision existence of the few superstars and great numbers of the artists that can earn descent income and share respective interest with their recording partners. However, proliferation of the possibilities that the artists face nowadays in recording, financing, promoting and distributing of the music products, make them easier to climb up the pyramid of the success, but difficult to stand out on it.
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