60% Of Warners Artists Have 360 Deals

On a recent earnings call Warner Music Group CEO Edgar Bronfman revealed an interesting statistic; 60% of all their artists now have 360 deals with the labels. For those of you who've not been paying attention, a 360 deal is when the record label shares in all of your revenue streams from touring, merchandise, publishing, films, etc., and not just from music sales.

This is sort of like having your uncle who owns a clothing store be your manager. He may be able to get you into some nice stage clothes and even supply you with some dough for recording or tour support, but what does he know enough about the rest of the music business to help you at all? Same goes for signing a 360 deal with a major. They're not even that good with selling music these days, why trust them with everything else?

Bronfman also went on to say that a full 50% of their revenue came from areas of the business that did not exist in 2004, with the previously mentioned 360 deals a part of that.

Despite all the bluster, WMG still lost $46 million dollars last quarter, which they're touting as some sort of victory since they lost $55 million last year at this time. About the only good thing that I could see was that their total digital revenue grew 13% to $203 million, but that doesn't matter much when your bottom line is in the red.

The interesting thing about all of this is that WMG is in the running to buy at least some of the assets of EMI, who's price seems to be actually increasing by the day (supposedly there are at least 10 bidders, which is a total surprise). Warner's still has over $2 billion in debt, and even though new owner Russian billionaire Len Blavatnik has some mighty deep pockets, this isn't the part of the industry that I'd be speculating on, especially with such a high debt ceiling.

Another thing that's interesting is that Bronfman mentioned how "early traction is encouraging" when speaking about streaming service Spotify. That's all well and good, but believe me, no one's going to get rich on streaming music, especially after the first big license fee that a label takes in. It sounds like a good story to the stock analysts though, as major labels keep on dangling that carrot, and people still appear to be trying to catch it.

Bottom line - WMG lost a ton of money last quarter despite a big rise in digital music revenue. That one fact says it all.

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Selling A Million And Still In The Hole

If ever there was a reason to not be on a major label, imagine finally hitting it big with a million selling album only to find out that you're in the hole $500k to the record label, with additional money owed to management and agents. You think that's far-fetched? Watch this video by entertainment attorney Martin Frascogna, as he explains an all-too common scenario where just that happens.



Now keep in mind that if you have a good music lawyer your situation might not be as bad as what's described in this video, but you could still easily wind up owing money. The good part is the fact that you'll probably be in-demand to play shows, which will bring in additional revenue, but if you've signed a 360 deal, the label will have its hands in your pocket on that too. This can discourage someone who's only in it for the money, but not if you're in it for the music. Which one are you?

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Help support this blog. Any purchases made through our Amazon links help support this website with no cost to you.

You should follow me on Twitter for daily news and updates on production and the music business.

Check out my Big Picture blog for daily discussion of music, recording, and production tips and tricks.

Music Publishers And The 360 Deal

As everyone connected to the music business knows these days, record labels are demanding 360 deals with all of their new signings. Just in case you're not sure, a 360 deal is one where the record label owns a piece of all your income streams, including revenue from touring and merchandise.

Now you might think, "Why should I give them part of anything other than the part that they're supposedly good at - selling recorded music?", and you'd be right. It's pretty outrageous to pay anyone who can't make a real contribution to the success of a revenue stream. A 360 deal in essence gives a label the same control as a manager has, or at least the same fees, but since they're not even that good at their core business of selling music anymore, why should you give them part of something that have no experience in?

But now it turns out that major publishers want to get in on the act too, and are demanding their own 360 deals.

At one of the recent monthly Association of Independent Music Publishers (AIMP) luncheon at LA's House Of Blues, a panel of publishing business affairs execs told the audience that music publishers are now demanding additional rights that amount to major label 360 deals when signing new artists.


The reason why the major labels want (even need) 360 deals is because CD sales are in the toilet, and downloads don't make enough (and even those sales are flat) to compensate. They have to make up for the loss of income somehow, and taking additional rights from the artist is the only way (so they seem to think).

So it is with publishing. Until recently publishing escaped much of the turmoil of the music industry. Mechanical royalties (the royalty when a CD or download is purchased) have dropped, but performance royalties (when a song is played on the radio, television or in a film) have gone up as more and more television channels came on line. But now that income has dropped as well as just about every broadcast entity is paying less for music, so publishers are also trying to make up the lost income.

What's an artist to do? If the label, the publisher, the manager, and maybe an attorney have a piece of all of your income streams, there's not much left.

All the more reason for the DIY approach that's now possible in Music 3.0. That's the only way that you can put yourself in a position not to have to take a 360 deal of any kind. Any kind of success that you generate increases your bargaining power. It's no longer just another way to do it, it's now a necessity.

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Follow me on Twitter for daily news and updates on production and the music business.

Check out my Big Picture blog for discussion on common music, engineering and production tips and tricks.