As CDs become a thing of the past, record labels have had to find other ways to make a profit. The Multiple Rights Deal, also known as a 360 deal, is one way they are doing this. Instead of deriving all revenue from album sales, these new deals give the record label a cut of the monies from touring, merchandising, and publishing. Clearly, a deal with money coming in from multiple sources is a good thing for the record companies. But artists must now consider whether or not these deals give away too much to their label.
With massive competition from online music downloads eating into their profit margins from CD sales, it shouldn’t be a surprise that record labels are turning to 360 deals and their multiple revenue streams. In addition to their financial impact, 360 deals also provide labels with a chance to become more involved with brand creation and control. Labels can sell themselves to artists as a “one stop shop” to handle touring, merchandising and publishing.
As an artist, there are pros and cons that must be carefully examined before entering into a deal like this. Record labels will want to take a bigger piece of your revenue, possibly more than you as a fledgling band are willing or able to give up. But in return for that bigger share, labels may offer a larger advance and, in many cases, touring subsidies that otherwise would not be offered(1). They also can perhaps afford to be more patient with new artists who do not have strong CD sales because they can rely on additional money provided by touring, merchandising, and publishing. However, a major concern is whether or not labels have the experience and know-how to competently handle these new operations. There is a very real possibility that artists could be caught in the middle of the label’s growing pains.
When you are faced with a Multiple Rights Deal, don’t assume the deal will benefit you. Make sure the terms are clear and are for a short, yet reasonable period. An example would be an agreement that involves 3 albums or one that lasts for 5 years. Getting your band signed can be an exciting and fulfilling experience, but you still want to ensure that you are not taken advantage of. Planning ahead, doing the research on a label’s strengths in ALL areas of the 360 deal and setting reasonable terms of the relationship will help to ensure that your best interests are looked after.
by Sarah Demarco
1 Jeff Leeds, “The New Deal: Band as Brand”, New York Times, November 11, 2007 http://www.nytimes.com/2007/11/11/arts/music/11leed.html?_r=1&oref=slogin