There is no need to beat a dead horse, but lets kick Mr. Ed around for a second.
The music industry has changed, and even if you don't like what's happening you may have to just suck it up and deal with it if you really want to be a musical icon. So here are a few facts.
The four major, soon to be three, record labels account for 88% of recorded music sales leaving just 12% to be split among the countless indie labels out there and popping up as you read this.
The major labels are responsible for this huge difference because they have the financial backing and resources needed to launch an artists career. I am not saying you can't live comfortably with an indie, or even start out with one and then move up to the big leagues. I am just saying that if you still dream of being the next Jay-Z, Madonna, or Taylor Swift you will need a major in your corner. Now here's the downside, or the upside if you actually pay attention.
All of the major labels, Sony/BMG, Universal, and Warner have instituted the notorious 360º Deal for their new artists. Now you may be able to get signed without handing them a piece to the whole pie, but it is very unlikely at this time. Many musicians are furious about this new practice, and some hold valid arguments, but for a second let's step away from what you have been told by your buddies and examine what a 360º Deal is.
Basically put, and I am sure you all know this, the 360º gives the record label a piece of your recording royalties, publishing, merchandising, touring income, endorsement deals, licensing, and whatever else you may make money on with your brand image. Notice how I said brand image instead of music.
In the past artists just forked over money from their physical recordings and in some instances publishing royalties to their label partners and got to keep all the other income associated with their business model. Now if you just read the 360º Deal as that you would scream and shout that you were getting the shaft. What many pundits leave out is what the label gives to you for that chunk of pie.
When you sign a 360º Deal with most major labels they then takeover all of the production and costs associated with every aspect of your brand. They help design, print, and distribute your merchandise. They help solicit your music to film, television and advertising companies. They help put together your tour. They even help you find sponsors. Without this type of deal you, as the artist, would need to fund these endeavors yourself, and many times that required asking your label for a loan to get each project off the ground. Now they do that for you, basically because the more they invest the more they stand to earn.
On top of funding all of the other income streams that can make you money the labels have the connections to get your new product and services to a much larger audience than if you went at it alone. They have connections in the film and advertising industry, the touring industry, the merchandising and distribution realm, and they have those connections all over the world. So think of it like this you could do it yourself and potentially reach two million people in one geographical location in the states, or hand it over to a company that can reach 2 billion in China alone.
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When Jay-Z signed his 360º Deal with Live Nation he got 775,434 shares, plus an option on an additional 500,000 with the exercise price of $13.73.
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You see they have the money and the connections to make you into that superstar you always dreamed about. But to hammer the point home I offer one more point. If I was the head of A&R for Sony and had two bands that I wanted to add to our roster. One of them was more than willing to sign to a 360º Deal and the other demanded a typical contract, as a business person looking out for my bottom line who do you think I would sign first?
I am not condoning the 360º Deal or condemning it in any way. I am just tired of seeing all the negativity with very little about what the majors give to you in return. Remember in any true negotiation or business deal each party should feel as though they have given a little and got a little in return. And finally if you really dream about super stardom, private jets, sold out shows at Madison Square Garden and a gold plated shark tank in your mansion you may have no choice but to sign a 360º Deal so be prepared.
And finally, if you ever have the carrot dangled in front of your face GO OUT AND GET A REPUTABLE ATTORNEY who specializes in music business contract negotiation. The ambulance chaser you saw on TV can't help. You need a contract lawyer who can make the language work better for your career and save you millions in the process.
Here are some links to learn more about 360º Deals:
http://musicians.about.com/od/ah/g/360deals.htm
http://techcrunch.com/2008/11/08/360-music-deals-become-mandatory-as-labels-prepare-for-free-music/
http://www.nytimes.com/2007/11/11/arts/music/11leed.html?_r=1
http://lawyer4musicians.com/2009/03/22/you-spin-me-right-round-like-a-360-record-deal/
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