Stumbling Towards 360: An Industry Licks Its Early Wounds

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In theory, the 360-degree deal is an elegant proposition.

The more holistic structure encompasses all aspects of an artistic career, including recordings, live performances, merchandise, sponsorships, and publishing.

Sounds attractive, though in practice, crafting the 360-degree deal has been anything but easy.  And a number of major issues are plaguing early market-shapers.

Viewed from a label perspective, a major competitive threat immediately presents itself.  Because anyone with a big enough pocketbook can play this game, and labels are already getting outbid.

But big checks are only one component of a successful strategy, and major disagreements at Live Nation offer a high-profile example.  Just last week, Live Nation said goodbye to superstar promoter Michael Cohl, the result of a major rift related to artist mega-deals.

Cohl favored a shopping spree on mega-artists like Madonna and Jay-Z, both of whom recently landed multi-year, $100 million-plus agreements with Live Nation.  Live Nation chief executive Michael Rapino, on the other hand, favored a more measured approach.

Meanwhile, superstar artists (Radiohead, NIN, Pearl Jam, Tori Amos) are increasingly leaving the major label system, instead of embracing all-encompassing arrangements.  And newer artists are carefully considering their options, and pondering the disadvantages of rolling everything into one unified contract.

In London last week, executives were also fumbling through the early stages of 360, and addressing deeper, structural challenges.  “The artist and the manager are the only ones that are really at the center,” explained Fred Bolza, Senior Director of Digital Development at Sony BMG Music Entertainment UK, speaking at London Calling.  “Everyone else is attempting to drive value from outside areas.”

And when it comes to major labels, artists are frequently looking for a massive payday upfront.  “It’s always to a degree about the check, and everyone is complicit in that check culture,” Bolza noted, outlining another challenge to effective partnership creation.

Meanwhile, the clock is ticking on a waning recorded asset.  Year-over-year sales declines are in the double digits, and digital assets are only softening the blow.  “I believe in three to four years, music is going to be completely free, whether we like it or not,” said Audu Maikori, chief executive and president at Chocolate City Entertainment Ltd.

Elsewhere, executives continued to criticize an industry that is overly focused on younger buyers.  “Maybe it’s better to think 3 to 60 instead of 360,” quipped Eamonn Forde, author of monthly music magazine Five Eight.

That is a valid criticism, especially given the decreased purchasing activity of younger music fans.  But trendsetting remains a youthful pursuit, despite the massive devaluation.  And younger buyers exist within an increasingly-crowded entertainment field, one that frequently edges out discrete music purchases.  “The unit of music is no longer relevant to the user,” Bolza observed.  “There is a value to it, though the practical value is zero.”

Report by publisher Paul Resnikoff from London.