Deal Evolution: Why 360 Degrees Doesn’t Cover It All

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The music industry has its fair share of cliches, but on the contract side, the “360-degree deal” is already becoming a bit overused.

So what, says one executive, simply because it accurately describes the all-encompassing nature of an all-asset contract.  But according to several lawyers at Midem this week, better to use the umbrella “multiple rights deal,” a catch-phrase that covers a far broader range of contract structures.  That includes so-called “90-degree” and “270-degree” deals, and a variety of other partnerships covering less than every asset generated by an artist.

Alongside the specific degrees, different types of deals and novel structures are proliferating, and artists are wise to be informed of the emerging trends.  Major labels are almost exclusively signing 360-degree deals these days, a trend that was once again reiterated at the conference.  But majors are only one player on a very changed field, one that now includes consumer brands, television networks, and mobile companies, among others.  It also includes the self-starting artist, who can easily ride solo through a range of innovative, do-it-yourself approaches while selectively striking limited partnerships.  “It’s not only the record company that is involved in these types of deals,” attorney Bernard Resnick explained during a Midem legal symposium.

In fact, anyone with enough money can now come to the table, a trend perhaps best exemplified by touring behemoth Live Nation.  The Live Nation entry highlights the decreased competitive negotiating power that label groups now exert, and the increased options that artists – both established and emerging – can exercise.

Live Nation is the author of one of the most classic, textbook 360-degree deals to date, a tie-up involving Nickelback.  The deal encompasses the gamut of assets generated by the rock group, an exhaustive list that includes recordings, touring, merchandising, licensing, and even literary rights.  “Whatever Nickelback does, from the minute they wake up to the minute they go to sleep, Live Nation is involved,” Resnick continued.

But that’s old news to many executives and artists.  What about these newer deal structures?  At this stage, almost every variation is possible, and limited only by the creativity of the partners involved.  In the case of Bacardi, a recent alliance with Groove Armada focuses heavily on touring and recordings, both components that can easily be tied back to the brand.  In the case of U2, a stepped-up, 12-year deal with Live Nation focuses on touring, as well as merchandising, branding, and certain digital aspects. But publishing and recording stays with Universal Music Group.

Of course, few bands will ever reach the superstardom of U2.   But savvy artists and their managers are wise to tap partners for specific needs like publishing, based on the expertise of the core team.  That makes sense in a market that allows artists to create direct fan relationships, and keep a massive percentage of resulting sales.  Indeed, many have argued that the manager is the natural nexus for all of the artist’s endeavors, instead of the label.

A “sub-360-degree” structure also allows more flexibility.  Artists can typically leave managers if things go sour, but exiting a major label, 360-degree deal is less straightforward, and any dispute could stall an artist’s career.  In previous horror stories, labels would freeze new recordings, and prevent releases through any competitor while a dispute ensues.  In the current model, a label group could theoretically cause problems across every earning aspect of an artist’s career, potentially during the peak of an artist’s fame.

Other issues continue to crop up, including questions related to whether label groups have the in-house competence to fully manage all-encompassing deals.  Additionally, the 360-degree is less beneficial to the manager because of responsibility conflicts.  According to numerous executives and lawyers at Midem, the all-encompassing label deal quickly encroaches upon the manager relationship.  “The agreement doesn’t say, ‘we will be your manager,’ but they start saying that they are going to be involved more,” attorney Dina LaPolt relayed.  “It’s not in the contract, but they’re barging in.”

Resnick took it a step further by pointing to contracts that explicitly limit the managerial role.  “I’ve seen a contract with a major where they did more than allude to it,” Resnick shared.  “They actually said, ‘you as an artist will limit the commission you will pay your manager’.”  That promises to be the beginning of a prolonged turf battle, one that could marginalize certain manager relationships.

Report by publisher Paul Resnikoff in Cannes.