Sunday, December 23, 2007

Why 360-Degree Deals Won’t Turn The Music Industry Around

The ‘music industry’ has at last awoken to acknowledge the existence of ‘new’ music distribution networks such as the World Wide Web and P2P. It has also begun to realise that quashing these technologies by imposing crippling Digital Rights Management on digital recordings may not be terribly effective, and so a new business model has been proposed - the 360-Degree record deal…
Take More, Give Less

This new form of record deal is in many respects very similar to the classic deals of the 20th century (where the label gets the vast majority of the music sales profits), but this time around the labels want to also take a sizeable cut of the artist’s live performance, publishing and merchandising earnings.

So, what’s the benefit from the artist’s point of view? Well, to put it bluntly, none. In fact, the deal for the artist under this new regime is far worse than anything that had previously been available. For the majority of bands, even very well known ones, their main source of income is usually touring and merchandise - and the industry now wants a slice of this pie. To justify their cut, they say that their PR and promotional engine can help to break new bands, but this is what they had always been doing anyway. Rather than give up so much potential income, new bands would be far better off producing (and distributing) their own music and hiring a dedicated promotional agency to handle the marketing and business side of things.

Here’s a typical breakdown of the 360-Degree Record Deal for new bands:

* Label gets approx. 90-95% of record sales
* Label gets approx. 10% of touring income
* Label gets approx. 10% of merchandise income
* Label gets 9c publishing cut per song (or more, depending on media distribution)

Of these elements, the first one is the only clause consistent with previous practise in the industry. The labels have brought this model in as a response to the changing face of music distribution and consumption technologies, but the very prevalence and affordability of these technologies is the reason why no artist should commit to a 360 deal in the first place. If you have enough on the radar to attract the attention of a major, then you really don’t need them.

Are Audio Engineers Making Artists Lazy?

According to Unsprung Artists, the 360 model requires that new artists become “durable, enduring and timeless”. However, as the market becomes increasingly filled with amateur productions, it is the glossy, overcompressed and overproduced shiny sound that stands out - but this ‘professional’ sound is often as deep as the single goes, with the music itself lacking in any real depth, musicianship or integrity.

I certainly agree with Bruce’s view that, for music to have any real longevity, there must be more than production expertise involved - however, I wouldn’t cite the increasing prevalence of home DAW systems as the culprit in any perceived decrease in the quality of music being created worldwide. Technology has made it easier to make music, but it hasn’t made anyone a better or worse musician - what it does is enable musicians to create things in ways that were not possible before, and it certainly allows us to do many things much faster than before.

Musicians will always be judged in relation to the quality of the best music out there, and the best music requires talent, expertise, dedication and hard work. There are times when the hard work is in learning a new instrument, and once that is mastered then one can just let the music flow naturally - such natural ability can never be superseded by software. One of the great challenges of being a musician is in finding your strengths and, quite literally, playing to them. If your strengths are simply dropping sample loops into Ableton Live and tweaking a few filters, that’s fine - but it’s not going to set you apart from the thousands of others who do the same thing, even if you get Bob Katz to master your CD.


ADK said...

First, thank you for your thoughtful and informative post on 360 degree deals. You have demonstrated that such a deal would be detrimental to new artists but how do you think it will affect established artists? The new deals signed between artists and Live Nation are all 360 deals and surely, seasoned industry veterans such as Madonna, Jay-Z and U2 would not jump into 10-12 year deals blindfolded. I do agree that signing a new artist to a 360 deal could be unfair to the artist but I believe that with the record label relieving the pressure of immediately sending out a mega hit on a platinum album will allow the record label to spend more time on artist development. At least that would be the ideal way for it to work. Unfortunately there are many music industry executives who simply see dollar signs instead of talented human beings. On another note, perhaps new revenue from established artists 360 deals can help fund new artists and some sort of giving back system can be put together. Unfortunately looking at the history of the music industry, I feel it may be a short term fix for the dip in profits rather than a permanent change for the better. Though I am as skeptical as you, I cannot help but hope that the music industry may someday become more artist friendly. It seems to be shifting to the artist's hands anyway. I appreciate your opinion on the matter and it will be interesting to see how long the 360 deal will last or how many artists who do sign a contract will benefit as I feel it can go either way at this point.

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