Which Other Contract Clauses Should You Look Out For in a 360 Deal?

Our NYC and Miami Entertainment Law Firm advises and represents clients in all legal matters related to music, sports, television/film, visual and literary works, modeling, online matters, and intellectual property.

Miami Entertainment Lawyers

Take your music career to the next level by signing with a record label company. Typically, when upcoming artists have the opportunity to sign with a label, they agree to what is called a 360 Deal. This contract entails that the artist agrees that, in return for the financing and promotional influence of the record label, the artist will provide the label with a percentage of all streams of revenue.

This contract may or may not be beneficial to the artist, depending on the character of the record label company and the awareness of the musician. Chase Lawyers want to ensure that you don’t fall for a contract that could hinder yourself as an artist or your career. In a previous post, we focused on the positive and negative aspects of the 360 deal, so now we want you to become aware of three other possible contract clauses a label may send to you.

The Time Period of the Contract

Many record labels want to sign you on for as long as possible, so you should know how long the contract is intended to last. If you were to sign on for a five-album deal, there is a chance that it may not work out with the record label the way you wanted it to, or that they may only record one album for you (recording five albums in this type of deal is considered optional). But if you have already agreed to XX number of years, you won’t be able to back out of the contract. We recommend that you try to negotiate a short term music contract when you first start out with a label.

The Revenue Streams that are Included

You should also pay special attention to which revenue streams are included in this deal. Record label companies are known to collect a great percentage of record sales while the artist receives a percentage of royalties.  Some other revenue streams that are typically included in this deal are: live performances, sales of merchandise, composer copyrights, product endorsement, production of music for other artists, a possible book contract, and a movie or television role you may play.

The Production Process of Royalties

Royalties are generated through your Royalty Account. This account starts out as a financial hole that has been dug by the record label company, and it’s up to you to climb out of it. For you to gain a better understanding, we have provided the following example. If your record label decided to spend $200,000 on recording your music, purchasing radio advertising spots and organizing events or live performances you then have a $200,000 deficit in your account. It would be your responsibility to pay back that amount (with how much money you have made during these investments) before you would profit from any royalties.

The Presence of an Inspection Clause

An inspection clause provides you with the right to look at your record company’s financial accounts to make sure that they’re not making up expenditures to reduce your gross amount. This music inspection clause is specifically used in an event where you feel as though your net worth isn’t exactly what it’s supposed to be. Artists typically receive 30% of the gross amount, so if your gross amount is $100,000 the net amount that you should receive is $30,000.

The Assignment of Your Rights to Another Label

As your music career flourishes, it may be time to transfer to a bigger record label. This is an exciting time for most artists; however, it may not be everything you expect it to be. A clause that most 360 Deals have is one that states that they can assign its rights in your career to another company. If this is the case, ensure that you can view and approve the new deal (financial aspects and all).

Chase Lawyers is a boutique entertainment law firm that advises and represents clients in legal matters related to music, sports, television/film, visual and literary works, modeling, online matters and intellectual property. If you are planning a music career and have questions about 360 Deals, contact our Miami entertainment lawyers today to ensure your path to stardom is a smooth one!

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