In the music industry, success is usually measured by the amount of revenue an artist generates. Additionally, every musician hopes to retain his or her freedom of expression – the freedom to create music he or she loves. These two goals are often at odds with each other, as the musician struggles to earn sufficient funds to support his or her desire to create music.

As a result, recording artists and record labels combine forces in a variety of ways in the ongoing struggle to strike a balance. Various types of contracts and record label deals exist in the music industry, each with their pros and cons.

At one end of the spectrum is the self-distribution model in which the artist retains the highest level of personal freedom, but is often unable to generate sufficient income. At the other end, the artist obtains strong financial backing but may retain very little input into how his or her craft is developed and expressed.

What is a 360-degree deal?

A 360-degree recording deal – also known as a “360 record deal” or “multiple rights deal” – is a relatively new development in the music industry. As record labels and artists both struggle to generate funds in an increasingly difficult market, the 360 deal has emerged. In this contractual relationship, the record label – or other music industry professional – provides most, if not all, of the financial backing for an individual musician or band in exchange for a percentage of their earnings from all entertainment sources – not just from sound recordings.

In the typical 360 record deal contract, the financial backer – usually a record label -provides the musician with money for equipment, marketing, touring and album production as well as other expenses. In return, the label retains a percentage – anywhere from five to 50 percent or more – of the artist’s income generated from such things as:

  • Record and merchandise sales
  • Live shows and tours
  • Music licensing
  • Guest appearances
  • Endorsements
  • Fan clubs
  • Movie roles
  • Fashion, cosmetic and jewelry product lines

Intellectual property rights

With a 360 deal, the record label or other financial backer also obtains important rights in the intellectual property of the musician. Such rights include the following:

  • Copyrights
  • Trademarks
  • Literary rights
  • Personality Rights Personality rights (or “rights of publicity”)

Many artists want to retain all rights to the exploitation of their own creations and likenesses, and some even liken a 360 deal to “selling their souls to the devil.” But, for most artists, the chances of fame and fortune will be greatly increased because of the label’s financial backing. A 360 record deal can offer secure and diverse sources of income, open the door to live venue and studio access, and substantial marketing and promotion resources from the backer.

Due to the probability of reductions in their intellectual property rights and creative freedom, musicians should consult with an experienced entertainment lawyer before entering into a 360 deal. A knowledgeable attorney (combined with some bargaining power because of the artist’s potential) can help you negotiate your contract or any other record label deals, preserve some of your intellectual property rights and offer guidance as you plan for a successful future.