I've felt somewhat alone in my abject disdain for these so-called 360 deals that labels are foisting upon artists. In a nutshell, a 360 deal entitles the label to a piece of pretty much all the revenue streams of the artist (hence the term "360"). Typically, a label would only be entitled to revenue generated from the sale of the records they release. Under a 360 deal, the labels not only get that stream, but also a piece of ticket sales and merch.

These 360 deals aren't new. Robbie Williams and Korn did them years ago. The difference was that those artists (a) had a choice not to do them, and (b) received massive advances for these rights. Now, artists don't have any choice (you want a deal with a major...this is the deal you get), and the advances are basically what these artists would have gotten for a non-360 deal.

My issue with these 360 deals is primarily one of taxation without representation. That is, the artists are giving up a piece of their revenue and not receiving anything in return. Did labels, in the course of the past year, suddenly become expert at maximizing touring and merch revenue? Of course not. They're not doing anything differently than they always have (to their peril), but now just want to share in the earnings.

I do get the labels' argument. They feel - not without reason - that the artists are able to sell concert tickets and t-shirts, in some respect, because of the promotional work that the label has done. That said, these revenue streams are often the only ones that keep a band solvent while they wait (often indefinitely) for a royalty payment from the label. There was sort of an unspoken understanding that artists would take the lopsided deals with the labels because they (the artists) could increase some of their other revenue streams; such as touring and merch.

With 360 deals, these once sacrosanct revenue streams of the artists are now just another piece of collateral that the label holds. What happens, for instance, if the artist is horribly unrecouped (as so many are), and the label expects them to keep touring, but won't pay any tour support? The artist can no longer subsidize their tours nearly as effectively because their revenue from CD sales, t-shirts, and tickets has now been drastically reduced...because the label is taking their cut.

Now, I'm no fan of the unrecouped artist. Bands need to not look to the labels as banks. They need to find multiple revenue streams to be sure that even if the label drops the ball, they have other ways to keep going. 360 deals make that impossible.

Finally, my biggest issue - going back to the taxation without representation idea - is that the artists aren't getting any value for what they're giving up. If the artist's ability to generate tour/merch revenue was greatly increased (over and above what it always has been) by something the label is doing, then, by all means, the label should share in it. It's not, and the labels shouldn't.

Phew.

Anyway, Creation Records founder Alan McGee agrees with me, and puts it far more succinctly and entertainingly in this post. Some salient quotes:

In a 360-degree deal, this is what the records company is doing: ripping off the door at the gig. Let's call it like it is. Where is the morality in that? The cops would bust someone for stealing at the door. And everyone would applaud. It raises the question of legality. If you want a record deal you have to give up money you earn from other endeavours. Isn't this a form of extortion? I hope some attorney gives counsel on this for us all.