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The Genesis of 360° Deals

by: Aashish Pathak | November 15, 2019

Traditionally, record labels limited their revenues to sound recording sales, and artists would exploit other revenue streams to increase their profits, like touring and merchandise sales. However, with the music industry in perpetual financial flux due in part to a culture of unapologetic copyright piracy violators and licensing deals paying pennies on the dollar in the streaming era, the cost of breaking in new artists has become onerous. To that end, the 360° deal has begun to take center stage.

The up-front costs for creating these other streams are generally quite expensive for the artists, so sharing those costs with a record label helps alleviate some of the initial financial pressure. Artists and management each invest and realize profits from multiple sources of revenue, rather than relying solely on the traditional income stream of sound recording sales. For example, artists who compose their own material can allow record labels to share in the profits from publishing, in exchange for investing resources in promoting their songs. A record label can provide musicians with an attractive advance in exchange for percentages of their various revenue streams.

These include the following:

  • Touring & Live Performance
  • Songwriting
  • Publishing
  • Merchandise
  • Sync Licensing
  • TV & Film Appearances
  • Lyric Display
  • Books

The key to an equitable 360° deal lies in the negotiation. So, if a record label is receiving multiple revenue streams from one artist, the musical artist must negotiate that the label adequately markets the recording artist. For instance, the label should be working to attract and persuade music supervisors to buy the artist’s music for inclusion in multimedia platforms -- TV, film and video games. Deals can be set up as a 50/50 split (e.g., a profit share) where both entities maintain equal rights in expenses and profits for the music products. This can allow both parties to engage in a more transparent and accountable relationship. Ultimately, the goal is for all groups involved to properly exploit the music, while feeling fairly compensated for their efforts.

You can imagine that this could create a fire hose effect with a voluminous and continuous flow of royalty data, and the subsequent hassle and energy drain of using Excel spreadsheets to manage these disparate data streams makes this tool no longer viable for managing the process. Software is foundational for companies seeking to get what is owed to them and to keep harmonious relationships with their clients. In fact, recipients of royalties are likely relying on software to ensure their complex payments are being settled fairly.

Among the many software options available to music publishers, Vistex has the legacy of being a leader in solutions that save the entertainment industry—including music, TV and film—time, money and business relationships. Vistex is the world’s first enterprise-wide content management solution for rights, royalties, and licensing.