Are 360 deals bad for musicians?

360 deals – contracts where record companies get a share not just of record sales but of other things such as concert revenues – are becoming increasingly common. Are they good for artists? Perhaps not, according to this Billboard piece by Bob Donnelly.

When you read the fine print, you’ll also discover that the labels want to make money from the books that artists write, the Hollywood movies in which they act and the fan clubs they create. In fact the labels want to share in absolutely everything. Does that sound fair to you?

In many of these 360 deals, the record company will demand that their earnings come out of gross revenues. This means that if the cash the labels actually receive has been reduced by any parties in the middle of the transaction (even if those parties themselves add value, as, for example, many music publishers do), then the label will add those amounts back in before calculating the percentage of revenue they retain.

Think about that for a moment. The manager doesn’t get paid on gross, and the artist certainly doesn’t get paid on gross. Why then should the record company be paid on gross?