Example of a “360 Deal” (this is not an actual artist example):
Male rapper based in Atlanta with a strong following. He has his own team of inexperienced friends and family around him and a very strong street following. The DJs, fans, other artists and industry are supporting him and propelling him forward. With no real single or CD in the marketplace, demand is high—he’s getting $30,000 a show and performing three or four times a week for the past few months. This will last about 6 months, approximately. He’s put out a series of mixed CDs, for free, over the past year. The label signed him a year ago to a 360 Deal but hadn’t begun to promote him yet because their roster was full. The artist got tired of waiting and began putting out a new mixed CD every month to build his buzz.
Advance: $75,000 Album Budget once popularity increased: $350,000 Recoupable Marketing and Promotions: $750,000 Monthly Show Income: $420,000 Endorsement Deal: $50,000
Album comes out and sells a total of 350,000 copies (it was a very commercial album but the artist had been very street, almost gutter, up to the point of his album release so fans didn’t really embrace the album as expected).
Album income for label: $3.5 million Artists’ Share after Recouping: negative balance of $405,000 $750,000 + $75,000 = $825,000 12% of $3.5 mill = $420,000 $825,000 – $420,000 = $405,000 Artist’s endorsement Deal Share: $37,500 75% of $50,000 Artists Share of Touring Income: $1,764,000 70% of $420,000 x 6 months Artists Share of Publishing Income (50%): $100,000 (estimate of mechanicals and ASCAP/BMI royalties) Income for Label: $4,773,500 gross income on an investment of $825,000 $3,500,000 sales $405,000 recoupment $12,500 endorsement income $756,000 tour/show income + $100,000 publishing income $4,773,500 gross income Less Staff costs Less Day to Day operating expenses Less Taxes
Income For Artist: $1,122,375 income $37,500 endorsement income $1,764,000 tour income +$100,000 publishing income $1,901,500 sub total -$405,000 recoupment $1,496,500 gross income Less 20% management fee Less 5% Business Manager fee (Accountant) Less Tour costs/legal costs/tour manager/DJ/Operating expenses/taxes
Let’s compare gross incomes… Artist made 1.5 million while label made 4.7 million Artist share: 24% Label share: 76%
Let’s compare Net incomes before taxes… Artist made approximately $1 million while the label made approximately $4.5 million Artist share: 18% Label share: 82%
If the label is taking all of the risk (they are not), putting up all of the money in all of the right places (they are not), devoting all of their attention to this one artist (they are not), and doing most of the work (they are not), then this business model makes sense for everyone involved. But if the artist is doing the bulk of the work, risking their career in the hands of the label, and coming out of their own pocket for many expenses, then this business model is hugely skewed in favor of the major label.