What is a 360 Deal in Music Contracts?

Estimated reading time: 9 minutes

Let’s say you’re living the dream of so many musicians: A record label not only shows interest in you (yay!) but they’ve even gone so far as to offer you a contract (yay!). Maybe following our advice on how to get signed to a record label has paid off. Time to celebrate, yes?

Well… not so fast. Did they offer you a “360 deal?” If so, you might want to take some time to examine exactly what a 360 record deal is. After all, the music industry has a rich history of ripping off artists, and 360 deals are a relatively new phenomenon that has its supporters as well as plenty of critics.

Table of Contents:
• What is a 360 deal contract?
• What are the pros of a 360 deal contract?
• Should I accept a 360 deal contract?
• 4 tips when negotiating a 360 deal contract
   1. Get a lawyer
   2. Keep exemptions and carve outs in mind
   3. Define your splits
   4. Remember: everything is negotiable

Is a 360 deal contract a good deal for musicians or is it just another in a long line of shady label shenanigans? Let’s dive in and find out.

What is a 360 deal contract?

A 360 is an exclusive contract between a record label and a band or artist in which the record company not only takes a share of the artist’s music sales, but also percentages of their revenue from other ventures outside of what the label is directly involved with.

So, not just your record and digital music sales, but also things like merchandise and concerts — which have traditionally been the main way artists actually earn money. But labels don’t stop there. They also want a piece of your songwriting and publishing revenues, licensing and placement royalties, and pretty much any other kind of income stream they can think of. Knowing what royalties are in music is crucial when navigating these contracts, as they play a significant role in your overall earnings.

Got an endorsement deal with a brand of instrument? The label may want a slice of that. Getting paid to be in an ad, a TV show, or a film? The label will be thrilled to share some of your earnings from those ventures.

A 360 deal can even give the label the right to acquire your copyrights.

Singer/songwriter Mac DeMarco feels this way about 360 deals:

Do not sign a 360 deal. I don’t care how much money they’re offering you, don’t [take it]. It’s an awful, awful idea. … And they own your image. They take money from your merch on tour — nobody should touch that. … Do not give anybody that merch money, or your show money.

So, you may be asking yourself, why would anyone want to sign a 360 deal contract? Well, it does have its pros.

What is the difference between a basic record deal and a 360 deal?

A 360 contract represents a significant departure from the traditional record deals that have long dominated the music industry. In a traditional deal, the record company typically profits from record sales, album sales, and sometimes music royalties generated by the recording artist. However, a 360 record deal expands the scope of income sources, allowing the record label to also profit from an artist’s revenue streams outside of record sales. This can include income from music publishing, merchandise, touring, endorsements, and more.

The key difference between these two types of deals lies in the distribution of revenue and control. While a traditional deal often allows artists to retain more control over their non-music-related earnings, a 360 contract enables the record company to take a cut of these additional revenue streams. For an emerging artist, this might seem like a viable option as it often comes with more extensive support from the record label in terms of marketing, promotion, and career development. However, it also means that the recording artist must share a larger portion of their earnings across various aspects of their career.

What are the pros of a 360 deal contract?

Despite everything you’ve read so far, 360 deals aren’t evil. There is logic behind them, and they can even be helpful to artists.

The idea behind a 360 record deal came about in the 2000s in response to the decline of album sales. Desperate for another revenue stream, labels started to take a bigger-picture approach to look to what their role truly is.

So, the thinking behind a 360 deal is that, because the labels are the ones spending all the money upfront to make their artists famous, why shouldn’t they capitalize on any revenue the artists get thanks to this new-found fame? Because, to properly break an album, a record label has to spend money not just on studio time, but also on promotion, which can include all sorts of costs you might not think about.

The question the label asks is: Would this artist even get an endorsement deal if the label hadn’t made them famous to begin with?

To take this logic one step further, if the label is going to try to claim a piece of all their artists’ non-album-oriented deals, they have some compelling incentives to help their recording artist get those deals in the first place.

So now the record label might be the one responsible for their artist getting an endorsement deal, landing a cameo on a TV show, or booking a tour.

In fact, 360 deals typically imply that labels are paying more money up front for the recording artist. That implies you might not have to pay for your own booking agency or merch.

So, with a 360 deal, you’ll get more support, wider exposure, better marketing, access to the best producers and engineers, and just generally connect with more people in the industry than you would have under traditional record deals.

At least in theory. And of course, all that help comes at a cost. Or should I say, costs? Because the label will take a percentage of everything, leaving you with less direct revenue downstream. Artists also tend to find that 360 deals give them less creative control over their music or their careers.

Is a 360 contract good for indie artists?

Determining whether a 360 record deal is beneficial for the artist depends on multiple factors, including their career goals, level of independence, and financial needs. For an emerging artist, a 360 contract might be appealing due to the comprehensive support provided by the record label, which can include funding for recording, touring, and marketing. This level of investment can be particularly valuable for artists who may not have the resources to manage these aspects of their career independently.

However, the trade-off comes in the form of reduced earnings. Indie artists must weigh the benefits of having a strong record company backing their career against the potential loss of income from music royalties and other revenue streams. For some, the trade-off might be worth it, especially if they require the resources and industry connections that a major label can provide. For others, retaining full control over their income might be more advantageous, particularly in an era where digital platforms allow artists to reach audiences directly without the need for a recording contract.

Should I accept a 360 deal contract?

Ultimately, it’s up to you to decide what’s right. You may decide that the creative and revenue costs are too much and that you’d rather do things on your own. Sure, it may take you longer to get successful, but at least you’ll do it on your terms and without owing money to anyone.

Alternatively, you may believe that a 360 deal is ideal for your goals at this time. If so, it’s important to know how to release music effectively, whether independently or with a label’s backing.

A 360 deal can boost your career in a very short time, and once that contract is up, you may have everything you need to go out on your own, or to sign a better deal with someone else. We have tips on submitting your album to UMG or other major record labels.

Of course, no two contracts are the same, and to really know if you should or shouldn’t sign a 360, you first need to examine the specifics of your contract.

Which brings us to…

4 tips when negotiating a 360 deal contract

1. Get a lawyer

The very first thing you should do when getting a 360 deal contract (or any contract) is to hire a lawyer. And not just any lawyer, but an entertainment lawyer who specializes in the music industry.

Do not ignore this step. You may think, “Oh, I can read. I’ll figure out what this contract is saying.” No. You are not an experienced lawyer. You have no idea what is standard. You have no idea what you can negotiate. You may see something that makes sense in English but not realize that you are missing out on some of the important legal nuances.

Hire a lawyer. Yes, it may cost a couple of hundred bucks, but it can literally save your career.

2. Keep exemptions and carve-outs in mind

When discussing the contract with your lawyer, be sure to let them know what other creative endeavors you may already be undertaking that are outside the scope of your music deal. After all, a lot of contracts include vague and all-encompassing terms which the labels can use to try to go after money they should have no right to.

For example, let’s say you write children’s books or you have a catering business. You will want to have these businesses “carved out” of your musical contract so the label can’t go after those sales.

3. Define your splits

Be sure to clearly define the division of profits. In other words, define how much of your revenue from each source goes to the label. They may want 40 percent of your live performance revenue, 20 percent of your merchandise, 10 percent of your endorsement deals, etc. Define every single item clearly with no vague language.

4. Remember: everything is negotiable

Many artists are so excited at the prospect of getting a record contract, they worry about pushing back too hard for fear of losing the deal. This should not be a concern. The label wants to work with you. The contract is just the opening salvo and it is normal business practice to negotiate from there.

If you are getting pressured to sign the deal “as-is,” run away from it, because no trustworthy company behaves like that.

But again, your lawyer will help you understand what’s a normal ask and how much you can and should push back on the contract.

So, if you’ve been offered a 360 deal contract, congrats! Now take a deep breath, hire a lawyer, and see if the record label is worthy of your abilities.

Scott McCormick is the author the Audible bestselling Rivals! series and the hit fantasy novel The Dragon Squisher. Scott can be reached at storybookediting@gmail.com.