Iyoriobhe 1

Isaac Iyoriobhe

Professor Gonch

English 101

10/2/17

Pro-Pro Paper

Many artists today are complaining about the climate of the music industry. They feel that record

labels are conducting practices that are unjust. One these practices is record labels offering artists 360 record

deals. A 360-record entails that when artists sign a record deal that labels are not only entitled to large

portions of the revenue made off of records, but also a large portion of all the revenue streams that artists

make such as touring, merchandising, publishing, and other endorsements. Though the general consensus

deems 360 deals to be unfair, Record labels practice of using 360 deals are ethical because record labels, in

many situations, put the artists needs before their own as a company, and use 360 deals to survive a

company in an era of declining music sales.

Most opponents of the 360 deal have the idea that record labels have used the 360 deals

as simple money grab to exploit artists revenue stream. Opponents also believe that 360 deals

have killed artist development because labels are just looking for the quick dollar, while

forgetting about the artist, the artists music, and building the artists fan base. This argument is

illogical for the simple fact that when record labels sign artists, the record label is looking to

make money off of artists. Records labels invest their time and money into promoting artists and

making sure the artist is creating their best music in order to make sure artists sell a lot of

records. With that being said, record labels accomplish their main goal when they develop artists

properly: labels make profits.

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360 deals favor artist development because labels offer more long-term commitments to

their artists (Basofin 27). Traditional record deals gave artists advances, but when artists failed

to sell enough records to pay back the money advanced to them, their labels would simply not

recoup the money because advances were nonreturnable (Basofin 27). Knowing this, record

labels are skeptical to sign artists to traditional deals due to the financial risk involved. It easy

realize why record labels are often seen as the bad guy because when this happens record labels

are in debt and sometimes have to release artists from their record deal. An example of this is a

jam band. When a jam band signed with a major record label in the traditional era, the bands

likely dismal record sales rendered them a prime candidate for being dropped early in its career

(Basofin 27-28). 360 deals allow labels multiple different revenue streams which allows them to

work with artists over long periods of time because labels can invest in artists with less financial

risk. For example, if a label signs an artist to a 360 Deal in which the label shares endorsement

income with the artist, the label wants the artist to be sought after for endorsements. But because

endorsements are generally reserved for artists with a wide following, labels may have to commit

themselves to artists for longer than single album cycles (Basofin 28). This example shows how

360 deals favor artist development, and also shows how 360 deals help labels invest more in

artists. This exemplifies labels putting artists needs before their own.

Not only do 360 deals allow labels to confidently invest money and have long terms deals

with artist, but 360 deals allow labels to sign a wide variety of artists. If labels are not making

money off of record sales, then labels will start to make 360 deals with a broader range of

artists (Basofin 25). Jam bands are the perfect example of a group that would benefit from a 360

deal. Fans of Jam band are not particularly fascinated with studio recordings but rather live

performances, which is why Jam bands are not known to sell a lot of records (Basofin 26). Craig
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Kallman, the Chairman and Chief Executive Officer of Atlantic Records, is aware of this. He

discusses how Jam bands during the pre-360 era would not have been able to sign to his record

label, but during the 360 era he is pressed to find a Jam band. Jam bands followed some of the

core tenets of the 360 structure which is part of the reason why they are so successful (Basofin

26). Record labels ability to work with a variety of artists shows the ability of labels to be

flexible and sacrifice.

Labels sacrifice in investing in artists and acquiescing late to digital downloading and

streaming services caused labels to resort to using the 360 deals as way to survive. Due to the

decline of in music sales during the last decade, record labels require alternate revenue streams

(Basofin 29). Edgar Bronfman, Jr., the Chief Executive Officer of Warner Music Group, has

said that from now on, his company will only sign new artists to 360 Deals (Basofin 28). The

reason for this is because today investing in artists is too risky. Since 360 deals have shown to be

profitable in areas outside of music, labels are able to stay afloat because they are not reliant on

one form of revenue stream. Furthermore, with increased profit in these areas there is incentive

for labels to expand their businesses whether it is investing in artists, or conducting other

operations. This example conveys even when labels make profit they use it to invest back into

parts of their business such as artists.

Many people from the outside looking in still believe that 360 deals are inefficient for

artists because they see record labels taking a piece of the many revenues stream from the artists.

What these people fail to realize is the record labels are helping the artists by using 360 deals.

Record labels use the revenues from 360 deals to sacrifice and invest in artists as well as make

sure their label is still a profitable business. Record labels use the profits for artist development,

signing a variety of artists, and making sure the label is still a functioning business. Today, 360
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deals have now led artists to decide whether they should sign record deals, sign to an

independent label, or be independent artists.

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Works Cited

Basofin, Jonathan. 360 Deals and What They Indicate About the Future of The Music Industry

Structure. Kentlaw.edu, 30 Nov. 2010,

http://www.kentlaw.edu/perritt/courses/seminar/Basofin-360%20Deals-FINAL.pdf