Warner Music Group CEO told attendees at the Web 2.0 summitthat all new artists signing his label will have to sign 360 music deals with Warner. What is a 360 music deal?
give labels their standard cut of CD and digital download sales, but also give them a percentage of event ticket profits, merchandise sales, endorsement deals and anything else that uses the artistâ€™s brand or music.”
Warner Hong Kong and other global record companies in Hong Kong have been following this model for a while now.Â My guess would be they have done this for around 5 years as CD sales are so low in Hong Kong for must artists in Hong Kong that a record is considered doing well if it sold enough to break even.Â Long dead are the glory days of the 90’s where records sold 10-50x more than now.Â This model makes sense with music sales going down (and eventually free?) as most artists fail commercially anyway and the risk to reward ratio in investing in making a record is also going down.Â Making records ain’t a cheap business, for solo artists that don’t make their own music, there are songwriters, lyrists, producers, studio renting, CD production, packaging, distribution, and promotions costs. 360 music deals is a move away from the “agent” model and towards the “manager” model in handling artists.Â The agent model, the dominant model in the US,Â has always seemed a bit flawed to me, call me biased as I was exposed to the manager model (primarily used in Asia) in my entertainment experience first. I did not fully understand the agent model until watching Entourage and working at the NBA.Â In a nutshell, in the manager model, artists sign a 360 deal with a manager no matter what their “art” is be it music, acting, modeling or whatever, for a agreed upon term.Â There might be some variations to the deal depending on your value in the market, for example if you were a popular artists, the manager might throw in a MG (minimum guarantee) that they would make for you and in return the artists would give them a cut in all their 360 earnings. The manager would be like a parent figure sourcing deals and doing publicity as well. Most entertainment production firms, also have an arm that does this, film companies and TV stations as they might as well keep the fruits of the artist they made popular from their production.Â Heck, even model agencies have this, which they sometimes resell to bigger film/record companies if “artist” shows potential to move up the ladder.Â If the artist would like to break 360 agreement before the term, it would be a bit more tricky as the manager could claim they have made an “investment” in the artist and would need to be compensated (usually provides lots of drama for gossip magazines) This is quite different from agent model used in the US by companies such as CAA or MGA (call out to Ari) which “represents” their clients (models, singers, writers, athletes, actors, designers, or anyone need representing).Â These companies also get a cut, but don;t invest in their clients per se so their artists/clients can fire them anytime. This model I guess works for established artists but for fresh faces it would be hard as I feel the interests aren;t as aligned, if the artist fails, the agent only loses time, if the artist succeeds s/he might leave to another agent anytime).Â There isn;t enough reward compared to 360 deals or the manger model.Â Although people claim that this is a more evolved model, as more “free market” but I think it only benefits the big name artists, it not helping new artists that need the most nurturing and movie studios which developed a sleeper blockbuster only to find the then unknown actor lead not willing to do a sequel (A2 anymore?)Â Â I also need to use this opportunity to mention how annoyed I was when I was at the NBA. NBA office nearly has no real access to the players to get them to promote the league and they are so overly protected that it seems like the NBA employees were working for them. This article got alot longer than I expected myself to ramble about.Â Sorry for all the references to Entourage for people that have not watched it.