This course has been developed to provide students with the latest instruction on the best way for creators, consumers, and facilitators to navigate the resurgence of one of the world’s most exciting industries: the music business. Three things are clear about today’s music industry: The consumption of music is expanding at the greatest rate in history and from the most portals ever imagined, the cost of producing music is decreasing, and the number of artists creating and seeking to expose their work and develop careers through the Internet has increased dramatically. Whether you’re a music creator, consumer, or facilitator of this process, you’ll want to understand the history, underpinnings, and basics of the music business. Course author John Kellogg—administrator, educator, entertainment lawyer, performer, and radio and television personality—offers students the opportunity to learn the fundamental principles of the developing new music business, for now and into the future. What you'll learn: -- The basic history of the music industry and today's business trends -- How recording agreements are formulated -- The basics of copyright law as it pertains to the music business -- The role of agents, managers, attorneys, and specific business entities
360 Deals or "All-In" Deals
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From the course by Berklee College of Music
Music Business Foundations
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From the lesson
Recording Agreements
This week, you'll learn the ins and outs of recording agreements and why they are important. You'll learn what royalties and advances are and how they are calculated. You'll also learn about 360 degree or "all-in" deals.
Meet the Instructors
John P. KelloggAssistant Chair
Music Business/Management
And lastly, let's deal with the topic of 360 degree deals.
360 degree deals are sometimes referred to as all-rights agreements,
all-rights agreements.
What do I mean by a 360 degree deal?
Well, we have to look back.
In the last century, record companies signed artists to recording agreements and
primarily earned income strictly from the sale or use of the artist recordings.
That's how a record company made its money.
From selling or licensing out the use of those sound recordings.
That was the only income they were concerned with.
And as a result of CD sales and record and album sales increasing from the 70s all
the way through the end of the 90s, that's all the money the record company wanted.
They made a tidy profit off of just selling and using recordings.
But then what happened?
[SOUND] Napster.
[LAUGH] Right?
Peer-to-peer file sharing.
An immediate decrease in CD album sales.
And a lot of the profit that the record company was making started to evaporate.
So record companies had to look around for
other sources of income to try to make up for that deficit.
I remember maybe 2002, 2003 that I called a record
company that had an agreement with my clients, and
I was arguing for a percentage interest in the copyrights in the compositions.
I felt that my clients had made a contribution to
the songs that they recorded and they were never given credit for it.
Now the company that I was dealing with was made up of creative people as well.
Producers who were also songwriters.
And as I pressed this point that I want my clients to participate
in the songwriting income, the attorney got a little perturbed and he said,
wait a minute, John, you know your clients have had a hit career for over 25 years.
My clients wrote and produced most of the hit songs, and
as a result of my clients contributing those great hit songs,
your clients have been able to sell out concerts.
They've been able to act in TV shows and in movies.
They've been able to acquire sponsorships and endorsements.
And you know something?
We don't participate in that income.
We never have.
He said, hm, John, you know something?
Maybe my clients should ask your clients for
a certain percentage of their live performance income.
A certain percentage of their publishing, of their merchandising,
of their acting fees, of their sponsorships.
Hm, maybe that's something that we should think about.
And that was my first inclination that people at the major label level were
thinking about participating in income other than the sale and use of recordings.
And shortly after that, EMI entered into what was considered
the first major label 360 degree deal with Robbie Williams,
who was a huge artist worldwide except for the United States.
Where Robbie entered into a deal where he gave up a certain interest in his
publishing, he gave up a certain percentage
interest in his merchandising, sponsorship.
Any activities within the entertainment area, EMI was gonna participate
in the earnings, and that's generally what these 360 degree deals are all about.
In other words, the record company doesn't just participate in the income generated
from the use and sale of those sound recordings, but they participate in
the entire circle, 360 degrees, of income that the artist generates.
So now most deals that you will sign with major labels,
at least a major label is gonna try to get you to sign a 360 degree deal.
If you have a lot of leverage,
you might be able to negotiate out of a 360 degree deal.
But in most instances artists are gonna sign 360 degree deals.
Which means that the record company is at least gonna have
options to pick up contracts for merchandising with the artist.
So that they'll participate in a certain amount of the merchandising income,
sponsorship income, endorsement income, live performance.
Maybe a certain percentage,
10, 15% of the net revenue from live performances will be paid.
Never before has that been done at the major label level.
But it has been done at the independent label level
as well as small production companies.
That's been done for years, for the past 20 or 30 years,
under deals called the across-the-board deal.
Across-the-board deal was a deal where a production company would sign
an unknown artist to not only a recording agreement but they would sign them to
a copublishing agreement and participate in their songwriter's royalties.
They might even sign them to a management agreement, where they would also
participate in any of the other income that the artist generated.
So this has been happening for
years with smaller labels, independent labels and production companies.
They have always done it themselves.
We talk about do it yourself, and now I see it's more and
more important for artists to do it ourselves, have a team surrounding them
that's gonna help them generate income from a number of different sources.
Well, independent labels and
production companies have been doing it themselves for a number of years.
Even Motown, back in the 60s, they in effect had an across-the-board deal.
Berry Gordy had a management company that managed all of the talent at Motown.
The songwriters who happened to be artists
also had to give up their publishing interests to Motown.
And it sounds, I even approach it as an artist's attorney,
it's like the labels are being greedy.
They're taking money from every source possible.
But in certain situations it might be warranted.
It was certainly warranted in the Motown years.
Berry Gordy was in a position to drive over 100
singles to number one on the charts.
So as a result of that, artists were able to work more.
They were able to get greater opportunities for TVs, for movies.
Diana Ross went on to star in Lady Sings the Blues, in Mahogany.
All of these things where artists are morphing into other types of careers,
the record label feels like they started that.
Without that initial recording, and
that's why the exclusive recording agreement is so important.
It's the genesis of all of the other types of activities an artist can be
involved in to generate income.
So record companies wanna be a part of that and
feel that they have the right to participate.
So the question always has been, even dealing with the across-the-board deals
as well as the 360 degree deals, are the companies capable to do it themselves?
Do they have the people involved that understand live performance,
that understand merchandising, that understand sponsorships and endorsements?
Well, the fact of the matter is that over the past ten-year period since these deals
have become popular at major labels, major labels are themselves
starting to morph into general entertainment companies.
They go way beyond just producing recordings.
They're affiliating with management companies.
They're affiliating with merchandising, sometimes partnering with those companies
in order to create opportunities for their artists to generate the income.
I just recently dealt with an A&R person at a major label.
And his assistant got in touch with me, and the assistant's title was
manager of A&R and artist development.
Motown always had an artist development department.
But over the past 30 years,
record companies really kinda got out of that business.
But they're back in that business right now.
They're trying to develop their artists to be able to expand their careers
beyond just recording and even performing live on stage.
They want the artist to act.
They want the artist to be a pitch person so
that that can generate more and more income.
Now the percentages they take on all of these various sources can vary.
It can vary from 10% to even up to 25%,
but all of those percentages have to be negotiated.
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