16 Pros and Cons of a 360 Record Deal / Music Contract

It is one of the best times in history to be an artist. It is also one of the worst times to pursue a career in music and other creative fields.

All you need to do is check the email inbox of an independent musician to see how many deals or opportunities get proposed to them each day. There are several ideas that seem to come from legitimate businesses, but many of them prey on the desire of the creative mind to become famous. Far too often, these individuals or companies just want to get in the pockets of the artist to take a share of their small income without providing opportunities for growth.

If you are a musician right now, you would likely love the opportunity to sign with a major record label. Careful, though, as even contracts from reputable brands might not have your best interests in mind. That’s why an evaluation of the pros and cons of a 360 record deal or music contract is worth considering before you put your signature on that dotted line.

List of the Pros of a 360-Degree Record Deal

1. The label will often act as your manager when you sign this deal.
There were developmental deals in the past that let some musicians record 3-4 albums as part of the agreement. The exchange was that you’d need to give up some of your royalties – or anything else that the label felt would be beneficial to them. Then you’d have some time to work on your art.

The 360 deal is the modern version of this agreement. It gives a label the chance to sign someone that they normally wouldn’t choose. It gives them the chance to act as a manager to look after your career.

2. There are a lot more exposure opportunities available to you.
Most record companies that will sign a 360 record deal with musicians have subsidiaries or relationships with other media companies. If you were to sign with the Universal label, for example, then your music could give you access to an entire media umbrella that includes television, movies, and other forms of entertainment. Each one is an opportunity for you to make more money as an artist.

Even if the label takes a significant cut of your profits to get this deal off of the ground, you can still come away with a decent income. 60% of $3 million is still a lot of cash, even today. That’s why you need to make sure as an artist that the label has something of value that they can bring to the table.

3. You might not be responsible for all of your artist costs.
You may or may not receive a lot of funding for promotions, tours and other expenses, depending on the contract. It varies from artist-to-artist. The 360 deal usually covers most of your expenses, including hiring booking agents, creating your own merchandise and even booking an entire tour on your behalf. That probably means you will end up having a larger promotional budget.

But your music will need to be financially successful. If it’s not, you’ll need to look at the exact terms of your contract to see what happens. You might not get costs covered unless you’re generating a specific amount of profit.

4. You’ll have access to industry professionals right away.
Once you have a 360 music contract with a major label, then you’re going to have access to all of their experienced engineers and producers. There is also a significant marketing presence that can help you to develop a specific brand and message that customers will want to embrace. This advantage means that you don’t need to worry about all of the small details of getting your product in front of interest parties.

If the label is doing their job correctly, then they will help you to get your music on the radio. You’ll see your songs streaming on apps like Spotify. They’ll help you to book a tour, and then manage your itinerary. Some labels even help you with finding placement or licensing opportunities to expand your income opportunities. This advantage means that you can develop your own expertise as you work toward your future.

5. There are opportunities to develop as an artist.
A 360-degree record deal is a low-risk opportunity for most labels. If they decide to continue working with you after your first tour and album, then that communicates that they see some potential in what you’re doing. By supporting your ability to grow and succeed, they’re diversifying their investments to create some growth.

Although you can be dropped by a label at any time in many 360 deals, you’ll get a chance to make it big in an industry that you love. Even if your career doesn’t make you famous, it could be a lucrative way to earn a living without trying to manage the 9-5 grind that so many people do each day.

6. You can cross-collateralize your income streams to recoup advances.
When you sign a 360 deal with a label, then that means you’re obligated in most situations to repay the investment through sales that they help you to generate. Since this agreement usually involves anything that involves ancillary entertainment activities, you’re on the hook for a portion of any income stream. That also means that you should receive advances in each category so that you can start to make music.

That structure means that any income earned from the different revenue streams can recoup the advances provided to the label. You’ll want to review the contract before signing to look for this benefit because some companies might try to only use your recording revenues to recoup your recording advance.

List of the Cons of a 360-Degree Record Deal

1. A 360 deal lets the label take a percentage of all your earnings.
There was a time when record contracts were simple. Artists would make the records, and then the label would produce and distribute them. Then the musicians would give up a specific percentage of their income in exchange for that work and their touring opportunities. It set up a nice income stream for everyone.

Now that the music industry is spread out through a variety of products, a 360 deal requires musicians to pay a percentage of their earnings from everything generated as an artist. The label can lay claim to digital sales, merchandise, licensing, placement, and streaming royalties. Some contracts even give the label the option to acquire your copyrights.

2. You could lose the rights to your music.
Even though you write and perform the music after signing a 360 deal, that doesn’t mean you will own the long-term rights to your creations. The support of a label can be appealing because it helps to advance your career, but they typically own the copyrights to your songs. It all depends on what the stipulations in the final agreement happen to be. If the music doesn’t belong to you though, then you can’t do anything you want with it. You’d need permission from the label to make changes.

That doesn’t mean you must avoid raising your profile or stop earning money. Some artists can even fight successfully to get their copyrights back after signing a 360 record agreement. It just helps to know what you’re getting into with this issue.

3. It may require you to give up creative control of the piece.
The exact nature of your 360 music contract might require you to give up creative control over your music. This disadvantage means the label will determine how your music sounds, the length of each song, and even what production methods will be used to create the final product. Most labels exhibit a little control over the songs they choose to produce, so this issue applies to everyone except self-published artists.

Is there room for negotiation on this problem? Absolutely, but maybe not if you haven’t created a record yet. If a label wants full creative control, then ask them about the merchandise they’ve created or the tours they’ve booked to help all of you start making some money.

4. Labels can quickly kick you to the curb.
If your music flops, then the label is going to put all of the blame on you as the artist. If your 360 deal gives you a cash injection to start making music, then the label will want to recoup their losses if no one attends your shows or purchases your album. Even though these are low-risk scenarios for most labels, none of them want to lose money. If something unexpected happens, then you can expect to be the one who goes into debt from your work. You might even get specific sales figures they want you to meet by a deadline or they’ll just terminate the relationship.

Steve Rifkin says that the 360 deals are just the record companies getting their piece of the profits when they help an artist break into the mainstream. “I have no problem with taking a piece when I do something for an artist,” he said. “If I get them a brand deal, a tour, publishing deal – then I feel I deserve a piece. I don’t feel as if I deserve anything if I don’t bring anything to the table.”

5. Some labels might try to take advantage of you.
There are a lot of musicians who see the idea of a record contract as their holy grail. Once they get this piece of paper and sign on the dotted line, then there is this feeling that they’ve made it to the “big time.” That isn’t always the case. It isn’t unusual for independent artists to make more than those signed to major labels because you’re keeping your costs down and doing all of your own marketing.

Before agreeing to anything, you’ll want to review the size of the fan base that the label can bring your way. Then think about the size of your current YouTube or social media audience. Do you already get your songs on the radio? Record contracts might not offer you much if you already have a solid foundation.

6. You’re locked into the deal no matter what happens.
Most 360 deals let the label drop you at any time. You don’t receive the same courtesy under most circumstances unless you can negotiate this term into the agreement. If you feel like the label isn’t living up to their responsibilities to you, then there’s no way for you to get out of the agreement without legal intervention. That means you might need to pay a lawyer more than you’re currently making to rescue your income streams. Even then, you probably won’t escape with your copyrights unless you can prove a breach of contract in some way.

7. The deal that you receive works to cover the initial costs of making music.
When A$AP Rocky signed his 360 record deal, the reported value of it was $3 million. The average person might see that number as an upfront payment to the artist, but that isn’t it. Those funds work to cover the costs of creating merchandise, booking shows, endorsement creation, and much more. You’re not free and clear of that deal until you pay the company back for the investment they’ve given you.

If you’ve ever wondered why some musicians seem to stay at the forefront of the industry even if they don’t seem so great, their responsibilities to the 360 deal can be a significant reason why. The label invests more time in you, but you’ll be putting in a lot of work to make sure that you can get out from underneath that debt.

8. Your recording costs are more of an advance than a payment.
Labels will typically use the 360 record contract as a way to issue a non-refundable advance of the recording costs to you. Artists don’t need to pay back these funds to the distributor even if the work fails to generate income. What you’ll get is enough money to cover the upfront recording costs to create the music. It is up to the musician to pay for studio time, pay for production costs, and manage the mixing and mastering expenses that happen.

New artists running on a limited budget might not have the ability to afford these costs on their own. It also means that with this disadvantage, you’re responsible for finding the time to embrace your creative efforts.

9. Artists are given a number of obligations that the label imposes on them.
In a standard 360 music contract, one of the most common ways for a label to begin recouping the cost of an investment is to create a fan club for you. You’ll usually get some creative control over how it looks, but then you’re contractually obligated to tell the label about any entertainment-related activities that take place. You’ll need to do meet-and-greet sessions, provide materials for use, and even audio-visual messages that happen on your own time. You’ll even need to answer all of your fan mail, but you might get a budget for reimbursement for postage, stationery, and photos.

You won’t need to pay for the products, but you’re not going to receive compensation for your time. You’re essentially working for exposure in these circumstances, and then the label gets a hefty cut of whatever revenues you do generate – even after you get outside of the initial payments they offer.

10. You can get locked into specific performance-related criteria.
If you lock yourself as an artist into a 360 music deal, then your contract may come with specific terms and conditions about your monthly activities. There might be stipulations about the number of shows you perform each year – or even every month. You might be mandated to put out albums on a specific schedule, even if the label’s representative keeps shooting down all of your ideas. You might even be told to perform specific songs from the label of which they already own the copyright.

Conclusion

If you want to break into the music industry, then a 360-degree music contract or record deal is a common way to get your feet wet. It might not be the most artist-friendly agreement in most situations, but you’ll also get the prestige of working with a major label right away. That means you can start to develop your career as a musician while gleaning insights from some of today’s top industry professionals.

The best thing you can do in this situation is to negotiate your marketing efforts. Labels are often adamant about what they want and how much work they will do on your behalf. If you can show them how your work can make them some money, then they’ll help you to execute that plan to the best of their ability.

The pros and cons of 360 deals will always place the onus on the artist. You’ll see the label taking credit for your successes and blaming you for your failures. No one said that a life in the entertainment business was easy, but you can evaluate these key points to see if this option is a good choice for your career.