“360″ Music Deals Become Mandatory As Labels Prepare For Free Music

(spotted @ Tech Crunch)

by Michael Arrington on November 8, 2008

360 Music deals 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 artist’s brand or music.

A year ago they were still seen as controversial and experimental. Labels defended them as justification for investing in an artist in a time of decreasing CD sales.

Today, though, those deals are becoming mandatory. Warner Music Group CEO Edgar Bronfman told the Web 2.0 Summit audience that his label now requires all new artists to sign 360 Deals, and that about a third of their signed artists are under those contracts.

Bronfman argued to a hostile crowd that it doesn’t make sense for labels to pour money into artist development when CD sales, their primary source of revenue, continue to decline (although he did say that digital sales now make up 20% of their revenue). Without other ways to make money from an artist, he said, they wouldn’t continue to promote artists.

Bronfman also said that 360 deals give labels the ability to give away music for promotional purposes to spur event and merchandise sales.

And that, for me, is the key. Bronfman, an outsider to the music world until recently, sees the writing on the wall -