What is a 360 deal?

A 360 deal, also known as a 360 recording contract in the music industry, is a contractual agreement between an artist and a record label. 

This agreement covers all stipulated rights involved in the album sales, publishing and licensing of the artist’s recorded music (physical copies and digital streams), as well as touring, merch and other ancillary income streams an artist may have in the music industry.

What is the purpose of a 360 deal?

The key purpose of a 360 deal is to entitle a record label to a percentage of earnings from an artist’s revenue streams.

From a record company’s perspective, these percentages are deemed justifiable because of the substantial investment of money and resources the company spends on developing and concert promotion.

The signed document means an artist agrees to the record company taking a share of that artist’s music sales alongside percentages of other revenue streams outside of what the label is directly involved in creating. 

For example, the label might pay for studio time (an amount the artist may not be able to afford) to help an artist record and distribute an album, but not pay for fabricating merch like T-shirts sold on tours — yet the label will get a percentage of the digital sales from both products.

What are the pros of a 360 deal for an artist?

A 360 deal may be considered a good option for a new artist who is just starting out and requires sponsorship, support and resources to boost their artistic career. 

A 360 deal grants an artist an access to the label’s resources, including promotion, marketing, distribution and, in theory (check the fine print!), still receive a large or fair share of the royalties from their music. 

This deal will be the most beneficial to artists who don’t have resources or connections that can be invested and used in their music careers.

What are the cons of a 360 deal for an artist?

A 360 contract may not be a good option for artists who either don’t like the percentage of revenue they’ll be obligated to give to the record company or those who are not comfortable with the control level they are giving up to the label. 

The latter aspect is particularly important to keep in mind: A 360 music contract can require artists to give up creative control over their music.

This means the label company could determine how the music should sound, any given song’s length and album production methods that will be used to create the final product. 

Unless you are on the top end of the spectrum — for example Madonna and Jay-Z signed 360 deals focused on tour promotion that brought in hundreds of millions of dollars — artists who have already established a lucrative music career without a label may also find it counterintuitive to their continued success to sign a 360 deal.

Considerations to know before signing a 360 deal

Verify the legitimacy of the record label

You work hard as an artist, and obviously don’t want to sign a record deal to give away rights to a company that doesn’t operate legally.

And a record label is considered a music business entity, so it should operate within one of the several business structures that define these entities. 

There are different types, such as proprietorships, partnerships, public limited companies, limited liability companies and joint stock companies.

Irrespective of the chosen structure, it is crucial for a new artist (and their lawyer) to ensure that the record deal offered is by a company that is legit and registered as having legal rights to operate within the music field. 

A label that doesn’t have this status means it doesn’t have a capacity to be sued, which is a key element of contract validation.

Explore royalty partitioning

Royalties are payments made to an artist for using their copyrighted works. These include mechanical, public performance and “synchronization” royalties.

Being a significant revenue stream for an artist, royalty partitioning is what any artist should be keenly aware of before signing a deal with a record label.

Ownership of intellectual property

Ownership of intellectual property includes copyrights, trademarks and even stage names. Some 360 deals are designed in a way where an artist signs away their rights, autonomy, stage name and creative control over music production to the record label.

Obviously, you, as an artist, should verify this is never the case if you’re about to sign a deal.

Remember: Everything is negotiable when you deal with a record company — after all, they’ve approached you to work with them.

The best practice here is for an artist to own all copyrights and masters, and keep control over their social media accounts.

Dispute Resolution

A disagreement may occur in which there will be a dispute that has to be resolved. There are different resolution methods — including litigation. 

Given the business nature of the 360 deal, and the fact that a record company likely operates with a team of lawyers, it’s in the best interest of the artist to avoid litigation if possible.

Confirm with your lawyer to verify that the proposed deal includes several amicable forms of settlement that will be applied before the aggravating and possibly expensive decision to go to court.

3 useful tips when negotiating a 360 deal

1. Get a lawyer

Getting a lawyer is essential when planning on signing a 360 deal contract. The key thing here is to hire a lawyer with knowledge or expertise in the songwriting industry.

While you may be familiar with the terms in a deal and be sure that you can read and understand all its aspects, you may miss out on some of the crucial legal nuances that a skilled lawyer will quickly identify and bring up for discussion.

2. Keep exemptions and carve-outs in mind

When hiring a lawyer it is vital to also mention and describe other creative endeavors you plan or already undertake (like another source of income outside your music deal).

Many contracts include vague and all-encompassing terms which label companies may use to try to earn more money or gain more rights than they initially described.

For instance, if you write novels or have a beauty business, you will want to have these businesses “carved out” of your music contract so the label won’t be able to get any rights on these revenue streams at any time during the life of a contract.

3. Define your splits

Division of profits is one of the key considerations when signing a 360 deal. Make sure you clearly define how much of performance revenue and other streams goes to the record label with your lawyer.

For example, a label may want 40% of all live performance, 20% from the merch, 5% from your endorsement deals and so on.

Clearly discuss and define every single source based on what a record label asks for and clarify the terms you’ll accept before signing.

Easy, legally binding contracts with PandaDoc

As an artist, inking a 360 deal can be live-changing in a positive way, boosting your career. But it can also be a complex and challenging task, and not to be taken lightly.

Be sure to work with a lawyer that has your best interests in mind at all times.

Signing a contract should also involve a notary to further verify the legitimacy of the document.

Using PandaDoc’s online notary and electronic signature software can be invaluable in easing contract signing and eventual management of a 360 deal. 

PandaDoc also offers a range of templates to speed up and easy contract creation and management process:

As a full service document management platform, we are here to assist your career every step of the way. Feel free to schedule a demo or start a 14-days trial anytime!