360 deals are contracts that allow a record label to receive a percentage of the earnings from ALL of a band's activities instead of just record sales. Under 360 deals, also called "multiple rights deals," record labels may get a percentage of things that were previously off limits to them, like:
- Concert revenue
- Merchandise sales
- Endorsement deals
- Ringtones
In exchange for getting a bigger cut from the artists they represent, the labels say they will commit to promoting the artist for a longer period of time and will actively try and develop new opportunities for them. In essence, the label will function as a pseudo-manager and look after the artist's entire career rather than only focusing on selling records.
360 deals are controversial for a lot of reasons. First of all, they're often seen a cynical money grab by labels that are facing dwindling sales and high overhead. The charge is that labels have survived a long time without these kinds of deals, so it would seem that they're suffering from a failure to manage their businesses and react appropriately to the changing industry - asking the bands to foot the bill hardly seems fair. Other people object to the whole "band branding" notion that makes 360 deals so potentially profitable for labels. A great example is The Pussycat Dolls. Sure, the branding has been a huge success - but where exactly does the music fit into the picture?
Labels counter that these deals let them sign different kinds of artists because they don't have to be so focused on recouping their investment from album sales. They can stop chasing the instant number one and work with artist in the long haul because they don't need to rely on big sales figures alone to make signing the artist profitable.
Controversial or not, 360 deals are becoming increasingly common in major label contracts.