360 Deals

By Ira Abrams

Indie label 360 deals start with the same premise as major label deals: The label's share of multiple rights income is based on dollars received by the artist after deduction of commissions payable to personal manager, business manager, booking agent and other members of the artist's team, including the artist's attorney. Sometimes the deductible costs are capped at around 25 or 30 % of gross, depending on the particular income stream involved. The label's percentages range from 10% to 20% of income from these additional sources ("Covered Revenues") depending on the parties' relative bargaining position; and the percentage may differ from source to particular source. 

Todd Brabec says that for example, a deal might give a 20% income participation in publishing, sponsorships and endorsements with a 10% share of merchandising and tour earnings. On the other hand, I've seen company participation go as high as 50% of net "Covered Income", with publishing being shared as follows: 75% of publisher's Net Income to the artist/writer, except that the publisher's share of public performance net income is shared 50/50 (i.e,, the publisher keeps 25% of the Publisher's Net Income (the "Retained Share") and the writer (artist) gets the rest (75%), not unlike a typical co-pub deal. Deductions from the publisher's gross (to derive "Net Income") include the usual expenses, like direct administration costs, demo costs, attorney's fees for services directly involving the covered compositions, copyright registration fees, etc. Often, a publisher's "Administration Fee" of 15%-20% may be tacked on. 

Percentages may widely vary depending on whether the indie label is actively involved managing every aspect of the artist's career or is simply passive (arguing that but for the recordings and airplay/marketing/promo of the artist's recordings, the artist would have no career at all). Those labels that are passive are not multifaceted "entertainment companies" and in my opinion rip off the artist unmercifully. The main problem with those labels that are "active" is that it's difficult to avoid inherent conflicts of interest on the label's part. It's like the fox guarding the henhouse. If there's a boatload of non-returnable money for the artist on the front end, conflicts of interest become less of an issue. 

Choose your indie entertainment company carefully and unless there's a big advance, I'd advise doing a shorter term deal. 

Ira Abrams, Esq.
Music & Entertainment Industry Transactions and Mediation
1839 South Ocean Blvd., Suite 2-B
Delray Beach, Florida 33483-6583