This is how much a major label makes off a 360 deal with an artist

This is how much a major label makes off a 360 deal with an artist
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#1

So @Chordwainer (Dave) asked me an interesting question last night. Out of the $4,000,000,000 that the Warner Music Group made in gross revenue during the last fiscal year, how much of that went to the artists.

When I was breaking apart Warners books to answer that question in the other thread, I saw this line in page 9 of their budget.

We are also continuing to transition to other forms of business models with recording artists to adapt to changing industry conditions. Many of the recording agreements we currently enter into are expanded-rights deals, in which we share in the touring, merchandising, sponsorship/endorsement, fan club or other non-traditional music revenues associated with those artists.

So I traced the chart of accounts to where it showed how much they made from this. $389,000,000. This is NOT including the money they made off sales. This is in addition to it.


The answer to Dave’s original question is here… and I answered it in terms of the total royalty payouts they sent to the artist/songwriters/producers.

http://indierecordingdepot.com/t/the-future-of-recordings/1167/139


#2

So if I’m correct, the model was this:

1 - Sign band with a record deal
2 - Stipulate years / number of records that were part of the deal
3 - Advance money to make the album
4 - Recoup the advance when album goes on sale
5 - Advance money to make the next album
6 - Repeat until the contract is over

Most artists end up owing the record company more than the sales of they album could make, and therefore they go on tour and sell merchandising, and keep all of that money for themselves. They can then pay back their debts to the record company.

So if I’ve got this correctly, the 360 contract gives the record company a cut of all sales, all tours, and all merchandising. So if the likes of U2 or Guns and Roses were on a 360 deal, the record companies would just be rolling in money (when you consider the revenue from these tours).

Is my description correct?


#3

Yup. You got it. Its different than a development deal and a songwriting/publishing deal, but that’s pretty much it.

Sometimes their publishing catalogs and capital investments (such as vehicles, real estate) could be posted as collateral. But a lot of labels didn’t have the legal power to hold the debt over them for life. The band LLC can declare bankruptcy, dissolve, then the members are off the hook. One label I know tried to make each member sign the loan using their personal social security numbers, and they wisely didn’t do it.

That’s exactly what the 360 deal is, except a label working with U2 doesn’t need to mitigate risk by committing U2 to a 360 deal, because their albums will most likely sell. And besides that, U2 isn’t dumb enough to sign a 360 deal lol. Hell, U2 could pay for their own damn record if it game down to that haha.


#4

Not only cut of the sales, the label also slap their own minions over the whole process, so “your” tour is staffed and manned by label mooks and you have no oversight of expenses whatsoever.


#5

And they (WMG) pretty much own all aspects of the band and music, correct?


#6

LOL, gotta love the DIGITAL recording REVOLUTION!

…not.


#7

Yeah, this makes me want to cancel my streaming account and go back to my 10 year old mp3 player.


#8

I hope this isn’t off-topic, but I noticed that Ariana Grande released a song/video from her new album on YouTube. It was released on YT 3 days ago and already has over 41 million views! I looked up her net worth and a current estimate seems to be $50 million! She released her first album in 2013, so she has been a recording artist for just over 5 years. She seems to make tons of money off of each album, each tour, merch sales, streaming, probably YT as well. I think I would call that a “get rich quick” scheme. :wink:

Of course, she did have some exposure before that … she was on a Nickelodeon TV show called Victorious for a few years where she reportedly made $9k per episode. There was a spinoff show also, but I don’t think it lasted more than one season, if that.

Her record label, Republic Records, was just honored by Billboard as “Label of the Year”, and I think Ariana just won her first Grammy award tonight.

Obviously, this is an exception to the rule that most artists never do nearly that well commercially. I watched this new song/video and I thought it was really cheesy, mostly sample/beat-based stuff (like much is these days), and not what I’d particularly call “good music” or “quality music”, but of course that means nothing to her (presumably) legions of loyal fans. It is certainly visually captivating, and baits you with an interesting story-line that seems to have a ‘twist’ ending. Is it ‘art’? Yes. Is it good? YMMV. :roll_eyes: Does it make money, bring fame and celebrity, and awards? Apparently, an emphatic yes.


#9

If I remember correctly there was even a highly publicized shooting on one of her London concerts that made her a worldwide artist or at least known all over.


#10

It was actually a suicide bombing attack in a Manchester, UK venue in May of 2017. At least 22 killed and many others injured IIRC, and responsibility was claimed by ISIS. While that publicity certainly made her more well known, she was already famous at that point IMO.


#11

Are you saying that this kind of thing was not happening before we went digital? I understood that the industry has been doing this for a long time.


#12

correct.

It was generally accepted that the artist would be paid the mechanical songwriting credits (12-15% ish?) up front when the record was pressed, and the label would charge the artist back for everything else (inc. recording costs) and only pay out the roughly 50/50 (profit) royalty AFTER ALL the RECORDING bills were ALL paid off by the artist.

Tour support was essentially a LOAN, not a profit center.


#13

Well…I don’t think she was well known in teh US, at least not a household name.


#14

Mechanical copyright is song ownership royalties - not normally a record company’s area of concern in the past (although it certainly is now, as most record companies have a publishing arm). You would sign up with a publisher for collection of mechanical royalities. Any deal less than 50% for the artist is poor. The publisher is simply acting as extra backroom staff so that the artist doesn’t have to go through the process of collecting the royalties themself, so 20% should be enough for the publisher - although many get away with charging much more.

Any advance made the record company is made on artist royalties (i.e. sales), which is typically 10% - ish of the retail price.