Are 360 Deals the Record Labels' Swan Song?

"The music business is a cruel and shallow money trench, a long plastic hallway where thieves and pimps run free, and good men die like dogs. There's also a negative side."
--- Hunter S. Thompson

The record business is quickly dying. Music sales in the United States are less than half of what they were just a decade ago. Worse yet, sales will almost certainly continue to drop as digital distribution becomes more popular.

In response, record labels are completely changing the structure of their contracts with artists. The labels' present direction is to capture revenue streams beyond the sales of recorded music. And, in hopes of returning their corporate earnings to where they once were, the labels are attempting to completely cut out promoters, artist managers, and agents.

Since the dawn of the industry, the role of a record label was limited to producing, distributing, marketing, and selling recorded music. Under the new model, labels receive income from other sources of artists' earnings, including live performances, merchandise sales, publishing, and commercial endorsements. The new contracts are known as “360 deals" or “multiple rights deals". They enable record labels to earn income that was never before available to them, making the labels less reliant on recording income.

The 360 model is only sustainable if it benefits both artists and labels, while providing a desirable product to music consumers, and efficiency to the industry as a whole. And, herein lies the problem with the 360 paradigm. While the new model may work for artists with superstar personas, it will not be acceptable, long-term, for most artists. Not to mention promoters, managers and fans alike.

Despite the growth of the 360 model, the structure is objectively harmful to the industry. For starters, most labels are proving themselves inept – or at best, inexperienced – at managing the other elements of an artist's career from which labels stand to profit under the 360 model.

360 Deals also seem to be leading to an ominous new trend. The model's focus on exploiting as many revenue streams as possible has brought about a trend known as “band branding" which removes the emphasis from musicians' music and redirects it towards artists as “brands” that can be sold in a variety of forms. As media theorist Douglas Rushkoff noted, “Recording artists are finding the only way to achieve any financial safety is to become a lapdog of the great corporations.”

Despite the negative aspects of 360 Deals, artists will continue to form these contracts over the short term simply because labels remain the primary source of venture capital for artists. Eventually, however, the majority of artists may forego traditional record labels altogether.

Instead, they may seek 360-style arrangements with more adept and efficient industry players like managers and booking agents. In fact, a handful of savvy artists have already begun to steer their careers themselves by taking advantage of digital distribution, leveraging internet marketing tools, and actively networking to promote their own music. Eventually, this may spell the end of the major labels altogether.

So what do you think? Are 360 deals bad for the industry as a whole? Will the major record labels eventually fade away? Will artists eventually manage their careers themselves? We want to hear from you!