Tuesday, December 30, 2008

Co-Branding as an Alternative to 360 Deals

While presented as 'new music paradigm', the term 360 describes a wishful number of revenue streams flowing back to a traditional label, based on a traditional loan to an artist signing an otherwise traditional agreement.

Which is not to say you should never consider participating in such an agreement.

If your current income is zero, then a 360 deal makes great sense.

However, for an artist who has already established a revenue stream, a 360 deal only becomes a reasonable choice when all parties to the contract, having full understanding of their responsibilities to the other parties, and with full transparency can be held accountable for the execution (or abdication) of said responsibilities, so in effect, contract each other.

The label only wants to pay you on the net of record sales? Therefore likewise, carve out an agreement whereby they are only paid on the net of touring and merch; and like any good manager, hold them accountable for the fulfillment of specific, measurable responsibilities (that entitle them to the agreed commission). To me, that sounds fair and equitable.

The ideal 360 deal –from the artist's perspective– should therefore look a lot like a CO-BRANDING agreement, albeit where one partner (the source of funding) remains invisible, logo real estate notwithstanding.

With the exception of limited work-for-hire agreements (one-off commissions), no one in the new millennium should enter any kind relationship whose execution would compromise an artist's integrity.

Nobody should, but people will. As much as record companies are accused of being greedy, musicians are often equally guilty of signing draconian agreements in order to satisfy a lust for fame and celebrity. But this is not the always the case, of course, and in fact, as previously indicated, 360 deals make sense for some acts, and one may even make sense for you.

However, in our Post Sell Out World, you're a free agent. So, if you're going to sign a 360 deal, you don't necessarily have to do it with a traditional music label. Instead, you can do it with a collaborator of your choosing, for terms agreeable to both of you.

You might sign with the entity who gives you the least control but the most money; or you might choose to collaborate with a company that offers you less money but more creative control. Ideally, you will enter into either a limited term equity partnership or accept a 'Project Underwriter Sponsorship'.

FYI: Per the 'PBS Red Book', "PBS defines an "underwriter" as a third party that has voluntarily contributed cash to finance, in whole or in part, the production or acquisition of a PBS program. Money from such sources used toward research and development, or for packaging or repackaging a program, ordinarily counts as underwriting as well".

For our purposes, a Project Underwriter Sponsorship is defined as an agreement between a two or more parties whereby one or more has voluntarily contributed cash to finance, in whole or in part, the production of a an artistic project, in this case a musical recording by a specific artist/s and the subsequent promotion of the project, in return for credit for having done so.

Neither co-branding partners nor underwriters may necessarily have a history recording and distributing music. If we speak strictly of a 'new music paradigm', they usually do not.

In fact, for the purposes of raising funds in order to record, tour and pay the rent, EVERY company is a potential record company –from the local shops on Main Street to whomever happens to top the Fortune 400 list in a given year, and whether they sell futuristic widgets or old fashioned potpourri.

Of course, not every company can provide distribution, but depending on your specific needs you may or may not need a major label network in order to fulfill your own professional and artistic goals.

The important thing is that such deals are structured as mutually beneficial CO-BRANDING contracts, or as corporate sponsorship of an artistic enterprise, but never as label/bank providing a lopsided loan to the customer/artist. Because if all you need is a loan in order for your dreams to come true, there are cheaper ways to secure that loan, even in today's economy.

More to the point, artists can stop doing business as applicants for loans, if they find a way to position themselves as suitable investments in another company's or collaborator's business strategy.

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