EQ Magazine - May 2008 - (Page 12)

PUNCH IN LEGAL AFFAIRS What the “New Model” of Record Deals Means to You. Part Two. b y M o s e s Av a l o n In the March 2008 issue of EQ, we talked about the new 360 Deals (also known as “All In” contracts). To briefly recap: These deals allow record labels to take a cut not just from record sales, but also from every other aspect of an artist’s career, including revenue from touring, licensing, publishing, and merchandising. The labels claim they are offering higher splits than what is found in traditional deals, and thus such deals are ultimately good for artists. Is this true, or are these so-called 360 Deals just new methods of artist exploitation? Moreover, with mega music execs such as Jimmy Iodine of Interscope demanding every new contract signed be in line with the 360 model, the question remains: Will these deals be the magic elixirs needed by majors to stay relevant, or will they be their final undoing? In the March EQ, we explored alternative scenarios, such as the nowfamous “Radiohead experiment,” which tested one-to-one sales directly to the fan base as a viable substitute for what labels offer. The good news was that this experiment resulted in approximately 100,000 downloads, with the average customer paying $9. The bad news was that many fans didn’t pay a dime for the album. Still, Radiohead’s strategy—as well as the Eagles/WalMart and Madonna/Live Nation deals— shows us that superstars do have other options. But what about new artists? What about acts without millions of devoted fans impatiently awaiting their next release? I’ve run some numbers, and, personally, I think what we have in these 360 Deals is a typical “rich-get-richer” scenario. For artists who have crossed the platinum threshold, this kind of deal is a sweetheart. Instead of making the standard $1.50 per record, they will now average around $3.50 per unit sold. Even though it means giving up a piece of publishing revenues, this will probably net out to a good deal for those few who can count on going platinum. However, if you aren’t a part of that upper one-percent, a 360 Deal probably won’t benefit you. Sure, you’ll stand to make that same $3.50 per record, but you’re not likely to sell enough to recoup on your advances— which means you’ll get zero from record sales. Meanwhile the label will get big pieces of your publishing and merchandising streams—revenue streams that, at one point, were considered untouchable. Artists who don’t meet the tipping point, and, instead, end up in recoupment hell will be left wondering, “How the hell do I get out of this trap?” To find an answer to this question, I bounced some relevant legal theories off a few lawyer friends by work-shopping the topic at the Los Angeles Bar Association. What I found out was incredibly interesting. The general consensus was that artists may find themselves in the situation where they can exploit some alarming weaknesses in these 360 Deals, and leave the labels wondering how they painted themselves into a corner. For example, if a legal-savvy artist sued the label because said label didn’t exploit all the new “rights” they are assuming under a 360 Deal, he or she might just open the labels up to several very 12 EQ MAY 2008 www.eqmag.com http://www.eqmag.com

Table of Contents Feed for the Digital Edition of EQ Magazine - May 2008

EQ Magazine - May 2008 Contents Talk Box Sounding Board Jamie Lidell, What the New Model of Record Deal Means to You, Part II, Andrew W.K. Tool Box Aerosmith Fast Tracks Guitar Trax Bass Management Key Issues Drum Heads Vocal Cords Mix Bus Cheat Sheet DigiDesign Pro Tools LE 7.4 Cakewalk Sonar 7 Line 6 UX8 Studio Projects CS5 Art Tubefire 8 Jazzmutant Dexter MCDSP Emerald Pack Overloud Breverb KRK Exposé E8B Mackie MR5 Blue Sky Exo Monitor System Big Fish Audio Around the World in 80 Raves East West Fab Four Virtual Instrument Sony Matt Fink- Starvu Session Keys Room With A VU

EQ Magazine - May 2008

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