New Label Strategies
With the advancement of the computer and technology like internet, leading to an increase in file sharing and direct-to-fan digital distribution, combined with music sales plummeting in recent years, labels and organizations have had to change their strategies and the way they work with artists. New types of deals are being made with artists called "multiple rights" or "360" deals with artists. These types of pacts give labels rights and percentages to artist's touring, merchandising, and endorsements. In exchange for these rights, labels usually give higher advancement payments to artists, have more patience with artist development, and higher percentages in CD sales. These 360 style deals are most effective when the artist is established and has a loyal fan base. For that reason, labels now have to be more relaxed with the development of artists because longevity is the key to these types of pacts. Several artists such as Paramore, Maino, and even Madonna have signed such types of deals.
A look at an actual 360 deal offered by Atlantic Records to an artist shows a variation of the structure. Atlantic’s document offers a conventional cash advance to sign the artist, who would receive a royalty for sales after expenses were recouped. With the release of the artist's first album, however, the label has an option to pay an additional $200,000 in exchange for 30 percent of the net income from all touring, merchandise, endorsements, and fan-club fees. Atlantic would also have the right to approve the act’s tour schedule, and the salaries of certain tour and merchandise sales employees hired by the artist. But the label also offers the artist a 30 percent cut of the label's album profits —if any—which represents an improvement from the typical industry royalty of 15 percent.
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