La Shawn Barber’s Corner » Jay-Z’s 360 Deal

I don’t listen to rap. I don’t know anything about rapper/producer Jay-Z’s music. Even if my life depended on it, I couldn’t tell you a thing other than “rapper.” But his deal, announced yesterday, is noteworthy.

Many Millions

Jay-Z dumped his record label, Def Jam, and cast his lot with Live Nation, a concert promotion company that also handles recording, publishing, touring, merchandising, and web sites for artists. Over 10 years, he’ll rake in $150 million. (Source)

Jay-Z will get $25 million in advance, $5 million a year in “seed money” for his label, $10 million for every album over the next 10 years, and “significantly more funds available for future acquisitions and expansion.” An obscene amount of money in any case, but if people are paying to see and hear him…

Last year, Madonna left Warner Music and signed a 10-year, $120 million deal with Live Nation. U2 cut a 12-year deal for touring, promotion, and web site only. The band is still signed with Universal Music.

Also see Live Nation rocks the music industry.

360-degree protractor So What?

Back in the day, record labels got paid only when music sold. Artists typically kept whatever they made touring and selling merchandise. Thanks to falling CD sales, illegal downloading, etc., labels aren’t making as much money.

That’s why the multiple rights deal, also known as the “360 deal,” is so attractive to labels. They still make money when music sells, but they get a cut of touring and merchandising profits. Even if music sales are slow, labels with 360 deals earn a profit from everything else.

For the most part, touring is where the money is, and Live Nation is a more profitable business model for the digital age.

Whether or not you dig my music blogging or care about any of this, the trend is worth watching if only for sociological purposes. The music industry is changing right before our eyes, and we’ve got front row seats. I find it fascinating that “we the people” have caused such upheaval, what with our affinity for free music tracks, available for the taking. We’re rebelling against overpriced CDs and opting to get our music at the lowest price possible (including for free) and in a medium that’s convenient for us.

Clear away all the dust and debris of the music industry explosion, and you’ll find the digital music file, innocently lying at the bottom of the ground-zero pile.

David Byrne On Digital Age Music Distribution - brief discussion of various deals

How can I sell my music online?: “[I]t has always struck me as odd that a group of people who spend more time training for their career than most brain surgeons, and who spend every waking hour of their day creating value from thin air believe that the little slice of time they spend in a darkened room fashioning idealised versions of their songs and turning them into things for sale is the only way through which they can earn a living.”