Last week Lyor Cohen gave a rare interview with Elliott Wilson and B. Dot talking about his new label 300, his history at Def Jam, and the reason for Fetty Wap’s success, amongst other topics.
The best part of the interview, though, was when Lyor was asked about 360 deals, which he helped pioneer at Atlantic Records while he was the head of Warner Music. He went on to give an impassioned defense of the unpopular 360 deal:
“If you asked me to come start a restaurant, and you said you have this great concept for a barbeque restaurant, you’d come to me and say, “I got this concept.” I provide the money. Now, if I provide the money, I’ll get half, right? So we go off, really successful restaurant…and the barbeque sauce is so damn good, you start bottling it. Should I not get some action with that? I think so. It’s only fair.
Let me ask you a question. Does your manager get 20% of everything? The managers are getting 20%. Are they making any investment? They’re not making any investment, yet they’re getting 20% of everything. Do they hire a staff? Do they have hundreds and hundreds of people with phones and health care?
This is hardly a new argument, as Lyor’s been defending the 360 deal for years. In 2011 he said 70% of acts on Atlantic Records have 360 deals. They now seem to have become somewhat standardized at that label; last year an artist manager told Buzzfeed, “That’s the business model at Atlantic, 360 deals.”
Here’s a brief primer for those unaware: a 360, or multi-rights, deal is one that entitles a record label to a percentage of all revenue streams from a signed artist in return for the label’s expanded services in touring, marketing, and recording support. So along with album sales, the label gets a piece of merchandise, touring, sponsorships, film deals, and any other revenue the artist secures. People tend to focus on the part where labels grab more money and ignore the justification for why that is.
Perhaps because Lyor is a notoriously aggressive businessman (once pressed by a journalist as to his business approach, Lyor simply summed it up this way: “I show up. Period. End of subject.”) or maybe because he is physically a big target (I won’t entertain the thought of anti-Semitism because that is totally preposterous in hip-hop), his championing of the 360 deal has become the focus of anger from many in the hip-hop industry. Most armchair A&Rs will tell you these deals are “evil” and will position Lyor as a villain. Mos Def added fuel to the fire on his controversial “Rape Over” freestyle in 2004 when he said, “A tall Israeli is runnin’ this rap shit / We poke out our asses for a chance to cash in.” Dame Dash has been an outspoken critic of Lyor for years and claims he was the one that ruined Roc-A-Fella. Lyor seems to be one of the most hated men in hip-hop.
But that’s how tidy character narratives work – in a linear fashion. In truth, Lyor didn’t “invent” the 360 deal, though he’s glad to take credit for doing so.
Although the first 360 deal is usually attributed to the UK’s Robbie Williams, who struck an enormous contract with EMI in 2002, the first formal 360 deal that popularized this kind of structuring was with Paramore, a huge band in the mid-to-late ‘00s that signed to Atlantic in 2005. At the time, the band, and specifically its de facto leader Hayley Williams, made clear their goal in leaning more indie than pop, so Atlantic conceded to downstream the band’s deal to an indie label, Fueled By Ramen, in order to achieve what the band wanted – a “comprehensive approach that allowed for slower growth.” This is common in the industry today – a major label signs an artist but keeps their partnership a secret to play up the grassroots aspect of the artist’s growing profile. “We were given all the time in the world, and all the support we could ever ask for, to basically do nothing but play shows,” said Williams. Without their 360 deal, she wasn’t sure a label would have “given that lenience.”
The 360 deal was born as a result of sinking record sales. We all know the story: in 2000 the annual revenue from album sales was almost $800 million; by 2009, it was barely half of that. Record labels, in the face of growing piracy, scrambled to compensate for the money they were losing. “Labels were looking at gold and platinum albums 10 years ago,” says Dru Ha, the head of Duck Down Records, an independent staple in the rap community. “Today they’re looking at 250k, but still spending the same expenses.” The 360 deal was an attempt at closing that gap for the labels.
That makes sense from the label side because as album sales have decreased, touring revenue has increased. Lyor once told a parabolic tale of the moment he realized he needed to enforce 360 deals. At a sold-out concert for one of his artists, his son turned to him and said, “Dad, I’m so proud of you. Look at the action you’re getting a piece of.” “I don’t have any action,” Lyor replied, and when encouraged about how the merch table would at least get him some money, Lyor told his son he wasn’t seeing any of that either. “That was the end of that bullshit.”
To many artists, however, the 360 deal was simply a continuation of practices that had been screwing rappers over for decades. “We all know the artist’s been getting shafted for years and the label doesn’t have the artist’s best interest in mind,” said Torae, a Brooklyn rapper who’s remained fiercely independent throughout his nearly-20 year career. “[Artists have been] at the bottom of the totem pole to get paid, so now it’s imperative to hold on to your merch and show money,” he told me. Hence why rappers get so defensive about 360 deals.
But the rush to judgment isn’t justified in every case. “What makes it fair or not is the team you sign up with,” says Dru Ha, who said that Duck Down has operated with 360 deals since the label’s beginning. “There are teams that are great at it. They might have a person that just deals with licensing or brand sponsorships. Whether it was a Bad Boy or a No Limit or a Loud, we were these sub-labels that understood the landscape for our parent companies. [Labels like] TDE or Cinematic Music Group are doing that already, so if they’re gonna partner with a major label, those companies probably don’t need a 360 approach.”
I remember interning at Atlantic for a short period of time, and what I paid attention to more than anything else was the way a guy in an office behind me was on the phone, trying to strategize brand sponsorships for their artists all day. They were essentially looking to squeeze money out of beverage and liquor companies, money the label didn’t have to spend. This, in a nutshell, is why 360 deals work for a small group of rappers. A label wants an artist with a 360 deal to be a full-blown star with multiple revenue streams – not just one or two.
However, label execs haven’t always been on-point in their communication of what the artist gets out of a 360 deal. In a 2011 interview with Forbes, Lyor had this to say about why they’re important: “These labels are about people, and to get the very finest, most seasoned, most creative, thoughtful, transformative people, you have to pay them, and I would not be able to have the quality of the individuals that populate these companies without having additional rights.” Many took it as Cohen saying that 360 deals would basically help line the pockets of already-rich people. It wasn’t the right selling point.
That disconnect between artist and executive is also part of the reason so many rappers are against 360 deals. “Artists walk into these label offices and see these guys behind desks making money off their music,” says Dru Ha, “but they don’t see those same people at shows or behind the merch booth.” Musicians often don’t see the tangible benefits that the labels promise to provide them while taking away more of their revenue.
In fact, 360 deals can be a weapon used against artists, and those who don’t sign them don’t get to reap the benefits of being on a major label. That’s what happened to Lupe Fiasco around the time of Lasers. He refused to sign a 360 deal, and in return was told not to expect any priority within the label’s promotional budget. “So when ‘Shining Down’ came out and you didn’t hear it on the radio station, it’s because they never took it to a radio station,” said Lupe (below). “The reason there’s a video for ‘Beamin’ is because I shot it. The only reason that it’s on MTV is because I have friends at MTV who said they want to play your video on MTV.”
The reason Atlantic did that to Lupe was because they have to justify their investment in an artist with a 360 deal. Album sales are non-existent, so music, in a sense, becomes part of the marketing budget, and in turn the label wants returns on their investment from shows, merch, and sponsorships. That’s why 360 deals usually come with big advances. The alternate revenue streams allow the label to continue supporting the artists without selling albums. As Torae told me, “They’re gonna make sure you’re the biggest thing ever so they can make their money back.” That’s how the give-and-take of a 360 deal is supposed to work. If you don’t give them access to revenue outside of increasingly small album sales, they don’t see a reason to sink more money into you.
Jay Z is the perfect example of a successful 360 deal. In 2008 he signed a deal with Live Nation reportedly worth $150 million. MTV reported that Live Nation would “integrate the marketing of all of Jay Z’s entertainment ventures under one roof, including his albums, tours, and endorsements,” while shelling out $20 million for “some publishing, licensing, and other rights” of Jay’s. Jay, after all, has modeled himself as a businessman first, rapper second. He is the model candidate for a 360 deal, while Lupe, who doesn’t quite fit with a corporate sponsorship, clearly isn’t.
Lyor has always contended that 360 deals allow labels to develop artists for longer periods of time. He chose to put Paramore on an indie like Fueled By Ramen because that label was good at growing artists from the ground up instead of putting them on a fast track to stardom. “If we weren’t so mono-focused on the selling of recorded music, we could actually take a really holistic approach to the development of an artist brand,” Craig Kallman, chairman of Atlantic, told the Times in 2007. “What’s the healthiest decision to be made, not just to sell the CD but to build the artist’s fan base?” This sounds exactly like what a lot of people in the industry have been hoping for – an adjustment to make money from things beyond just CDs. But nothing comes without a price, and 360 deals are not a one-size-fits-all solution.
In a way, 360 deals signal the changing roles of major labels today. These dinosaurian labels are nosing their way into fields of management and tour promotion as they struggle to adjust to their somewhat diminishing role. Artists like T.I. and Chief Keef have recently left major record labels after realizing they no longer need those machines to prop them up. Labels are great at making stars, but once you’re a star, you can buoy your own brand and make more money independently.
Paramore succeeded on Atlantic because their deal gave the label time to develop the group’s fanbase. Their first album did decent numbers, but the label might have been scared off if it wasn’t for the alternate income Atlantic was making. That justified their continued investment in the band, and as Paramore’s audience grew, the label began seeing more of a return on investment. It was a win-win.
360 deals might not work for every hip-hop artist, but they are more necessary than evil in 2015. Perhaps as artists continue to expand their grasp on social media and reach more fans directly, the role of major labels in marketing and promotion will continue to marginalize. Until then, 360 deals might be the best bet for rappers trying to make it big.