What is a 360 deal

mica - music austria

When young musicians sit down at the table with labels and publishers to seal their cooperation contractually, market power is usually unevenly distributed. There are a few things to consider so that your career does not end before it has even started. By Markus Deisenberger.

In her book “Das Schöne Leben”, Christiane Rösinger summarized with a single joke what it looks like financially for most musicians:

A musician comes to the doctor. Says the doctor, “I have bad news for you. You only have two weeks to live. "The musician calls out angrily:" And from what, please? "

The first contract is only too happy to be called the Seen the possibility of leaving the precariat behind once and for all. Unfortunately, the contractual reality usually looks different. And in this way:

Point 1: high proof?

First and foremost, most musicians are concerned with artistic self-realization. Strangely enough, the first question is whether the contract is first on the table, but then usually the one about the money. The question of the percentage participation is one that, viewed in isolation, gives precious little information about whether a contract as such is good or bad.

How high does the remuneration for the artistic performance to which rights are granted have to be in order to be able to describe it as "fair"? In the case of an artist or band takeover contract (to put it simply, the difference lies in the intensity of the commitment), this fee is calculated in percentage points of the retailer's selling price per unit sold. And: between 6% and 25% you can get pretty much anything in practice. Sometimes a different, higher percentage is agreed even after the breakeven point has been reached. Attention: In many cases, other investments are intended for download and streaming than for physical sales.

Whether a certain figure is classified as high or low, i.e. satisfactory or in need of improvement, always has to do with the service provided by the contractual partner. Today we often have to deal with the situation that the artist virtually single-handedly ensures a finished product. Authorship, production, graphics / layout, booking, marketing - everything is done by DIY and sometimes you ask yourself, not without good reason: What is the label's service actually made of?

In many cases, this “only” consists of selling the sound carrier. This is of course no small matter, because sales are an essential factor, require sophisticated logistics and a lot of manpower. But is the sound carrier also advertised? So is there any kind of promo going on? And was the production itself supported in any way? If the answer is no, then as an artist you should ask yourself whether there is any other reason to choose this label anyway. Perhaps it is the name that sounds like it causes tongue-tingling in certain circles and that is expected to have a positive sales effect. That too can be seen as an achievement.

Or is it not, regardless of what percentage is contractually guaranteed, that pure sales are the better solution? That would then mean founding your own label. If you already have to deal with all the label agendas yourself or you don't get into the embarrassment of worrying about it because you can't find a label, that seems appropriate.

In any case, the holistic view is more essential than the question of an exact percentage: which service is actually countered by which service? Does it really pay off to work with a label?

Point 2: The Rocky Effect

In many cases today you have to do with artist, band takeover, but also publishing contracts (more on this later) with extensive legal grants. The buzzword is: "360 degree contracts" or "Multiple Right Deals". These contracts are a bit like Rocky in the swimming pool. Specifically, the scene is meant in which Rocky has to practice clumsily in the breaststroke and his trainer says to him: "You will feel muscles that you didn't even know you had!" You will cede rights that you didn't even know you had. "

There can be two reasons why labels / publishers allow as many rights as possible to be assigned: Either the contractual partner has no interest in evaluating all these rights, but rather it is a matter of opting for the (largely unlikely) case of the surprising commercial success of one To secure the sound carrier. In other words: When the song goes through the roof, the label or publisher really wants to be able to do everything with it without having to ask for permission. For the artist, however, this means in return: he gives up rights that he may know more about than the contractual counterpart.

Or second: the contractual partner is not just a label, but pursues a business model that is about taking on as many agendas (booking, publishing, etc.) as possible in addition to the classic label business.

Put simply: If the partner really offers several things, the assignment of the necessary rights is also OK, because it is used for evaluation. If, on the other hand, it only serves to secure rights in the event of future success, the assignment should be carefully considered.

In many cases, there are also provisions today in which rights that arise from future technical developments are assigned analogously. Regardless of whether this is even possible from a legal point of view, it means that the rights to a type of exploitation that did not exist at the time the contract was concluded, but were invented during the contractual term, are also assigned. These regulations are a consequence of the internet. If there should be such a groundbreaking and unforeseeable innovation again, one does not want to negotiate again, but rather to be able to evaluate this area without being asked.

Also problematic are provisions with which rights to other productions are also transferred. Example: An artist not only grants the rights to the contractual production, but also guarantees the rights of all other productions that arise during the contract period. Such a transfer of rights can go so far that productions that are created under a different name, in other formations, must be offered to the record company, which then has the exclusive right, but does not have to exercise this right. If you sign such provisions, in the worst case scenario it can have a life-threatening effect because creativity is "put on hold".

Whether you as an author / musician can "negotiate out" some of these rights, i.e. can remove them from the transfer of rights, depends entirely on your own market power, but even more on the attitude of the contractual partner. The all-important question is: which right or which rights does the other party really need (for the intended exploitation) and what is a mere bonus?

The author must also be particularly careful if he / she is not yet a member of a collecting society at the time the contract is signed. Then he / she can theoretically still dispose of these exploitation rights. If he / she grants this to his / her contractual partner, the royalties are not due to him / her, but to the contractual partner. Worse still: “The contracting party could even prohibit him / her from performing his / her own works. Fortunately, there is almost always a so-called collecting society reservation in such rights transfer catalogs. This is a legal provision that excludes the transfer of rights (usually by a collecting society such as AKM) from the transfer of rights. In the event that such a passage should be missing, it is essential to complain about it. The author cannot dispose of these rights (in the event that he / she has not already granted them to AKM). For his own protection. "

Point 3: Is there life after death?

We know from everyday life that lifelong relationships only work all too seldom. So why make relationships beyond death? The phrase “for the duration of the protection period” or “for the duration of the respective valid protection periods” does not mean anything else.

Explanation: The copyright protection period in Europe - harmonized by an EU directive - is 70 years after the death of the author. So if the author of a work is 30 years old and it is assumed that he still has at least 40 years ahead of him, the contract is concluded for 110 years (!). No small thing and usually only makes sense if you intend to write a hit à la “Last Christmas”. Because then you have secured the livelihood of the children and grandchildren.

Of course, a distinction has to be made between the duration of the contract and the duration of the granting of rights. I.e. I can conclude an artist contract for about ten years (contract duration). And everything that is created during this period can then be evaluated “for the duration of the protection period”. In many of the contracts circulating today, however, under both points, i.e. under contract term and granting of rights, the phrase "for term of protection" can be found. That means: I commit myself beyond my death so that my works can be used beyond death (either 70 years after publication under the artist contract or even 70 years after the death of the last living author under the publishing contract). Absurd, but that's how it is.

Even more absurd is the phrase “for the duration of the respective valid protection periods including extensions”, which is almost common today. This means that provisions are also made in the event that these 70 are changed once every 80 or 90 years within the EU. It makes more sense for both sides to walk together for a certain period of time and then - after this period of time has elapsed - to evaluate whether it has been profitable for both sides. A sensible rule would be to agree a contract term of three years and an evaluation period of ten years. Many seriously working labels plan to do exactly that. However, the trend in the Anglo-American region is clearly going in the direction of longer contract periods. Long ties are not to be condemned in advance. However, they only make sense if an artist is being established. This means that here, too, the relationship between service and consideration is very important.

Point 4: Options

From a legal point of view, an option is understood to mean the right to enforce a contractual obligation that is predetermined in terms of content. Sounds complicated, but it is not. For example, the following provision can be found in a contract: “The artist gives the licensee two options to extend the contract for another year. The option can be exercised in writing no later than three months before the end of the contract. "

In plain language this means that the contract partner has the unilateral right to extend the contract. The unpleasant thing about it is: You don't know whether the other side will now exercise their rights or not, and you have to wait for deadlines (here: three months), so you are pushed into a passive role.

Sometimes there are several such options that can be exercised one after the other. Some of these option chains are formulated in such a complicated way that even lawyers are no longer familiar with them. It is better to let the contract end after a precisely defined period and then evaluate it. If such options are not negotiable, and especially if it is an option chain, you should definitely illustrate what that means in detail by means of a sketch. What is the maximum length of the contract if all options are exercised on the last day of the period? How long does it last if no option is exercised? And what does that mean in detail?

Point 5: The publishing contract: Where was my performance?

From a technical point of view, it is like this: A music publisher is a commercial exploiter of works of music. He acts as a mediator between the industry and the author, tries to accommodate his clients with commercial users (film, television, advertising, etc.), therefore generally acts as a service provider, sometimes even as the manager of an artist.

In practice, however, it often starts differently: Anyone who asks about the evaluation options for a sound recording, who asks who earns how much when a piece of music is played on the radio, who asks how a piece of music goes to the director or the person responsible for the soundtrack is actually already in the middle of the publishing business. Whether it is the artist himself / herself who takes these agendas in hand, a label or a publisher - the boundaries are becoming increasingly blurred. But when do you need a music publisher? So when does it make sense to conclude a music publishing contract?

The music publisher usually has authors assured publishing rights worldwide. For this it makes sense to have a sub-publisher in certain regions of the world. Collecting societies are actually networked around the world anyway, but the amounts of data are so extensive that all artists in the world can never be reached. The sub-publishing partner, who is familiar with the respective country, can convey and process works in a more targeted manner and, above all, check royalty statements. To put it simply, one can say: the more busy, the more international or internationally marketable a musical project is, the more interesting a publishing contract becomes, the more sensible it is to conclude a publishing contract with an internationally operating publisher.

One should be careful when record contracts are automatically linked to a publishing contract. Not every record company can be a good publisher. Often it is the wish to share in the royalties of the artist who is the father of the thought here. Such a participation (in case of doubt 40% according to the distribution key of the collecting societies) is only justified if the publisher also provides something in return, i.e. if it actively takes care of the exploitation of the author's rights.

The artist has to consider whether the publisher actually has contacts and will actively work on them for him, because there are active but also passive publishers, i.e. those who actively ensure that the work is fed into all conceivable exploitation channels , but also others who mostly just react.

Before you finish, you should therefore clearly illustrate:

What is my relationship with the publisher? Is she trusting? Do I trust him that he will stand up for me accordingly, that is, that he will accommodate me on the radio, television, in movies, advertising, computer games, etc.? Will it rotate for me so that I will rotate on the radio? Will he leave no stone unturned and be it to recommend me for telephone loops or the background noise in the airport toilet?

That may be a matter of trust, but you can also research what references the publisher has to show, what reputation it enjoys in the relevant circles, or what it has already done for other, comparable artists, which alternative exploitation channels it has opened up for them. Is there a serious picture with a constructive plan or is the publisher more interested in participating in the return flow of royalties and thus tapping an additional source of income?

The publishing contract should not be concluded “for a term of protection”, but limited to a few years in order to evaluate after the deadline whether the publisher has brought in more than it has skimmed off in royalties.

In any case, caution is advised against hidden provisions in artist or band takeover contracts! If the assignment of publishing rights has never been discussed, a hidden passage about the assignment of such rights is usually an overly clear indication of the contractual partner's lack of seriousness.

Occasionally, however, an assignment of publishing rights may be necessary in order to enable the publication of a sound carrier at all. This is especially possible in the small and very small label area. In such a case, the label needs the percentage of the royalty return in order to even come into the profit zone, i.e. to be able to finance production at all. That means: A small label enables me to start the business. In order to be able to finance the pressing of a small edition of vinyl at all, the label depends on precisely this return flow of royalties. This means that the assignment of publishing rights is "part of the deal" so that the release of the sound carrier can be financed at all.

Unfortunately, in practice it also happens that bands are encouraged to sign a publishing contract because otherwise no promotion will be initiated. So there is no promo without publishing rights. As an artist you should avoid such agreements that border on blackmail like the devil should avoid holy water.

If anything is unclear, you can contact the specialist lecturers of the mica - music austria turn. The advice is free of charge.

Markus Deisenberger

thanks

This contribution was funded by the Department of Culture of the City of Vienna (MA 7).