JPF Home Page Forums General Messages General Message Forum MySpace talking to independents Posted by: "Derek at CD Baby"

360 deals were the big buzz word at SXSW this year
since CDs aren't selling like they used to,
labels are now want to capture parts of the artists other revenue streams. Like performance, merchandising and endorsements

here's a few recent headlines

U2 Signs Deal with Live Nation
U2 sign $300 million deal with Live Nation
Jay-Z Signs 360 Deal With Live Nation






SXSW afternoon dispatch:
Music business struggling to find new model

As recently as four years ago, all the talk about a failing major label model didn't seem to stop the annual South by Southwest Music Conference in Austin, Texas, from sending hordes of A&R reps and journalists on the prowl for the next big thing. Yet this year, the event has felt more and more like a traditional festival, one where the music -- and not the deal -- takes center stage.

Perhaps there's a relatively simple explanation for this. At a Saturday afternoon panel about the state of A&R, this dizzying statistic was thrown out: In 2000, the major labels employed more than 400 A&R executives. As of the start of SXSW in 2008 that number has dwindled to below 70, according to panel moderator Rodel Delfin, an editor with trade publication Hits Magazine.

And the ones who survived, said David Ayers, an executive with the Chrysalis Music Group, are "70 guys out there who are terrified. " Added A&R veteran Berko Pearce, "It doesn't matter if he's making $800,000 or $50,000, any A&R executive is expendable at the moment."

In a climate where job security has become the primary concern, talk around the Austin Convention Center on Saturday focused heavily on new business models, be it the much ballyhooed "360 deal," in which a label sees a cut of touring, merch and licensing revenue, among other facets of a band's career, or increased Madison Avenue-style branding techniques.

Across the hall at a panel on the pros and cons of 360 deals, Frank Gironda, a VP with Nettwerk Management, shot down the idea of such an arrangement, arguing that they make little sense at a time when major labels are trimming staff.

"You may as well do a deal with UBS or Paine-Webber," he said. "They want a piece of your revenue streams, but are not doing anything to actually develop them ... Why should we try to bail [the labels] out when they're struggling in their business?"

Gironda used the example of Nettwerk-managed gypsy punk act Gogol Bordello, a group he said is currently without a record deal. He noted the Gogol Bordello makes the majority of its money on touring, followed by merchandise and licensing. "Record sales," Gironda said, "are not insignificant, but they're not driving the business ... It might make less sense to do a 360 deal as all our other revenue streams are very profitable."

Jeff Krasno, president of Velour Music Group (Kaki King, Jesse Harris), countered that a label is investing in much of what makes a band's career, including publicists, who could cost as much as $4,000 per month. Yet he seemed to hint that 360 deals may not be a model that will work for all parties.

"It's not an illegitimate argument," Krasno said. "I think it's a legitimate argument, but that's where this whole system may break down. We need a new model."

Earlier in the afternoon at a branding panel, licensing songs to commercials or corporate outlets was pitched as the new model. "A CD today is nothing more than a transferring device," said Jeremy Wineberg, an A&R executive with Invisible DJ Records, which began by placing hip artists in high-end clothing outlets like Ron Herman and Fred Segal, and is now directly signing artists.

While the panelists pointed out that adventurous rock act Wilco recently "got blasted" for linking with Volkswagen, Wineberg argued that the question of an artist losing credibility by partnering with a corporate entity is irrelevant.

"As major labels are wanting to partake in touring [revenue] via 360 models," Wineberg said, "they're taking more and giving less ... You're always going to lose fans [by doing an ad]. You're always going to gain new fans. But you can't, as an artist, turn down opportunities to bring in money."
from:
http://latimesblogs.latimes.com/extendedplay/2008/03/sxsw-afternoo-2.html


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