#PopCultureClass: ShETHER Lesson #3: Artists, Beware of the 360 Deal (Even Though Nicki Doesn't Have One)

Less than a week ago now, Remy Ma released ShETHER and dropped some gems. I've been writing about the several lessons Professor Ma gave us through the lyrics all week. Lesson #3 is one that I hope didn't go over the heads of up and coming (and even established) artists. Artists must know and understand the 360 deal and its consequences. 

Toward the end of ShETHER, Remy raps in explicit language (for those of you with delicate eyes) that Nicki is not as financially successful as she claims to be because she signed a "360 deal." Here are the lyrics:

And stop talking numbers, you signed a 360 deal
Through Young Money, through Cash Money, through Republic
Which means your money go through five niggas before you touch it
Any videos, promotions come out of your budget
Endorsements, tour and merchandise, they finger-fuck it
. . .
Stop comparing yourself to Jay, you not like him
You a motherfucking worker, not a boss like Rem

Let's take some of this line-by-line, because there is a lot to unravel here:

"And stop talking numbers, you signed a 360 deal"

So what exactly is a 360 deal and why does it matter? It can matter a lot to an artist. 

A 360 deal, also called a "multiple rights deal," is an exclusive recording contract between a record company and an artist where the label gets a cut from money made off of just about everything. In addition to money from the artist's music sales, a 360 deal gives the label a share in money made from:

  • Digital sales
  • Tours, concerts and live performance revenue
  • Merchandise sales
  • Endorsement deals
  • Appearances in movies and television shows
  • Songwriting, lyric display and publishing revenue
  • Ringtone sales

This wasn't always the case. 360 deals didn't really exist before 2002. Before then, artists mostly got traditional deals. 

Not that traditional deals are much better. Traditional deals pay artists royalties on the sales of music. BUT, producer royalties, net sales, foreign sales, reductions for packaging, budget records and new technology are all deducted from the artist's royalties. This means that most of the time, the royalties received by artists are pretty small unless the artist has a hugely successful album. Traditional deals also give the labels ownership over copyrights in the artist's music and options for multiple albums.

Originally created by TheRoot.com - "The Music Industry's Funny Money

Originally created by TheRoot.com - "The Music Industry's Funny Money

TLC fell victim to such a deal. As Lisa "Left-Eye" Lopes explained in TLC's Behind the Music show in 1999:

The most important language from Left Eye's explanation:

This is how a group can sell 10 million records and be broke, and everybody get ready to do your math. There are 100 points on an album, TLC has seven; every point is equal to 8¢. Alright, seven times eight is 56¢. That means every time an album gets sold, TLC gets 56¢. Sell 10 million records: $5.6 million. So, LaFace Records had to spend about $3 million on [CrazySexyCool], so that automatically gets deducted from the $5.6 million before we can see a penny. Now, we have $2.6 million dollars left to split between the 3 of us. Well guess what? When you have that much money you’re in the about the 47, 48, 49% tax bracket, so that immediately gets deducted to $1.3 million.

360 deals incorporate all of the items that traditional deals have. But, with a traditional deal, the artist can still make significant money on other things like touring, publishing, selling merchandise, and endorsement deals with other companies, because the label doesn't get a cut of that (though, the artist probably has to repay the label for some or all of the money provided to pay for things up front).  

Today, just about any new artist signing with a label is probably going to get some variation of the 360 deal. There have been a number of headlines about artists wanting to get out of their 360 deals, including Wiz Khalifa and Young Thug. Lupe Fiasco refused to sign one. Record labels prefer 360 deals because the money made from music has been dramatically declining over the past roughly 15 years, while other opportunities are booming.

Mo Money, Mo Money, Mo Money

Today, artists are making most of their money from this other stuff, not music sales. 

After My Adidas came out in 1986, the million dollar endorsement deal that RUN-DMC received from Adidas was the first deal between hip-hop artists and a major corporation in history.  

Just a few years ago, history was made again when Dr. Dre entered into a $3 billion Beats headphones deal with Apple, Inc. Labels, of course, want a piece of this pie (which is probably one of the reasons Chance has declined recent offers for a record deal - he can eat the whole pie and make more money). 

New @kitkat jingle with Chance The WRAPper @chancetherapper 🍫

A post shared by HOT 97 (@hot97) on

Given the potential to make money in multiple ways, record labels want in on this action. Labels now often insist on 360 deals as a matter of course, even if they don't actually contribute money or resources up front to develop those additional revenue streams. 

From the label's perspective, of course, they are spending a lot of money up front in some regards. They spend money to develop the artist, get the artist invited to industry events, hire appropriate photographers and videographers, create great digital media accounts, get the music on the radio, etc. etc. etc. Basically, the argument is that a 360 deals allow labels to focus on the entire universe of the artist and not just record sales.  

For some artists, this seems to have worked well and created massive amounts of success. Speaking about Lady Gaga, one lawyer has noted that,

For instance, Lady Gaga was a virtual unknown before Interscope spent a vast sum putting her on tour as an opening act for the New Kids on the Block, paying for marketing (particularly to the gay community), hiring wardrobe and makeup, and paying all her other expenses for over a year, not to mention using their clout to get her invited as a guest on almost every important radio station in the country.
She got upgraded. 

She got upgraded. 

Most people aren't going to be as commercially successful as Lady Gaga, of course, so labels could be in the red on many artists who don't pan out. 

In addition, there are few Lady Gagas in the entertainment industry. Labels probably won't agree in writing to do all of the things Interscope did for Lady Gaga, which means there's no guarantee they will, indeed, focus on the artist's holistic development.  In addition, the vast majority of artists don't have much of a choice regarding whether to take a 360 deal or not, because labels insist on them.

Now, whether or not Nicki actually signed a 360 deal is a different question. According to the Young Money press release from 2009 announcing Nicki's arrival, she doesn't have one. Even if she does have one, it sounds like she negotiated to keep many of her rights. 

Nicki Minaj 360 Deal

So, the lie detector test couldn't determine whether this is 100% true or false (because copies of the contract aren't publicly available), but Nicki's own label seems to suggest that she retained many of her rights. Remy may, therefore, be mistaken on this. 

The Structure of Record Labels

Remy doesn't concern herself with the specifics of Nicki's deal though. She moves right through to the next line in ShETHER with some truth-telling: 

Through Young Money, through Cash Money, through Republic
Which means your money go through five niggas before you touch it

The lie detector test determined that Remy is telling the truth on this point.

It seems that Nicki did, indeed, sign a deal with the lowest man on the record label food chain. Before Young Money can pay her, it first has to get its money from somewhere else.

Nicki is signed to Li'l Wayne's Young Money record label. According to Li'l Wayne's recent legal complaint against Birdman's Cash Money Records, Inc., the Young Money record label is a joint venture between Young Money LLC (a legal organization) and Cash Money (another legal organization) in which Li'l Wayne owns a 49% interest and Cash Money presumably owns a 51% interest. Cash Money, in turn, is distributed by Republic Records, which is a division of Universal Music Group, which "is a subsidiary of the Paris-based French media conglomerate Vivendi."

So, as it turns out, Remy probably didn't even go far enough - there's probably a lot more than five [parties] who are handling the finances before they get to Nicki. This means the money has a lot of people and companies to go through before it gets to her.

Li'l Wayne's dispute with Birdman/Cash Money also seems to prove that Remy is right. Li'l Wayne is suing Cash Money because he believes the label hasn't paid him the many millions of dollars (51, to be exact) they owe him. The basics of all of this is Universal gave money to Cash Money, who was supposed to give money to Young Money so that Young Money could pay its artists. But that money hasn't been paid. 

There are also criminal allegations that Birdman tried to have Li'l Wayne killed. They've come a long way since they were kissing in the mouth in public. 

Lil Wayne Birdman

Li'l Wayne actually sued Cash Money Records first. He later sued Universal Music Group for more than $40 million, but that lawsuit that has been stayed (postponed) until the Cash Money issue is resolved. Essentially, the courts have told Li'l Tunechi that he has to climb the food chain to get that money. 

Seeing that Nicki is signed to Li'l Wayne's label, which he only owns 49% of, Remy's seems to be right that some of Nicki's money goes through multiple channels first. If its true that she kept many of her 360 rights though, Nicki is probably fine financially.

Anyway, after listing all of Nicki's bosses by name, Remy goes deeper into the nature of the 360 deals, rapping that:

Any videos, promotions come out of your budget
Endorsements, tour and merchandise, they finger-fuck it

The lie detector test determined that Remy is telling the truth about 360 deals, but likely not about Nicki specifically. 360 deals give the record label a piece of many things, including endorsements, tours and merchandise. But, as mentioned above, Nicki doesn't seem to have one, at least on some points.

What can the artist do to protect themselves? It depends. If the artist has leverage and a great lawyer, they can probably negotiate a lot of the terms. Again referring to the 2009 Young Money press release about Nicki:

The battle among labels to sign Minaj heightened this summer and finalized with Minaj signing an exceptional and very unique deal with Young Money/Universal, where she retains and owns all of her 360 rights, including merchandising, sponsorships, endorsements, touring and publishing.

Nicki had leverage. And her label recognizes explicitly that this deal is not open to most artists. By 2009, Nicki had three mixtapes, had been covered by BET and MTV, and appeared on several Billboard lists. 

But, if the artist isn't quite there yet, all isn't lost. It just requires a lot of hustle on the front end by releasing tons of music, touring, and/or building fan bases online and off. If an artist is presented with a 360 deal (which is likely for major labels), here are three points to consider regarding negotiating the terms:

#1. Negotiate to exclude income streams that the artist has already created.

If the artist is already making money on ringtones, touring, etc., the label hasn't done anything to develop or create that income stream. So perhaps the label shouldn't get paid off of it.  

#2. Ask the label to agree, in writing, to spend money on developing each income stream.

In a YouTube interview, two seasoned entertainment lawyers - Steve Gordon and Elliot Resnick - talk about how this can be accomplished. To summarize the video, the standard agreement allows for a record label to get a share of different income streams (called "splits") as follows:

• 50% Merchandise

• 25% Touring and live performance

• 25% of digital products, including ringtones and sales from the artist’s fan site

• 25% Publishing

• 25% Endorsements

• 25% of any other income, including TV and movies appearances, theatre, book publishing, etc.

The ultimate point is that, no matter what splits are offered, the artist and their lawyer should ask the label to agree, in writing, to support those streams in some way - hopefully financially. This might be through manufacturing merchandise and selling it at retail online and on tours. It may be through other things. But, the label should do something in exchange for those percentages.

If the label can't or won't provide support for income streams, the artist can try to negotiate an advance (meaning, get a loan up front) for individual income streams. Also, the artist should try to negotiate that the label is not allowed to take money from one income stream to pay for balances owed for another. 

#3. Base the label's income share on net revenues, not gross revenues.

If the artist must agree to a 360 deal using the percentages mentioned above, negotiate that the percentage is based on net income, not gross. Gross income is the total money made before any expenses are paid for anything. Net income is the amount of money made after all expenses are paid. Here's an example from Steve Gordon, the lawyer I mentioned earlier:

For instance, if a tour earns the artist $25,000 but her expenses added up to $20,000 (for hotels, transportation, booking agent fees, sound and lighting, etc.), the label should only commission the $5,000 in profits not the entire $25,000.  Indeed, if the label’s commission was 25% and that was based on gross, the amount due to the label would actually exceed the artist’s profit.

Final Thoughts

Remy is right about 360 deals taking money out of artist's pockets. Nicki's pockets, however, seem to be just fine, if it is indeed true that she kept her 360 rights.

Other artists can learn from both of these women though. The default 360 deal can truly be terrible, but an artist can find a good negotiating position by taking these lessons to heart. Or, an artist can take the Chance the Rapper approach. Though he doesn't have a record deal, per se, he certainly works with larger companies, like Apple, to develop income streams that he gets to keep.

Either approach requires an understanding of record deals and what is best for the artist. In the words of Remy Ma, one's status as a boss and not a worker depends on it.