Understanding the Evolution of Artist Deals
From Traditional Contracts to 360 Deals
In the ever-evolving music industry, the structure of artist deals has undergone significant changes. Gabi Shabangu from The Music Arena (owned by Arena Holdings) shares valuable insights on this evolution, shedding light on how traditional contracts have morphed into what is now commonly known as a 360 deal. The Music Arena, is central to the evolving music industry. Home to the legendary Gallo Records, the oldest record label in Africa, Music Arena oversees the most extensive collection of African music globally. This rich industry experience and historical depth provide invaluable insights into the shifting landscape of artist deals.
Historically, artist deals were straightforward: record labels would invest in the production and distribution of an artist’s music, taking a percentage of the sales in return. However, as the industry landscape changed, so did these deals. The rise of digital platforms, streaming services, and the decline of physical album sales prompted labels to seek new revenue streams.
Above: Music Brands Housed by Arena Holdings
Enter the 360 deal! This comprehensive contract involves the label taking a percentage of not only music sales but also other revenue streams such as publishing, touring, merchandise, endorsements, and more. According to Shabangu, the average cut for an artist in a 360 deal is around 15 percent. The rationale behind this lower percentage is the extensive investment the label makes in various aspects of the artist’s career.
For many artists, this type of deal can be both a blessing and a challenge. On the one hand, it provides substantial financial and logistical support from the label, allowing artists to focus more on their creative work. On the other hand, it means sharing a significant portion of their earnings across all revenue streams.
Above: The Music Arena team at SAPMF
The key question remains: which deal is right for an artist today? The answer depends on various factors, including the artist’s goals, their existing fan base, and their ability to self-manage and market their career. For some, the comprehensive support of a 360 deal can be invaluable. For others, maintaining control over their various revenue streams might be more appealing.
To delve deeper into this subject and gain more insights from industry experts, watch the full discussion with Gabi Shabangu on The Music Arena at the SA Podcast and Music Festival below:
In summary, the shift from traditional artist contracts to 360 deals marks a significant change in the music industry, driven by the rise of digital platforms and changing revenue models. As highlighted by Gabi Shabangu, while traditional deals focused on music sales alone, 360 deals offer a broader scope, encompassing multiple revenue streams but requiring artists to share a larger portion of their earnings.
Deciding between these deal structures depends on an artist’s individual goals and circumstances. The extensive support offered by 360 deals can be invaluable for some, while others might prefer the independence of traditional contracts.
Stay engaged and informed as you navigate the complexities of modern artist deals their impact on the music industry.
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