This is for all you artists out there that have been hearing the term “360 deal” but haven’t really understood the details of what constitutes such a deal and why an artist would pursue one.
Bruce Warila at the Music Think Tank blog recently posted about 360 deals. He explains what they are, why they are being done, and how to do one.
Basically, a 360 deal is an arrangement whereby a new corporation is set up which is jointly owned by the band, along with any other participants including, label, manager, investors, etc. The deal is structured so that “‚Äòmutual alignment of interests” is created. This means that everyone benefits from the band being successful. If something is good for anyone, it’s good for everyone. This prevents different parties from seeking their own advantage to the detriment of other parties involved in the band’s business.
If you have any interest, you should check out his post, which is complete with a zip file download containing all the legal documents you’ll need to get you started thinking about, or even setting up, your own 360 deal.
If you are going to take on investors, if you are going to compensate employees with equity (stock in your entity), if you are going to compensate management with equity, if you want to treat everyone fairly, and if you want to align everyone’s incentives‚Ä¶I believe this (the concept) is the way to go.