Very Good Bob Lefsetz Article on 360 Deals. And My Response.

Bob Lefsetz, the author of “The Lefsetz Letter”, posted a very good article on his site about major labels using 360 deals to make up for the decline in music sales. Bob’s article was in response to a NY Times article, “Band as Brand”, which also covered 360s. Bob’s a smart guy. Knows what he’s talking about, and he’s brutally honest!

Since Bob’s blog doesn’t allow comments, I’m posting the text of his article (and the response I emailed to him) here:

Bob’s Article:

I’m freaking the fuck out. This Jeff Leeds story in the “New York Times” has my blood boiling.

Under the guise of artist development, the major labels are spinning this fantasy that 360 deals are good for the artist when the real story is they’re a land grab, a desperate attempt to insure the labels’ future.

At least they’re giving the vaunted Paramore a thirty percent deal instead of one for fifteen, but what did Billy Preston say, “nothin’ from nothin’ leaves nothin’”?

The problem in the music business is not the deal, but the fact that the major labels made music free, by sticking their heads in the sand, refusing to authorize new distribution technologies. What’s even more bizarre, their poster boy for mass destruction is now Steve Jobs, when any economist will tell you sale by track is death.

If you’re contemplating a major label, and your success is not based on terrestrial radio play, if you don’t make pop music, YOU’RE A FUCKING IDIOT!

Have you been to the major label’s office recently? There’s nobody working there! They want more of YOUR money for doing less work. You’ve still got to hire a manager, an agent, pay them, and also pay the label which is doing no more than before, it’s just that it can’t make as much money because the landscape changed. What’s next, subsidizing WebTV? Or, maybe you’ve got no idea what I’m talking about here, which proves the point. And the point is, are we going to subsidize outmoded businesses because we don’t want to see people lose their jobs, we don’t want to see them marginalized, we don’t want to see them go bankrupt?

Why don’t we start with AOL. Yup, I want all of you to sign up for a dialup account. That’s when AOL was most healthy. The company’s a shadow of its former self. Don’t you care? Don’t you remember when you logged in to AOL back in ‘96? Don’t you have any sympathy? Come on, use your modem. Call your phone company and reactivate your extra line. AOL needs to be SAVED!

Or maybe AOL can get a cut of Comcast’s broadband fees. And Verizon DSL. Hell, they were there first, they DESERVE the money.

Major label… You want more of my money, TELL ME WHAT YOU’RE GOING TO DO FOR IT!

If you’re just going to sit there and collect cash on my touring income, because you can’t make money selling recorded music, FUCK YOU!

And artists want to be beholden to these same assholes who tell you what to record, who micromanage your whole life?

Either go on tour or we’re gonna stop working your album. Make this endorsement deal or we’re not working your track on radio.

The oldsters, the Eagles and Madonnas and Radioheads of this world, are never going to go for this. We need a union, to protect the newbies. Used to be you only got raped financially in the recorded music world. Now you’re getting raped IN ALL 360 DEGREES!

The label won’t put out your record, because it’s not satisfied you’ve got hits. So, you decide to play some live gigs to eat. Oops, you’ve got to give thirty percent to the label. And you can’t get divorced, because you’ve got a CONTRACT! So, you’re tied up for the life of your career, unless you’re a superstar and actually last more than ten years.

Thank god Bruce Flohr went on record here. But where were the attorneys? Oh, I know, they were afraid of pissing off the labels, not eating themselves. Are they interested in their clients or THEMSELVES?

Sanctuary, which INVENTED the 360 deal, collapsed. As my dear friend Tony Wilson asked the executives, isn’t it the job of the label to steal from the act? Isn’t this why its stock goes up? Then how can you be the manager, the label, the publisher and the agent…

I’m thinking that new bands will have 360 deals. But with people you don’t know the name of, who are trustworthy! That’s what the new paradigm is based on, trust. If you trust anybody at a major label, you haven’t signed your deal yet. They’ll send limos, take you out to hundred dollar dinners, but once you’ve inked the deal, you’re back in your Toyota at Burger King. Ask them what happened and they’ll tell you it’s YOUR money, and the company isn’t only you, they’ve got to sign OTHER acts! The new 360 companies won’t have so many acts. Like managers, because it will be about personal attention.

We thought we had a common enemy, the assholes stealing the music. But no, all along the enemy has been the major label. Which hasn’t had the interests of the artists at heart for DECADES! Create a musical haven. Give us FIFTY PER CENT of recorded income. Treat us like brothers, not slaves. Do something new as opposed to moving in on our territory, based solely on your leverage. Yup, want a deal, it’s got to be 360!

Utter hogwash.

The sooner young ‘uns reinvent this business, the better it will be for artists and fans. The entire music business has moved to the Net. Where’s the penetration of this sphere by the majors? NONEXISTENT! They’re forming advertising agencies, getting down with endorsements. Wade into the wild west of the Net? NO! Unless it’s with total control, which results in fiascos like PressPlay.

The major labels didn’t create MySpace. Facebook either.

They didn’t invent Napster. They didn’t roll up the concert promotion companies.

They’ve been out of the loop on every innovation of the last ten years. But because they ruled in the past they’re entitled to rule in the future?


Apple creates the iPod. Google comes up with software for phones. Fox at least buys MySpace. What do the major labels do? Eat their young. Say that since we fucked up the future, you’ve got to cough up your rights.


The LABEL has to give up something to get more. So far, I can’t see that they’re giving up much.

Don’t buy this ruse. The future will arrive. And it won’t be run by Universal or Warner. Unless you’re so fucking stupid, or so mesmerized by the homes of Zeppelin and Cream, that you end up signing with these entities run by caretakers who weren’t even around when the great music was created.

It’s the artists’ move. Want to make a deal with your computer genius buddy down the hall? Someone who will go to every gig? Be my guest. Throw in with the establishment because they WERE the establishment… You’re fucking ignorant.

My Comment:

Man, this is a GREAT article. I totally agree with EVERYTHING you’ve said, especially the part about trust. I talk to a lot of aspiring artists, and the problem is they don’t realize how much the paradigm has changed in this business. They persist to try to get signed to major labels, thinking that will make all their dreams come true. You should see their faces when I inform them that most artists signed to major labels never have product released at all, and that 10% of the acts on major labels pay the cost for the 90% that flop. Utter shock and dismay.

Whereas before (historically speaking), the only alternative for an artist was to do their best to get signed to a major, and let the label do all the work for them (the artists getting themselves robbed blind in the meantime), now, it’s all about indie and DIY. With the level of communication and direct contact with the consumer, and the lower cost of digital distribution, major labels have no way of maintaining their monopoly over recorded music.

I’ve never been able to understand why the majors based their entire livelihoods on one business model. Then, when that business model failed, they started coming apart at the seams. Makes no sense. They watched their business model crumble, did nothing, and NOW they’re panicking. I can’t imagine that the eggheads at the the majors didn’t realize a business model based on over-spending, payola, and corruption (where the music CUSTOMER ends up paying $18 fuckin’ dollars per CD to pay for all that), was a system that was bound to collapse.

So that’s why they came up with the 360 deal, to try and replace their revenue streams by gouging the artists for some of their tour and merch money. It won’t work, because the bigger artists at these labels are realizing that there’s not much the labels can’t do for them that they can’t do for themselves.

Now, all that being said, I am an independent artist/label owner myself, and I do have all my artists signed to 360 deals. I don’t do this out of greed. I do this because all of MY artists are basically unknown when I sign them. So, I basically do all the marketing, distribution, promotion, etc. etc. for them. So instead of giving them huge bonuses I can’t afford, and then recouping them and leaving them broke, I give them a larger piece of their recorded music royalties, in exchange for a minority stake in their show and merch sales. The artists are all happy with their deals, and we’re doing pretty good as a label. So I wouldn’t say that it’s the 360 deal that inherently evil.

But when the majors use the 360 as way to leach even more money out of an artist that’s already established, that’ ridiculous. And we both know they’re not spending any more time and money on “artist development” than they have in the past. They’re just scrambling to squeeze more money out of the industry.

I would say the days of major labels are numbered. And good riddance. The only future role I see them playing is that of investment banker. They can leave the rest to the artists, & independents to figure out for ourselves.

1 Response to “Very Good Bob Lefsetz Article on 360 Deals. And My Response.”

  1. 1 coffeemag
    March 12, 2008 at 1:21 pm

    the truth

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