Paramore, a Grammy-nominated rock band, has cancelled the rest of a European tour, citing “a lot of internal issues.” Who cares?
Warner Music Group (WMG) does: They’ve been using the band as a prime example of their push for so-called “360” deals, where the label shares a portion of all of a music act’s revenue streams — not just music sales. And now one of those streams just got dammed up, at least for now.
From WMG’s earnings call earlier this month:
Grammy nominated best new artist Paramore is an example of the significant potential of success that expanded rights deals have for our record companies and for their artists. This was one of our very first expanded rights deals in the U.S., struck in December 2005. A multi-year grassroots marketing effort has begun to pay off as Paramore’s second album, Riot, is approaching platinum status in the U.S. Paramore’s selling out increasingly larger venues and has a fast-growing online fan club and merchandising business. This is a great example of what can happen when an artist and their record company’s interests are more directly aligned.
Paramore is a niche act, so this certainly isn’t a material issue for WMG, whose execs say their deal with the band has already made money for the label. They also say that a more substantial tour for the band is still scheduled to start in March.
Fair enough. But this does point out one of the pitfalls of 360 deals (for WMG and the rest of the majors, all of whom are chasing these kind of arrangements): More revenue streams equals more upside — and more things that can go wrong.
NOW WATCH: Tech Insider videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.