Sean Combs, better known as Diddy, is the CEO of the Bad Boy Worldwide Entertainment Group (Bad Boy). The company is a great example of using the 360 deal to maximize profits. Take a look at the different companies Diddy owns within the group.
The Bad Boy Worldwide Entertainment Group Brand (Selected Operations)
Bad Boy Records - Recorded Music Division
Sean Jean - Apparel and Fragance Line
Janice Combs Music Publishing - Music Publishing Company
Janice Combs Management - Talent Management Company
Bad Boy Films - TV/Film Production Company (Making The Band, Run’s House)
Daddy’s House Recording Studio - Recording Studio
Blue Flame Marketing and Advertising - Advertising Agency
Justin’s - Restaurant Chain
To get an understanding of how effective the Bad Boy company structure can be, let’s take a look at a few examples (Disclaimer: The following examples are hypothetical and to be used solely for illustrative/educational purposes. The UrbanMusicBiz Network has not accessed any specific contracts between Bad Boy Worldwide Entertainment Group and its artists.).
Example #1: The Group
Bad Boy is in search of a new boy band to sign to Bad Boy Records. To facilitate the search, Bad Boy produces a show through Bad Boy Films to air on a major television network. Once the group is put together, Bad Boy can sign them to recording contract with Bad Boy Records and a management contract with Janice Combs Management. Two of the group members are also songwriters, so Bad Boy signs them to a publishing deal with Janice Combs Music Publishing. The album is recorded in Daddy’s House Recording Studio. After the album release, the group becomes immensely popular and Blue Flame Marketing and Advertising aligns them with different brands for endorsement deals. Bad Boy has created six different revenue streams with the signing of a single group. They are:
Bad Boy Records - Music sales and mechanical license royalties
Janice Combs Music Publishing - Publishing royalties from the two songwriters in the group and any other songwriters/producers signed to the publishing company who contributed to the group’s album
Janice Combs Management - Management fees/royalties
Bad Boy Films - Revenue from the deal with the television network/ad revenue
Daddy’s House Recording Studios - Recording costs
Blue Flame Marketing and Advertising - Revenue from endorsement deals
Example #2: Female Solo Artist
Bad Boy has found a beautiful recording artist. They immediately sign her to a recording contract with Bad Boy Records and a management contract with Janice Combs Music Publishing. The first album, which was recorded at Daddy’s House Recording Studios, produces a hit single but experiences a mediocre overall sales performance. Bad Boy realizes that she needs some development but wants to keep her in the public eye in the meantime. They decide to utilize her as a spokesmodel for the Sean John Clothing women’s line, as her natural beauty and charisma is sure to win over the urban teen/young adult consumer. Janice Combs Management also helps her get roles in two major box office movies. Through this 360 deal, Bad Boy has created revenue through:
Bad Boy Records - Record sales and mechanical licenses
Sean John - Revenue from apparel sales
Janice Combs Management - Management Fees/Royalties from music and acting deals
Daddy’s House Recording Studio - Recording Costs
In this case, Bad Boy managed to salvage an investment that would have gone bad with a traditional deal. When the music revenue stream didn’t work out initially, they were able to utilize the artists other talents to increase the chances of a greater return on invesment (ROI).
The above examples demonstrate how an entertainment company can utilize the 360 deal. There are mixed feelings about these types of deals because, while they have potential to increase an artist’s exposure, they also leave the artist succeptible to being taken advantage of. A label can sign a “green” artist to a multiple-rights/360-degree deal and make the profit split between the artist 80/20 (80% to the company and 20% to the artist). They would be justified in this because they are taking an artist from “nothing” and catapulting them into the limelight.
One way this can be avoided is if the artist establishes their brand before starting deal talks with a label. That way, they can leverage any brand equity they have and negotiate more of a partnership with a more favorable profit split (60% company/40% artist or even 50/50 or better with more established artists) or whatever other terms they can come up with. Next week’s series will focus on brand-building techniques for artists and independent music/entertainment companies looking to make more profit and/or sign with a major label.
