For as long as there’s a demand for music from the buying public, music distributors will continue to remain in business.
If you’re not so knowledgeable about distribution, this article is for you. Don’t read to forget but read to understand then take the necessary action if you have to.
Music distributors are responsible for making sure that your product be it a digital file or physical product such as a compact disc or vinyl is delivered to music stores in a timely manner. Their job is just to make sure that orders are shipped out to stores so the music buying public can get their hands on the product.
2. Low Margins
The music distribution business is typically a low margin/ high volume business. What this means is that music distributors make very little money compared to the labels. They can charge or take a commission of less than 15% per record sold.
For example let’s say the label sells each CD for 40 ZAR (2 USD) to the distributor. The distributor would make 6 ZAR (0.34 cents) per unit. But they make their money or profit rather by selling huge volumes. And it works like that whether they are distributing a digital or physical product.
3. Direct Link to Retailers
Music distributors have relationships with retailers (digital or physical). As an independent artist or label it’s very hard if not near impossible to get your music into major stores (corporate stores) on your own. Even if you try to do so but chances are the music stores would reject your offer and refer you to one of the distributors. In most cases that’s how it works.
In the digital word, music distributors do not use warehouses to store products. But instead a distributor has to set-up a unique website where all clients (musicians and labels) can upload all their music and data. Once that is done, they will deliver the music to their digital partner stores using their digital system.
Distributors will not work with you until you sign a written agreement. The agreement will protect all parties involved so you can avoid any disputes at a later stage. Digital music has changed the game because previously music distributors would opt for an exclusive agreement (That used to and still works with physical distribution). Most Digital distributors allow you to sign a non-exclusive distribution deal though.
Physical Distribution is expensive because of the high cost of manufacturing tons of copies, logistics and warehousing facilities. And because of that, the barrier to entry in the market is high which means less competition. On the other hand digital distribution has a low barrier to entry because there is less overhead but high competition.
When you shop around for a distribution deal, make sure that the distributor understands and deals with your genre. If you are a house DJ and producer, you can approach music distributors such as LabelWorx and Symphonic Distribution. These companies have relationships with plenty of global music stores which sell strictly dance music.
A distributor can also be a label. That’s often the case with major record companies such as Sony Music, Universal Music and Warner Music Group. Most small labels sign joint venture deals also known as Licensing deals with the majors for distribution.
The smaller labels leverage the major labels infrastructure and distribution clout in order to reach the mainstream market. Without their majors involvement it’s very difficult to penetrate the market and be “successful” as an independent artist. Not that it’s impossible, because many have “made it” on their own.
Just recently Def Jam Africa was launched. And it was announced that several South Africa-based acts such as Nasty C, Boity, and Cassper Nyovest among others were signed to the division. But Def Jam Africa is owned and distributed (since 1999) by Universal Music Group.
9. No Marketing and Promotions
Music distributors do not pay for the marketing and promotions (unless you are signed to a licensing deal). And that includes digital music; you have to market your artists and products, submit your music to radio stations, ensure that you register and collect royalties from music societies, etc.
10. Basic project information
Distributors will want the following from your label: Catalogue number(s), barcode, ISRC codes for digital releases, album covers and the copy the final master product and a marketing plan for the project release.
If I missed anything please do let me know with your comments below. I have also included additional posts related to distribution. So you can go ahead and read further to get a better understanding of the subject.