July 12, 2020

Record deal vs. distribution deal – Which one is better?

the difference between a record deal and distribution deal
Image Credit: KMG Distribution

If you are contemplating on taking your music career to the next level, you will have to decide on record deal vs. distribution deal option.

It’s not that easy to come to a final decision especially when record companies are promising you heaven and earth prior to signing the deal.

If you want to know which path would be better for you, whether you are an Independent label or unsigned artist, and then continue reading until the very end.

So without wasting any more time let’s get into it.

Record deal

A traditional label deal is usually in favour of the label (Independent or major) and I’ll tell you why.

A record label is like any other business with overheads. If you (the artist) are signed to a record label deal, the company is responsible for every expense that you can think of.

From the moment the ink dries on that paper the record label has to ensure that the recording studio is booked so you can start working on your single, EP or album.

There are other countless of other things that have be financed such as engineer fees (mixing and mastering engineers) for recording your music, purchasing beats from producers, marketing and manufacturing you name it.

Everything that I have mentioned above has to be financed by the label. But business is business and there is no free lunch in this world.

Record labels do not do all these things because they care and love you, no. There’s always a catch.

In most cases, a record deal will not allow to own claim ownership of your masters. It sounds harsh I know but its business and fair if you can think about it clearly.

The label invests in your talent by pouring most of their resources in your talent with the hope of making a profit.

They spend X amount your album without knowing how much your single or CD will sell for the day it is ready for the marketplace. It’s an educated form of gambling.

That being said let’s look at some of the pros and cons of a record deal vs. a distribution deal.

PROS

  • Everything is funded by the label you are signed to, from recording costs, album artwork, marketing, promotions and manufacturing while you focus on making music.
  • Some labels especially the majors will pay an advance to basic expenses while you’re recording your album
  • Record labels have staff who are responsible for the administration, marketing and promoting your music 
  • A record deal can help you to gain exposure much quicker and tour

CONS

  • You might lose creative freedom and not have a say on who you work with (producers and collaborations).
  • The label can cancel your deal anytime should your album flop
  • Your music might not be prioritised over other established and top-selling artists on the roster
  • The record company will own the master recordings and complete catalogue
  • In this day and age, chances are the label would prefer to sign you to some sort of a 360 music deal.
  • The royalty pay-out is usually smaller especially for new artists.

Distribution deal

With stories of artists dying as paupers, ownership of masters finally coming to light, record labels “screwing over” well-known artists being the order of the day, more and more artists opt for distribution deals instead.

A music distribution deal is different because it puts you in the driver’s seat. This means you have more control on your music career.

However you need to start your own record label or have a formalized business structure in order to have access to a distribution deal.

With a distribution deal you will personally fund the production costs from start to finish (studio recordings, session musicians, mixing and mastering).

Once that is done you can take the final product to a music distributor in order to get into stores.

But there are several ways to do this.

You can license your music to another record company which has the resources to market and distribute better.

OR

Depending on your market and risk tolerance, you can do a direct music distribution deal otherwise known as manufacturing and distribution. But this is the riskier option which you should shy away from unless you have deep pockets and know what you’re doing.

Still undecided between a record deal vs. distribution deal?

Let’s go through the pros and cons.

PROS

  • Investing in your own music will allow you to own the master recordings.
  • You can choose your own music distributor be digital or physical
  • You earn better profit margins and royalty rates as label owner/recording artist
  • All sales and royalty statements will come directly to you

CONS

  • Sometimes you have to use a middleman (a smaller label within a major label set-up) in order to distribute your music successfully. Such a deal will earn you very little income.
  • With traditional distribution such as P&D, the barrier to entry is too high and often out of reach for many artists and labels.
  • You need funding to market and promote your own music. Distributors will not pay for the marketing costs.

Conclusion

Record deal vs. distribution deal, which one makes sense for you?

You must understand the pros and cons of each so that you know what you’re getting yourself into.

Similar Articles: