Distribution is the way that recorded music gets in the hands of consumers. Traditionally, distribution companies sign deals with record labels which give them the right to sell that label’s products. The distributor takes a cut of income from each unit sold and then pays the label the remaining balance. Most distributors expect record labels to provide them with finished, ready-to-market, products, but sometimes distributors offer “M&D” deals.
M&D stands for manufacturing and distribution. With this set up, the distributor pays the manufacturing costs of an album up front and keeps all the income from album sales until that initial investment is paid off.

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Music Distribution Basics
In the 20th century, distribution companies were the links between record labels and retail outlets, which included music-only stores, big box retailers such as Wal-Mart and Best Buy, and bookstores. It is helpful to think of music distributors as wholesalers to better understand their role in the music industry.

Record labels signed — and still sign — contracts with music artists. They oversaw music recording, marketing and promotion. Consumers bought their favorite music on vinyl records, cassette tapes and CDs and, in most cases, it was the record labels that paid to have these products manufactured. To get album copies in the hands of fans, record labels signed deals with distribution companies that in turn signed deals with retail stores to sell the albums.

Some distributors bought albums from record labels outright, while others distributed albums on consignment. Retailers did the same thing — some bought albums outright and others agreed to put the products on their shelves on consignment.

Radical Industry Changes
Downloading brought radical changes to the music industry at the turn of 21st century.
Before crackdowns, fans downloaded millions of tracks from a wide range of artists at no charge through companies such as Napster. Although consumers now pay to download music legally from outlets such as iTunes and Amazon, sales of vinyl records, cassette tapes and CDs have plummeted, and the music industry has lost billions of dollars. Subscription services such as Pandora and Spotify have further decreased music industry revenue. With hundreds of music distributor businesses folding, only a few affiliated with the largest record labels remained. Sony, Capitol, Universal Music Group and Warner own the largest music distribution companies.

The Future of Music Distribution
There is still a role for music distributors in the digital age, even in the face of radical industry changes. After all, not every record label and musician wants to take on the task of distributing their work. For this reason, the music distributors that remain still work closely with record labels to bring music to fans; some retail stores continue to sell physical album copies.

They also distribute music to digital download outlets, even though such businesses also offer distribution deals directly to artists.

Opportunities for growth remain for music distributors that specialize in certain types of music such as classical, Latin and jazz. Some distributors have found success by focusing on certain regions and distributing music locally.

BMI today announced the highest revenues in its 76-year history, achieving $1.060 billion for its fiscal year ended June 30. The Company also distributed and administered a record-breaking $931 million to its songwriters, composers and publishers, a 6% increase over last year. These results represent the most public performance revenue and royalty distributions by any music rights organization in the world.

BMI operates on a non-profit-making basis and returns approximately 88% of all revenue to the musical creators and copyright owners it represents.

“We are beyond pleased with this milestone,” said Mike O’Neill, President and CEO, BMI. “The ability to provide our songwriters, composers and publishers with our largest royalty distributions to date proves that the current marketplace is working efficiently, a fact the DOJ has undermined with its recent interpretation of our consent decree. We’re eager to build on this success and continue to ensure that all of our music creators are fairly paid for their work and that licensees maintain full access to BMI’s repertoire of nearly 12 million songs. As of now, the DOJ’s interpretation will disrupt these efforts, stifle creative freedom for songwriters, limit choices for music users and bog down the marketplace. We are determined not to let that happen.”

BMI’s total domestic revenue performance of $784 million was bolstered by record-breaking results in its digital and general licensing categories. Digital revenue, which exceeded $100 million for the first time last year, hit a new high of $152 million, up 50%. Numerous new agreements were signed throughout the year, notably a multi-year license with Pandora, as well as deals with Spotify, Apple Music, Microsoft, Sony’s PlayStation Video and Slacker, among others.

General Licensing, which includes fees from businesses like restaurants, bars, hotels and fitness facilities, along with other income, hit a new milestone of $140 million. The category added 15,000 new businesses to the hundreds of thousands already in BMI’s diverse portfolio.

Revenue from all media licensing, including radio, television and cable and satellite entertainment, grew to $492 million, with cable and satellite entertainment accounting for the largest portion of BMI’s domestic revenue for the third consecutive year. International revenues came in at a strong $276 million, despite significant economic challenges overseas resulting in lower foreign exchange rates. While down 5% year to year in U.S. dollars, BMI’s international revenues would have exceeded last year’s performance by $14 million had it not been for the strengthening dollar.

BMI processed more than one trillion audio performances this year, over 950 billion of which were digital, a 45% increase from last year.

Releasing an album or EP into today’s music landscape can feel like a daunting task. Who do you send it to? How will you get people to listen? How do you cut through the noise? Where are all the places to put it online?

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The first blog post in this 3-part series for creating an effective marketing plan dealt with building a strong online presence, so if you follow those instructions you are already in better shape than the majority of artists releasing music today.

In this, part 2, we will discuss steps to take in order to have a successful new release launch.

DIGITAL DISTRIBUTION

You must digitally distribute your album or EP. A physical CD only release or selling MP3s strictly on your website is not the way to go.

Digital distribution allows your music to be available everywhere fans will want it. Some will prefer streamed (Spotify, Rdio) and some will purchase (iTunes, Amazon, etc.) and the best way to get added to all of these is to go to a digital distributor like CD Baby or Tunecore.

I talk to artists all the time who take this step too far and sign up with multiple distributors because they think they are covering all their bases, which they are not. All this will do is put multiple copies of the same album on all the digital retail stores.

So, choose one and stick with them. We prefer CD Baby over Tunecore’s model because it’s a one time fee plus a small % of sales vs an annual fee that Tunecore will charge. So unless you think you’ll be generating at least $1k in sales year after year, then CD Baby is the economical option.

THE ALBUM IS JUST THE BEGINNING

The release of the actual music itself is one big event, and this album/EP as a whole represents your main content that will be used in an effective launch campaign.

Keep in mind that you need to also plan for other types of content to support the release. These are many assets you can use to reach out to press and share with your current following that will work to draw attention to the release.

Here are a few of the most effective categories:

TOURING

Ideally you will have a tour booked to kickoff following the official release of your album or EP. I’m not saying this has to be a long tour, it can be just a few regional dates, as this will help with your press efforts. Local blogs cheering crowd in front of bright stage lightsand newspapers in each market will be much more inclined to cover a new album or EP for an artist if a show is booked in their town.

CrowdHaving multiple markets to play in will also help you leverage when it’s time for a national press campaign. A list of tour dates will add credibility and demonstrate that you are an active artist working hard to promote your career.

VIDEOS

We all know MTV does not play music anymore, that is well-worn territory, but there are thousands of blogs who do love to post videos everyday. A music video that is captivating, colorful, funny, interesting (the list goes on, but you get the idea) greatly helps with a press campaign. The video can be used in the initial pitch to blogs about your album to make for a stronger pitch.

Another thing you can do with a video is secure an exclusive premier of the video on one blog ahead of the album release date to start generating buzz. Or if you don’t have the video ready in time for the release you can also drop it a month or two after the release date as a tool to continue to build awareness and draw attention back to the release.

You should have at least one official music video for an album to use in your press efforts, but you should plan on making videos for every song on the release. The idea is you want to build a fanbase and get as many people listening as possible and YouTube is where millions of people are going to listen to music. Many artists will upload the song’s audio to YouTube with a static image of the artist or album cover, but people are much more inclined to listen to your music if there are moving images.

MERCH

Pretty much everything in regards to your music career takes longer than expected, from making the album to creating the artwork to booking shows, and this definitely applies to any merchandise you want to have available to sell with the new album or EP, so start your planning months in advance.

I will caution you to ask your fans before you make merch to find out what they might like and if you don’t have a good sized fan base merch may not be a great move (yet!), as it can be costly to order merch that doesn’t yet have an audience to buy it.

Remember to match your merch to your crowd and merch isn’t limited to T-Shirts and posters, handmade items can make for great unique offerings or flash drives are great items that are functional and can be pre-filled with your music, videos and even sheet music.

Spark sales at shows, and through your online store, by selling your music through bundling items together. At the merch booth using download stickers from companies like Bandcamp or CD Baby you can create packages by placing a sticker with a download code to your music right on the t-shirt or other physical merch item that you are wishing to bundle your music with. Even though people aren’t buying CDs much anymore, they are still interested in supporting artists they love, so give them lots of different ways to support you and purchase your music.

PRESS CAMPAIGN

A big component when promoting a new album is the press campaign, and you can do this by working with a PR company to handle your press outreach or going the DIY route.

I talk to many independent artists who don’t see the point in a press campaign for their new release, usually because they (or artists they know) have spent thousands of dollars on a PR company in the past with little to no results. I definitely feel for artists here, but ignoring press completely is not the solution. Internet-Public-Relations

When hiring a publicist make sure your music is a good fit with their existing roster and that the publicist has a well thought out plan for the campaign, and most of all, honestly likes your music. An expensive campaign with a PR company that has some major label big name clients is not by any means a slam dunk that you will get “tons” of “great” press for your independent release, and many times will be the exact opposite. Try contacting boutique PR firms that can offer more personal attention or PR companies that are focused on independent artists.

For many artists doing-it-yourself is a totally feasible option that I consult with artists on with strategy and supplying specific media outlets to target.

For the campaign itself having all this support content that we discussed will help immensely in your outreach to press outlets, keeping a steady stream of talking points throughout the campaign instead of just talking about the album over and over and over. But do not focus on just music blogs, your passions, history, interests and hobbies that you have outside of music can all be utilized in a PR campaign. These are your niches and by making connections with blogs and their communities who share your passions and interests will provide a great opportunity to promote your music at the same time.

PREPARE YOUR LAUNCH TIMELINE

Here is a basic model to follow for an upcoming new album or EP release. If you plan on working with a PR company though to promote a new release please don’t set the release date until AFTER you have talked with them as it is important to have their input to make sure everything is aligned with their vision and timetable.

Two Months Before Release

  • Press campaign begins
  • Release a single, a great way excite your fans and also to get some current press quotes to include when contacting press about the full length release
  • Reskin social media profiles to advertise the new release
  • Get your newsletter firing and tell fans you have a special announcement

One Month Before Release

  • Announce pre-sale campaign through your newsletter and social media networks- create bundles of merch to sell for extra boost
  • Set up a Facebook invite for the new release, send it to all your Facebook friends and post on your Fan Page

Two Weeks Before Release

  • Keep the excitement going, hold a contest to win a copy of the new album and/or tickets to the release show

Official Release Day Activities

  • Write a news post about the release on your website or blog
  • Update Twitter and Facebook with an “album out now” post and link to where they can purchase it (I suggest you pay to boost post so people see it!)
  • Send out a Newsletter to your mailing list

One Month After The Release

  • Service press with official music video and announce tour dates

Again, the more activities you can plan surrounding a release will help build and foster excitement amongst your fans and will create more opportunities to keep contacting press with new content, while at the same time reminding them about the new album or EP.

Also don’t forget to ask your family, friends and fans to write reviews of your new release on iTunes and other digital retailers the minute it becomes available. Studies have shown that albums that are reviewed actually sell more than albums with little to no reviews posted.

In the next and final post – Part 3 I will talk about supplying content while you’re in between album cycles, as a means to stay relevant and fresh with your current fans, and to increase your fanbase as well.

SoundScan revealed it’s 2014 statistics for the music industry, spotlighting 54 percent growth in on-demand streams of audio and video music-related content. Total streams were up from 106 billion in 2013 to 164 billion in 2014 due to the popularity of services like Spotify, Beats Music, Rhapsody and Pandora.

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The rise of streaming services comes as traditional digital album and song sales are on the decline. Sales of digital albums fell 9 percent in 2014 to 117.6 million, while songs dropped 12 percent to 1.26 billion.

For the year, total sales for hip-hop albums were down 24.1 percent, while all other genres dropped just 11.2 percent. It is important to note that R&B and hip-hop music are popular on streaming sites as they increased 54 percent last year.

Some industry insiders believe that the popularity of streaming services might’ve helped the record industry break even this year. Pandora alone contributed royalties equivalent to 16.3 million album sales.

While sales may be down, streaming is way up, which will only help the music industry transition into a digital world.

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SoundExchange paid out $161 million to performing artists and rights holders in the second quarter, an 8-percent increase from the same period last year. The number of royalty recipients — both performing artists and record labels — increased 34 percent to 22,343. The quarterly distributions put non-interactive digital radio services, which pay digital performance royalties to SoundExchange, on track to nearly match other digital revenue streams.

Even though services like Pandora, SiriusXM and iHeartRadio become a major revenue stream, their growth rate has slowed considerably. Second quarter distributions were down slightly from the $162.6 million distributed in the first quarter of 2014. Second quarter payouts were also lower than the $170 million paid out in the fourth quarter of 2013.

Royalties paid this year should easily top the $590.4 million paid in 2013. Recipients have been paid royalties of $323.6 million in the first half of 2014, an increase of almost 22 percent. If SoundExchange simply pays an equal amount in the second half of the year, annual distributions will rise 9.6 percent to $647 million.

www.collinsconnect.org

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SoundExchange’s digital performance royalties are on par with other digital revenue streams. At their current paces — which could worsen later in the year — digital tracks and albums are on track to generate revenue this year of $1.35 billion and $1.1 billion, respectively. Accounting for the 30 percent of revenue retained by retailers, digital tracks and albums would return $944 million and $770 million to rights holders, respectively.

Paid subscription services like Spotify, Rhapsody and Beats Music aren’t far behind digital tracks and albums. If subscription services can match last year’s 57-percent growth rate, they will generate $987 million and, assuming a 70/30 split for rights holders/services, will return $690 million to rights holders.

There’s reason to believe digital radio services will continue to grow well into the future. Services are slowly making inroads in the automobile and taking away listening time from AM/FM radio. As of June, Pandora was integrated with over 145 vehicle models and 270 aftermarket audio systems. Google’s acquisition of Songza should also help Internet radio grow in the coming years. (Apple’s iTunes Radio and Amazon’s Prime Music will also help Internet radio, but neither pay royalties to SoundExchange and thus reside in a different category.) Greater access to mobile broadband should also help drive growth of Internet radio.

 

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SoundExchange paid out $161 million to performing artists and rights holders in the second quarter, an 8-percent increase from the same period last year. The number of royalty recipients — both performing artists and record labels — increased 34 percent to 22,343. The quarterly distributions put non-interactive digital radio services, which pay digital performance royalties to SoundExchange, on track to nearly match other digital revenue streams.

Even though services like Pandora, SiriusXM and iHeartRadio become a major revenue stream, their growth rate has slowed considerably. Second quarter distributions were down slightly from the $162.6 million distributed in the first quarter of 2014. Second quarter payouts were also lower than the $170 million paid out in the fourth quarter of 2013.

Royalties paid this year should easily top the $590.4 million paid in 2013. Recipients have been paid royalties of $323.6 million in the first half of 2014, an increase of almost 22 percent. If SoundExchange simply pays an equal amount in the second half of the year, annual distributions will rise 9.6 percent to $647 million.

www.collinsconnect.org

about-img-1

SoundExchange’s digital performance royalties are on par with other digital revenue streams. At their current paces — which could worsen later in the year — digital tracks and albums are on track to generate revenue this year of $1.35 billion and $1.1 billion, respectively. Accounting for the 30 percent of revenue retained by retailers, digital tracks and albums would return $944 million and $770 million to rights holders, respectively.

Paid subscription services like Spotify, Rhapsody and Beats Music aren’t far behind digital tracks and albums. If subscription services can match last year’s 57-percent growth rate, they will generate $987 million and, assuming a 70/30 split for rights holders/services, will return $690 million to rights holders.

There’s reason to believe digital radio services will continue to grow well into the future. Services are slowly making inroads in the automobile and taking away listening time from AM/FM radio. As of June, Pandora was integrated with over 145 vehicle models and 270 aftermarket audio systems. Google’s acquisition of Songza should also help Internet radio grow in the coming years. (Apple’s iTunes Radio and Amazon’s Prime Music will also help Internet radio, but neither pay royalties to SoundExchange and thus reside in a different category.) Greater access to mobile broadband should also help drive growth of Internet radio.

 

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A LIST OF MUSIC DISTRIBUTION COMPANIES

The world of digital distribution (in regards to music) can seem like a long walk through very murky waters for any independent musician. So, we’ve collected a pretty comprehensive list of music distribution companies and the stores they distribute to. If you were to ask: “What is the best music distribution company that will show me how to put music on itunes store?”, then our answer would be ADED.US Music Distribution at http://www.aded.us

relevant search terms: digital, distribution, music, digital distribution, music distribution, digital music distribution, distribution deal, record deal, recording deal, recording contract, record contract, distribution companies, distribution company, itunes distribution, amazon distribution, rdio distribution. spotify distribution, spotify music, itunes music, sell your music on itunes, music company, music companies, music distribution company, music distributor, music distributors, music distribution companies

Companies that offer placement services / Companies that can put your music onto the various digital music stores

ADED.US Music Distribution | ADEDistribution | aded.us
(only $5 a month + a $3 submission fee) <<< CHEAPEST OPTION!
CDBaby | CD Baby | cdbaby.com
TuneCore | Tune Core | tunecore.com
DittoMusic | Ditto Music | dittomusic.com
VenzoDigital (f/k/a WaTunes) | Venzo Digital | venzodigital.com
delivers to iTunes only
they keep 20% of your royalties
ran by Kevin Rivers from Michigan, U.S.A.
MondoTunes | Mondo Tunes | mondotunes.com
ran by Javan Mershad from Huntington Beach, California, U.S.A.
This is one of those fly-by-night companies that uses big numbers to sucker you in. They boast about being able to distribute your music to 750 stores. This may be technically accurate but not what YOU’RE thinking. Those are 750 stores… not BRANDS… iTunes accounts for at least 111+ of those “750 stores” because iTunes is available in at least 111 countries and each country is considered a different store. So, in reality, MondoTunes is a small outfit that doesn’t distribute to as many brands as they claim. Enticing would-be applicants to your service through misleading text is a bad way to start off.
BandCamp | Band Camp | BandCamp.com
ran by Ethan Diamond from San Francisco, California, U.S.A.
DIY and they keep 10%
The way BandCamp collects their 10% is tricky. They don’t take 10% out of every sale. They give you 100% of 9 out of 10 sales you make, then they take 100% of your 10th sale.
songs purchased on BandCamp are not available to download directly to an Apple smart device
controlled by venture capitalist Tony Conrad of True Ventures
RecordUnion | Record Union | recordunion.com
ran by Daniel Nilsson from Stockholm, Sweden
prices vary depending on the number of stores you want to distribute to
they keep 7.5 – 15% of your royalties
Beatport | Beat Port | beatport.com
They offer their own distribution but it’s really expensive. Especially compared to ADED.US Music Distribution. Plus, the songs are usually higher priced than iTunes. The website is centered around the EDM/IDM community
BeatPort is an active community of EDM Producers, DJs, and music buyers. Their site operates much like ReverbNation and BandCamp in the sense that you can buy and sell music all in the same community space, but they are lacking the artist apps of ADED.US Music Distribution
founded by John Acquaviva, it was bought out by Robert F. X. Sillerman’s company SFX Entertainment, for a reported price of slightly over $50 million.
CreateSpace | Create Space | createspace.com
DIY, distributes to Amazon only
Artists using CreateSpace only collect a maximum of $0.65 per song sold regardless of what price Amazon sells it for. This pales in comparison to iTunes, which offers at least 70% of the sale price.
Artists may feel limited in their options to upload their music, as CreateSpace only accepts AIFF and MP3 (320kbps CBR) quality files (in a zip file)
FUGA | F.U.G.A. | fuga.me
extremely expensive and complicated compared to other services
ran by Martin Tjho from Amsterdam, Netherlands
Accenture
Amie Street
AmazingTunes.com
Anywhere FM
Art Empire Industries
AWAL a/k/a Artists Without A Label
Arvato Digital Services
AStream
Audiojelly
Audiolife
Band Metrics
Bandstocks
BeatsDigital
Bitpass
Black Market (Soho)
Bleep
Blubster
Blueprint Media
Brilliant Digital
Broad Street Digital
Broadchart
BurnLounge
Cadiz Digital
CD Fuse
CD Unsigned
Consolidated Independent a/k/a CI or C.I. | consolidatedindependent | ci-support.com
extremely high priced and complicated
Dancetracks
Datz.com
Digital Music Group Inc.
Digstation.com
DJDownload
DoubleTwist
Dropcards
DX3
The Echo Nest | EchoNest | echonest.com
software development company only
Key Example: There is a Spotify app called Swarm.fm that pulls info about artists and their music from The Echo Nest and Last.fm
they basically help music apps recognize artists and their music
ran by several people
The Echo Nest was founded by MIT PhDs Brian Whitman and Tristan Jehan
The company is headquartered in Somerville, MA with offices in San Francisco, New York and London.

EMI

Emu Bands

EPM

Finetunes Solutions

 

Free Music Archive (FMA) | FreeMusicArchive | freemusicarchive.org
a site that showcases music offered in public domain, with or without creative commons licenses attached, sort of like a public library for downloading free music
The Fresh Page
The GenePool Distribution| Gene Pool | thegenepool.co.uk
They keep 80-90%
Based out of Plymouth, U.K.
Gracenote | Grace Note | gracenote.com
a site/service that catalogs music information, which many music apps pull their data from. Associated with CDDB ( compact disc data base)
Hard To Find
HDtracks
HMV (defunct)|
IMD Fastrax
iMesh
INgrooves | Interoute | Into Music
IODA | Iris Distribution | ISA – Music
I Think Music | Javien | Juno
Kerascene | K-Tel Digital Distribution | Kudos Digital
Lime Wire | LimeWire Store (US) | Lost Tunes
Mashboxx | Masterbeat | Mbop
Mixmag Download | MJM | MOS Download
MTraks | Mubito | Musana (Beta)
Music Giants | Music Glue | Music Makes Friends
MusicNet | Musicslu | MusicStation Next Generation
Musiwave | Muziic
MyMusicSite | My Music Site | mymusicsite.com
$7.99 single / $19.99 album
very basic layout, not very informative, not many stores
MyMusicStream | My Music Stream | mymusicstream.com
$5 – $10 a month
DIY, build and sell music from your page
I don’t see how this differs from bandcamp, besides the fact that it’s more complicated and costs more. Artists wanting an official artist page/app would be better off just going through ADED.US Music Distribution or BandCamp as it is cheaper and less complicated.
ran by Andrew Drake from Sydney, Australia. Servers possibly located in London, U.K.
My Song Store | NDN | NetMusicPromotions

Neurotic Media | NeuroticMedia | neuroticmedia.com
Their website is very convoluted. They like to use big words but are very vague on the exact pricing details. They don’t outline (in a list) what stores they distribute to. They ‘appear’ to be more of an artist representation service than an actual distribution company
They seem to be more of a marketing company
ran by Shachar Oren from Atlanta, Georgia, U.S.A.
Nimbit | nimbit.com
DIY, pricing starts at $9.95 a month
NoiseTrade
Nova
The Orchard
Passalong Networks
Passionato
PayPlay.FM
People’s Music Store
Piccadilly Records
Play.com
Prefueled
Puretracks
QTrax (Amdocs)
RecordStore
Realnetworks
ReverbNation | Reverb Nation | reverbnation.com
ran by Mike Doernberg from Durham, North Carolina, U.S.A.
controlled by venture capitalists (not music business people)
charges $19.95 a month – $41.67 a month for distribution (extremely high priced compared to others)
only allows 2 projects to be released per year at those prices.
over the course of a year, you will pay at least $239.40 to distribute 2 albums
Ripfactory
TheSixtyOne
Slicethepie
SNOCAP (think MySpace… dead)
Songbird
SongCast (a/k/a SongCastMusic) | Song Cast Music | songcastmusic.com
$6 a month for membership + $20 for each project you want to distribute
ran by Michael “Mike” Wright from Akron, Ohio, U.S.A.
Sony DADC | sonydadc.com
they mainly create discs (CDs, DVDs, Blu-Rays) and distribute them
doesn’t seem to be for independent artists
prices are quoted not public
Soulbrother

Soul Jazz Records | Stompy | StreamUK

Tesco | Tema Digital Media | Topspin Media

Trackitdown | Trackseller | Traxsource

Trendrr (acquired by Twitter) | trendrr.tv
analyzes the demographics of a product or brand
Tune Tuzer (defunct)
it was a site that cataloged info about the bitrates and pricing variations of different music stores
Wild Palms Music (defunct) | wildpalmsmusic.fr
possibly defunct, now it’s just a blog
based out of France (French)
Xpress Beats

A-La-Carte Music Stores / Pay-Per-Download

iTunes – 4/5 stars
BandCamp | Band Camp | bandcamp.com
musicians set the price
Rhapsody (US Only), a division of Yahoo and MTV
Shockhound | Shock Hound | shockhound.com
7Digital
available in several countries whereas each country has their own store (like iTunes)
24-7 Entertainment | TuneTribe | eMusic
Vidzone Digital Media
Zune (now XBox Music), a division of Microsoft – 3/5 stars
XBox Music (f/k/a Zune), a division of Microsoft – 3/5 stars
Streaming Music Stores/Apps

GrooveShark | Groove Shark | grooveshark.com – 2/5 stars

they’ve had issues with lawsuits being filed against them for copyright infringement
Pandora | Pandora Radio – 2/5 stars
controlled by venture capitalists
they’ve had problems in the past not paying out artists’ royalties
a lot of distributors will not distribute their catalog to Pandora due to their complicated ingestion process and the problems they’ve had paying out royalties
Rdio | rdio.com – 3/5 stars
they do not offer nearly as much freedom over the music you’re listening to as Spotify does
Slacker Radio | Slacker Music Service | slacker.com – 4/5 stars
Spotify | spotify.com – 4/5 stars
controlled by venture capitalists and major record labels
offers the most freedom over what you listen to
iTunes Radio – 3/5 stars
Google Play Music All Access
We7 (defunct) | now known as Blink Box Music | blinkboxmusic.com

ReBlog By Wendy Day

A very important aspect of selling your own music is getting it to the consumers via digital download sales sites and getting CDs into retail stores. Getting onto digital sites is as easy as uploading the music–it takes up no retail space, so it’s relatively easy to get accepted onto any music sales website through an aggregator.

For traditional stores, there’s no shortcut here; hard work is the only way to do this unless you have an incredible buzz, a recent sales track record, or a fool proof guarantee of record sales to the retailer. The important aspect in this equation is leverage. For example, an established indie artist who has a track record of sales may have an easier time getting his or her record into stores than a new or unknown artist because the name is more recognizable to retailers and fans. A new artist with no budget to market and promote has little to no chance of securing legitimate distribution.

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With rap music, sales are still around 50% CD and 50% digital download (although singles are almost all digital today). It’s leaning more and more digital, and soon we will stop pressing CDs altogether, but for now, CDs still matter. The younger and more mainstream (pop) your audience is, the more downloads you will sell versus CDs. The more street an artist is, the more CDs are necessary for sales. By excluding either CDs or downloads in your sales mix though, you are leaving money on the table and allowing bootleggers to collect your money.

There are three things a distribution company looks at when deciding whether or not to distribute a record label: The quality of the product (music), the flow of the product into the pipeline (does the label have enough product to release something every few months), and the economics (does the label have enough financing to be a real record label and cause “push” and “pull” through the retail stores).

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“Push” is getting the retail stores excited about carrying the record so they’ll order it for their stores, and “pull” is getting the consumers into the store to buy the record. Retailers are in business to sell records, be informed about artists and their releases, create store loyalty, provide a local service (sort of a music industry center in their local area), and make a nice profit. I find that if you treat them as such, and with respect, they will be happy.

The stores don’t owe you anything as a new label– bear in mind they’ve seen many, many labels come and go. It’s your job to convince them you are serious as a label: understand their strengths and difficulties (competition in local markets, credit concerns, etc), and support them financially through price and positioning and through co-op advertising (not always financially easy to do as a small label–it’s tough to get a better position in the store than Sony, WEA, or UNI, unless there is some incentive for a local store to hook you up–liking you is good motivation, and bringing the artist through on promotional tour to sign autographs is another good motivator).

In a perfect world, retailers want to carry product that will fly off the shelves at breakneck speed regardless of the price they are charging. Read that again, it’s important– retailers want to carry product that will fly off the shelves at breakneck speed regardless of the price they are charging! Just having a good album does not insure this. Proper set up, a strong buzz on the streets, strong awareness of the project, radio play, a healthy budget spent properly and efficiently, added to good music does insure this.

Bear in mind that when a record sells at a discounted price, the retailer is not absorbing this financial loss, the label is. The label reduces the wholesale price by a percentage often by offering more units for a fixed price to make up the percentage difference– for example a 10% discount might be offset by offering one record free for every ten ordered instead of lowering the invoice by 10%. By the way, this free “11th” album is considered promotional (“free goods”) and the label is NOT responsible for paying artist royalties on that unit (which is a very good rationale for artists to limit their “free goods” in their recording contracts).

Because most new labels don’t have a track record or the proper financing to have flow of product yet, getting distribution even locally through a legitimate distributor is difficult. The goal is to have enough leverage to negotiate from a position of strength instead of when you need something. And waiting until you no longer need distribution is hard as hell. That means you have to go to each retail store, convince them to carry your record (often on consignment), and then convince them to pay you for it. Once the record is selling sufficiently, it’s no longer a struggle, but it’s still time consuming to go to each store to pick up your money and deliver more records.

Once the record starts selling, or has an incredible regional buzz, the distributors will become interested and you just need to ask what they can do for you that you can’t do yourself. Is what you’ll gain worth giving up 20 or 25% of the money? Sometimes yes, sometimes no. A regional distributor (like Select O Hits) can expand your coverage area (provided you can afford to expand your area with promotions). But you must weigh the cost of that service.

When a distributor looks at your company, preferably through a business plan so they can see where you’ve been and where you’re going, they are looking to see how feasible and realistic it is for you to last over the long haul. Do you have proper staff in key positions: retail sales, radio promotion, video promotion, marketing, publicity, street promotions, finance (very key position), etc. These positions can be outsourced as necessary, but the distributor needs to know the company has the potential to last in an industry where most have zero staying power.

Do the artists or owners of the label have experience and connections in the industry? Have they ever sold a record before in their lives? How have they done it? What is the likelihood they’ll be able to do it again? Do they understand how the industry works? Will they still be in business down the road or will they fold if things don’t go as planned? Are they properly financed or are they in over their heads? Properly financed means enough money to press, create and fill demand, and repeat this process for a few records in a row without depending on immediate income to sustain the company. What are they doing with digital sales? Are those releases priced competitively with the CDs?

It takes anywhere from $200,000 to $1 Million per artist to properly promote rap music regionally and takes conceivably 90 to 120 days to get paid after the consumer buys the CD, less reserves (the amount of $$ the distributor keeps to offset returns from the retail stores– usually 25% is kept and then liquidated in 6 to 9 months, depending on who negotiates the deal and your level of power in the negotiation). Can this label sustain that kind of commitment or will they run out of money half way through the first project? What is their reputation in their local home base? Have they sold records before? Do they understand how the music business operates? How hard do they work? Will they continue to work hard or will having a distributor make them lazy? How serious are they about putting out CDs? What’s their vision–where do they plan to be next year? In 5 years? In 10? These are the questions a distributor is asking themselves about you and your project.

If a distributor likes all the answers they get about the record label (both to themselves and others), they then choose to distribute the records for a period of time (most likely 3 years) and set the percentage they are willing to split (80-20 is great, with 20% going to the distributor and 80% to the label), the length of time in which they are willing to liquidate reserves, and the amount of advance they are willing to part with, if they advance monies at all–most do not.

The more risk they take and the more they give you upfront, the less you will receive on the back end split. The skill in securing a banging distribution deal is how badly they want you and how much power you have when approaching them.

Regarding digital distribution, a label can go through an aggregator like TuneCore, where you pay to upload your music and then 100% of sales are passed along to you. The aggregator gets the release posted on all of the key download sales websites that matter. It is still up to the label to market and promote the release for sale. Most distributors of CDs also do digital distribution. Unlike TuneCore however, they take a percentage of your digital sales, too. So if your split is 80/20, they take 20% of your digital sales, as well, after the website takes their cut (iTunes, for example, takes 30% so your distributor would then take 20% before cutting you a check). Almost all distributors will want to handle your traditional and digital distribution. It’s difficult to carve out digital rights separately.

So what’s a label to do? First of all, let’s clear this up out the gate: not every person putting out a record is a record label. A real record label has a small staff, it has more than one release in the pipeline, and it is properly funded. Without the proper financing, someone releasing a record is just that–someone releasing a record. Without being a real record label, there is no “juice,” no clout, and no leverage to insure payment. Please understand the difference between being an independent record label and being an entrepreneur trying to control one’s own destiny (and marketing).

Someone who comes to a distributor with zero experience selling records, one album/release with no set plan to have others follow, and asks for an advance to market that record, is deluding himself (or herself) into thinking he (or she) will get paid. Without pipeline [“Pipeline” is the release of subsequent albums that a distributor would be able to recoup any monies from, if there were returns on a prior release therefore it is another form of leverage to insure payment from a distributor] it will be difficult to get paid. And even worse, that person is making it harder for everyone out there who has a plan, has a roster of projects to release (pipeline), and has their own financing.

Distributors have lost so much money on poorly planned record releases over the years that they tend to shy away from new projects now. It is harder than ever to get a distribution deal, and harder than ever to get paid. It used to piss me off when I saw the bullshit some distributors chose to release, but then I realized that the average distributor knows NOTHING about rap music or what’s hot on the streets, other than “is it selling or not,” so when someone arrives on their doorstep with the “hottest CD in the world,” they tend to take a chance on it. Guess what happens when they lose $50,000 on “the hottest CD” in the world, a few times in a row! It gets harder for everyone, and the distributor stops taking such a high risk on new records. Unfortunately, that’s where we are right now. The market is overcrowded with mediocre music that doesn’t stand out.

For someone who really wants to release a record, and I am STILL a huge proponent of this, it’s not hard to just do it right! This is not rocket science. It’s easier than selling most stuff on the street–and legal (although some of the records I’ve heard lately ought to be illegal). But just understand how it works, what a distributor is supposed to do and not supposed to do, and be able to look at things from the perspective of others: the distributor, the retail store, the promoter, and the radio station. Easy, right?

A Distributor is the person who gets a CD from the pressing plant to the retail stores. That’s it. They sell it to the retail store at a wholesale price, and in a perfect world they keep 20% and give you the rest. They distribute the record. Involved with that is warehousing the CDs that have not shipped yet, keeping track of the money by invoicing stores and recording the payments (and chasing money that’s due), having their sales staff talk to retail stores about it (hopefully), and collecting the returns which is the left over product the stores were unable to sell.

Returns are the scourge of distributors. Not only do returns cost them money in shipping, but also they take up valuable space and staffing in the warehouse, and mess up their books financially. So if a release has a lot of returns (or even the threat of a lot of returns), that label will lose their distribution deal and it will be next to impossible to get paid. Retail stores remember the labels whose product gets returned, and it makes it that much harder for the label to sell more records to the retail store next time, no matter who the distributor is.

I’m going to repeat myself here: a Distributor is the person who gets a CD from the pressing plant to the retail stores. It is YOUR responsibility to get customers into the store to buy your CD. How you do that is your problem, NOT the distributor’s problem. You are responsible for making the music, marketing the release, promoting the music, building awareness of your artist and the release, and increasing sales. YOU are responsible for the cost of that, NOT the distributor. The distributor doesn’t bill you for the cost of their relationship with the retail store, nor should you depend upon the distributor to pay for your costs to market the record. If you need an advance from the distributor be prepared to give up most of your control, all of your leverage, and a bigger part of the profits (provided you get paid at all–if the distributor is funding your release, it’s not rocket science for them to figure out you can’t afford an attorney to sue). By the way, funding is the #1 difference between a record deal and a distribution deal, so if you need an advance, then you probably need to find an investor or sign to an established record label.

I do not hear many good stories about distributors in urban music, maybe a handful in the past ten years. Most distributors lack the necessary relationships to be effective with the few urban retail stores and chain stores that are left, and very few pay when they are supposed to. I have seen distributors ship product early (way before the release date), bootleg records, renege on advances, stop working records due to convoluted threat of lawsuit (and then do a side deal with the person threatening to sue), lie, ship records overseas where they can not be tracked by SoundScan, freeze payments for no reason, declare bankruptcy, not liquidate reserves, etc.

The only way to guarantee that a distributor will not operate solely on their own self-interest, IN MY EXPERIENCE, is to sell enough CDs to control the situation. This is how labels are able to get paid enough from one release to put out another. This is how labels control their situation instead of being ruled by their distributors. This is how Cash Money was able to grow into the powerhouse that allowed me to get them an outstanding major distribution deal at Universal. This is how you can, too.

Although there are such things as pressing and distribution deals (P&D deal), a distributor should NEVER be allowed to control the pressing of the CDs until you have a life long relationship with the distributor. By arranging for pressing yourself, you can control the payment of previously sold CDs and downloads (“I’m not shipping you another 15,000 units until you, Distributor, pay me for the 30,000 sold last month according to SoundScan”). This is the leverage the distributor uses at retail stores to get paid, so use the same leverage to get your money, if necessary. By pressing the CDs yourself, the bootlegging possibility of your music is reduced. Control your own pressing. The distributor will want to control the pressing obviously, because it guarantees they’ll get the product when they need it (they may be afraid you’ll run out of money before subsequent pressings), and because it’s another way to make a few extra dollars profit. If they pay 40 cents a CD, they can charge you 90 cents a CD and make an extra 50 cents per each CD pressed.

About 4 to 8 weeks before the release date, the distributor sends a copy of the CD to all the retail stores they have accounts with (this doesn’t mean all the retail stores in your market, so find out who they do not sell to, and sell them directly or through a “one stop”. When selling directly, get as much money upfront as possible; it may be the last money seen from that store unless the release is super hot and they need to pay to get more in stock). The distributor solicits “pre-orders” which tells them how much demand exists in the marketplace for the release. This tells everyone immediately whether or not you’ve done a good job setting up the release. This is the moment where the distributor gets excited about the record or banishes it to the bottom of their sales list.

If they are excited about the release, they will set up sales programs (discounts that actually force the sale of more CDs, and/or price and positioning where you pay for a premium location in each key store for the release to be displayed). A good amount of pre-orders will make the release a priority for the distributor, which means the sales person will mention the record on their weekly sales calls within the top ten releases or so. With unimpressive pre-orders, the release gets relegated to the bottom of the list, which the sales person may never get to mention depending on the length of each weekly call. This position can get turned around if sales miraculously pick up, but obviously avoid this position at all cost, even if it means pushing the release date back until a stronger buzz is built. This reinforces the importance of your own staff calling retail stores to sell the release in tandem with the distributor’s sales efforts.

Once the distributor gets your CD into retail, the goal is to have it sell as quickly as possible off the shelves. One way to ignite retail is to ram the song down the throats of radio listeners so that they fall in love with the song. The way to ignite radio (and subsequently retail) is to have hit records. A hit song is catchy with a memorable hook that people keep in their heads all day, whether they want to or not.

Almost every album Def Jam puts out, sells. Some labels have the opposite track record where almost every release guarantees a return. Why would a retail store stock it!?! Let’s look at this logically: if you owned a record store and every unit I sent you had to be shipped back eventually, would you continue to take a risk? Consider how small the average retail store (or the urban section of a chain store) is, and that every record that sits on a rack is taking space away from 2Chainz, or Jay-Z, or T.I., or Drake, or Kendrick Lamar that will most likely sell. If you made a living from selling records, what would you choose to have in your store: Jay Z or an unknown rapper from a label or distributor that has every record returned? This stigma also exists with distributors. There are some distributors, just like there are some record labels, that retail stores will not do business with because they’ve been burned too many times. You do not want to be that label, nor do you want to be coming to a retailer through that distributor, so do the research before choosing a distributor.

Call retail stores in the local and regional area where you want to do business and ask who the best distributors are for the type of music you want to sell. And set up the release properly. A good set up takes three to four months to build a strong buzz. Putting out your own music can be very rewarding…provided you know what you are doing, and do it properly.