What is Music Distribution?
Music distribution is the process by which albums and singles get into shops. Distribution companies sign contracts with either record labels or, if they plan to release their music independently, the artists themselves. These contracts give music distribution companies the right to sell the labels/artist’s products to record stores, who will usually have a working relationship or account with them. The distributor will generally take a percentage of the income from each album with the remainder is given to the label.
Sometimes, manufacturing and distribution (M & D) deals are arranged. This means that instead of the record label/artist providing a finished product, they will instead have the distributor pay the costs of manufacturing the product before distribution. When this happens, the distributor will often keep all the income from album sales until the initial investment has been paid off, then take their usual cut from thereafter.
The process by which a music distribution company will decide on whether to enter into a contract with a record label or artist is usually down to a few simple factors. One of the overriding aspects of these decisions is money.
Most music distribution companies will only ever enter into a contract if they can guarantee a return on their investment. This can often be determined by the amount the distributors stand to make.
Some companies will take a flat fee for their work and will in turn guarantee a certain level of distribution. Other distributors, as mentioned before, will take a percentage of the sales. With this type of contract the distribution company stands to make a large amount of money if the music sells substantially but could equally lose money if the music they are distributing doesn’t sell.
Another factor determining whether a distributor will enter into a contract is simply whether they believe the music is good. If they do not believe the music to be of a certain quality they won’t think it will sell either. Because of this, record companies are often found to have lasting relationships with music distribution companies. A record label with proven sales will be in a better position to negotiate a contract whereas an independent artist is in the position of not having proven sales and therefore will be in a worse position.