The distribution of musical recordings is one of the least understood yet most important components of the music industry. Even the best recordings of great songs won't make it to the public without a distributor. In an effort to demystify the process and strategies of music distribution, EM gathered three industry executives for a roundtable discussion. These three pros bring to the conversation different perspectives of the distribution business: the independent artist/label view, the ever-changing digital distribution view, and the major-label view.
The first panelist is Kofy Brown, an Oakland, California, musician and songwriter and a co-owner of indie label Simba Music Records. She is also a consultant for San Francisco-based TRC Distribution. The second, Ron Sobel, is a Los Angeles entertainment attorney in private practice, specializing in music publishing, technology and new media, and the digital distribution of intellectual property. Sobel worked at ASCAP from 1986 to 2000, most recently as vice president of creative affairs. He also is a faculty instructor in the Music Industries Studies program at California State Polytechnic University, Pomona; serves on the California Copyright Conference's board of directors; and is a frequent lecturer and speaker about intellectual property issues. Rounding out the panel is Jennifer Otter, who works on the front lines of the music industry as West Coast marketing director for Interscope, Geffen, and A&M Records, which are all distributed through the world's largest music distributor, Universal Music and Video Distribution (UMVD). Otter previously worked for UMVD and had stints with Sony Music Distribution and Polygram Distribution. She is based in San Francisco but works in 20 western states.
How would you describe music distribution and how it fits into the big picture of the music industry?
Sobel: Distribution, in its simplest form, is the business and mechanics of getting recorded material into the marketplace. If the costs to record and promote a record are high, you have to distribute and sell a huge number of records to recoup the investment. If, on the other hand, recording and promotion costs are kept small, the sales and distribution network can be more manageable and therefore more profitable.
Brown: In the big picture, distribution is like the veins of the music industry. It's how retail outlets get product. Basically, the record company makes a product for example, a compact disc. Then it uses its own distribution department or an outside distribution company to make sure the CD gets to as many places as possible. Independent distributors like TRC have relationships through sales representatives to get CDs out to retail chains and mom-and-pop stores. Our label staff actually goes to some of the local San Francisco Bay Area independent stores ourselves, and we distribute or sell our CDs direct.
Otter: Distribution is key for a record to be successful in the worlds of both major and indie labels. Without a strong distribution team, records are literally not in stores. UMVD distributes a lot of the key labels in the world of major labels. Along with making sure that each label's products are in stores, many times representatives from the distribution team are the only people that bands have contact with while on the road. While most label personnel are located in Los Angeles and New York, UMVD has people in the field all over the United States. Those people not only physically check stock but also get new and breaking information about artists and projects to countless record retail accounts. The UMVD field staff usually directed by each label's staff is also largely responsible for making sure that the artists have visibility in the marketplace in such places as local stores and venues where the bands are playing, and in helping place local advertisements for the bands.
Clearly there are basic similarities in distribution for majors and indies. Are there any differences in their philosophies or approaches?
Brown: The biggest thing that makes majors and independents different is the resources. For example, a major distributor like Sony can distribute a CD almost anywhere in the world. That's why music by a major-label artist like Lauryn Hill can be promoted and purchased from Zimbabwe to New Zealand to Peru to Gary, Indiana, simultaneously. Sony has the power and money resources and the personnel to get and promote their product almost everywhere.
Otter: Although I have only really worked inside of the major-label and major-distribution system, I see both strengths and weaknesses in it. The best thing, in my opinion, about a major distributor is the sheer number of people employed by it who are theoretically there to help work our records. Also, the money is there for advertising and support for implementing marketing plans created by the record label.
However, with that also come many people whose drive and motivation is the bottom line and not necessarily the music and artistry of the projects at hand. Many artists slip through the cracks in the major-label system due to an extremely heavy workload, lack of enthusiasm of the staff, and the cliché of “too many chefs in the kitchen,” as well as the major-label egos and politics that can be involved. In my relationships with the players in the indie world, there seems to be an overall greater sense of purpose, drive, and passion; however, there is a lot less money, clout, and resources in many cases.
Sobel: All recording artists want their records in the marketplace, but it is a very crowded and competitive marketplace. We now have two kinds of records: traditional, physical CDs, and nonphysical digital-music files. The major labels have been very successful at selling physical CDs, but they have little experience with selling or distributing digital-music files. The costs to distribute digital-music files are minuscule compared to the costs of traditional, physical distribution. There will always be marketing and promotional costs to consider, but the fact that artists now have an opportunity to put their music in the marketplace without incurring manufacturing, shipping, packaging, physical distribution, and inventory expenses provides an alternative method of building and reaching an audience. Although we are still in the infancy of digital distribution and of working out the licensing and monetization aspects of that new distribution option the promise of access to a global marketplace through digital distribution should be seen by all of us in the creative community as a healthy and positive addition to our promotion options.
Distribution seems to be limited by the geographic region. In today's global economy, how can artists use a distribution network to get their music heard by the widest audience?
Brown: You're right about the borders. We have used our domestic distributor to generate interest abroad, and we've used other methods. By gigging abroad, I create a demand for my records in other parts of the world. My company then utilizes the indie distributors in those countries, including the Netherlands, England, Japan, and Canada. We aggressively sought out different markets in the world to sell to. It makes sense for an independent artist and label to go with distributors that are familiar with each region.
Sobel: In much the same way that some indie labels have a physical sphere of regional influence, some digital distribution outlets have an analogous sphere of “cybercommunity” influence. Where traditional distribution channels may have exposure and sales in a two- or three-state physical region, some Internet music sites have exposure and sales to different audiences, different markets, and different continents, which simply broadens the ability of an artist to reach an audience.
Otter: UMVD is a global company. In my experience at Interscope, Geffen, and A&M, we take each artist individually and try to make that project work in specific breakout markets. We definitely share information and ideas with our colleagues around the country; if something works in one market, we will try to implement it in another.
Brown: Indie labels have to be very resourceful and use the available technology like the Internet to get our product all over the world. We can get our product out by posting MP3s on different sites on the Web. We can use outlets such as Amazon.com or CDnow.com there are thousands of outlets on the Internet that can be very useful in getting traditional distribution. If you start creating a big buzz on the Internet, eventually that overflows to the record stores, and then they call the label asking how to purchase the product that people have started requesting. It's like the snowball theory when done correctly.
This is all okay in theory, but readers are probably interested in how to initially get their products into a distribution network. How does an artist or a label get started? What is the process of submission or consideration for independents looking for distribution partners?
Brown: For an independent distribution company like TRC, all you need to do is find out the name of a buyer and then call, write, or e-mail him or her and pitch your product. First, you should make sure it fits the genre of the distributor you are talking to, so in [our] case, it's hip-hop, dance, or urban only. If you are into rock, punk, jazz, gospel, or any other type of music, you should search out a distributor that sells that type of music. Second, you should have a marketing plan or some type of sales history to show the distributor that your product will sell.
Sobel: Digital distribution partners should be seen as just another link in the chain of exposure, marketing, sales, touring, and merchandising endeavors. There are several reputable digital distribution outlets MP3.com, ArtistDirect, and eMusic, among others and there are new and emerging companies evolving on a daily basis. Each company offers unique opportunities according to different contractual obligations. I encourage artists to contact several potential digital distribution outlets to determine which of them offers the most appropriate array of services at reasonable terms. A key distinction between traditional label deals and digital deals is the requirement for exclusivity. Nearly every traditional label will require an exclusive arrangement, whereas most digital partners operate on a much more flexible, nonexclusive basis. That offers smart artists many opportunities to market their music.
Brown: Remember that if the distributor decides to pick up your product, you should realize that their main function is to get your product to the retail outlets, not make people buy it! The most common thing I hear from indie labels is “Why isn't my product selling?” It's because you the label probably didn't do anything to promote it. It's your job to make sure people come into the store and buy it. It is the distributor's job to make sure the product is in the store, available to be purchased. Also make sure your CD has all the mandatory things such as a UPC bar code on it and make sure it is shrink-wrapped. Those two little things often get left off indie records.
Otter: Honestly, as a marketing director, I'm not responsible for the A&R aspects of [the] labels we end up distributing. That's another facet of a major label: it's departmentalized. That is a reality of the major-label game; because there are so many projects happening at one time, we have to specialize duties, responsibilities, and expertise.
Many artists are doing it themselves these days. What can artists and labels do to enhance their chances of an ongoing, mutually beneficial relationship with a distributor?
Brown: To me, the biggest thing is forming a relationship with the sales reps at the distribution company. Go to your distributor and meet the people in person. Do a performance or special show if possible for the company. Making your product mean something to someone is one of the biggest ways to get the distributor to push your product. Also, establish a relationship with the retail buyers so you can let the distributor know you're also working the record.
Sobel: As in any successful partnership, both the artist or label and the digital distributor must contribute to the venture. Aggressive and creative marketing strategies are very effective on the Internet. One such strategy is viral marketing, which is basically Internet word of mouth. In an Internet-connected environment where fans have long e-mail lists of friends, it is very easy to spread the word about a new product, band, song, or show quickly because an e-mail sent to a list of friends is easily sent to another's list of friends. The compounding phenomenon of 1 begets 2, 2 beget 4, 4 beget 16, and so on spreads rapidly, much like a virus. That has proven to be an effective and inexpensive means of promotion and marketing.
Another Internet marketing concept is data mining, or using information that is volunteered by the consumer to the artist or Web-site host. If a fan voluntarily provides data such as age, gender, zip code, or music preferences, the smart artist can use that information to market and promote more effectively.
Then there are other things the artist can do, such as maintain an e-mail connection with the audience for example, notifying them of special promotions, discounts on CD purchases, and the like and taking advantage of the entire spectrum of Internet and Web site exposure, including news, live versions of songs, newer songs, chat pages, photos, and videos on an artist's Web site. Those techniques all offer a broader, richer experience for the fan and a new opportunity for the artist to market or sell merchandise, and they can stimulate exposure and sales in ways that a traditional brick-and-mortar store cannot. Furthermore, structuring joint venture opportunities, such as tours, merchandising, advertising co-ops, and marketing campaigns, can be effective for gaining exposure, which leads to building relationships with an audience, which leads to commerce.
Otter: I have been on the road with Weezer in the past weeks, doing a lot of in-store signings and performances. For a new or developing project or artist, those sorts of events are ideal for making new fans and reconnecting with old, dedicated fans. For a band that is trying to establish a fan base, it is key that they play as many shows as they can and go out into the audience afterward and introduce themselves to any fans or potential fans. Getting and maintaining a strong base are important for launching and sustaining any longevity of career in this business. Management, both for established acts and up-and-comers, needs to recognize and reward people for being faithful to a band over a span of time.
I think whether it is a meet and greet, when fans get to go backstage and meet an artist; an in-store event; or even an industry dinner with a band, if bands or artists are cool, you are going to work that much harder for them. I have had many record retailers and distribution people fall in love with a band or artist after they get to spend some time with them. That one-on-one contact really makes people feel like they are a part of the project, whether that contact is breaking bread with Weezer or having them sign their new CD for you. It is really a powerful example of how important music is to our culture.
There has been a lot of talk in the industry over the last several years about the death of retail sales due to the Internet. Are you seeing such a downturn? What are your thoughts on this trend and on the future of the coexistence of traditional distribution and digital distribution?
Sobel: I think heralding the death of retail sales is a bit premature. Digital distribution won't erase retail sales in the short term. On the contrary, exposure that a band achieves on the Internet often leads to sales of their records at retail outlets. As digital distribution matures, however, it is likely that computer-savvy consumers will find that purchasing music through digital distribution channels, including streaming, downloading, and subscription, will be more convenient and rewarding than purchasing a traditional CD. Digital distribution of music from an artist to a fan will soon provide efficiencies, enhancements, and a connectedness that a traditional sale cannot.
Brown: I think that retail sales have slowed down a bit due to the Internet, but I think it's mostly because of the outrageous prices that CDs sell for now $17 to $18! I know plenty of people who just won't go out and buy music the way they used to because it costs so much.
Sobel: The technology currently exists to distribute, monitor, account, and monetize music over the Internet. The obstacles, however, involve the complex migration of licensing protocols together with the history the labels have in controlling the physical distribution of records. As we come to understand that music is not so much about controlling the manufactured containers records as it is about monetizing the artistic creations songs we will also learn how to take advantage of digital distribution to reward and incentivize music as a service and not as a product.
Brown: I think traditional distribution will always be around because it's so great to go out to a record store, sift through records or CDs, and find gems. That will always be the case, but as technology grows and becomes easier to use, I do think more people will be getting their music via the Internet in some way, shape, or form.
Otter: The dealings on this are moving so fast and are happening so high up in the corporate ladder, I can't adequately address it on behalf of my labels. However, I spend a majority of my money shopping for records in retail stores. People in and out of the industry are always totally boggled by why I, given my job, would have to buy music. The answer is that I love music more than anything in the world, and there is no way that I get even a fraction of all the stuff I want from work. There are few pleasures that I prefer to spending a foggy San Francisco afternoon digging through the bins of Amoeba [Records] on Haight Street. Whether it is an obscure indie release that is just brilliant, a B-side single, or some scratched vinyl that reminds me of playing records on my first Fisher Price record player, there is far too much music and there are too many genres for me to ever feel that my collection is complete, or that my musical education is even close to being complete.
DELIVER THE GOODS
As the panelists point out, distribution is a complicated matter because it is the point at which many aspects of the industry come together: artists, fans, labels, promotion and marketing, and actual delivery of the product. The ever-evolving world of digital distribution provides some new alternatives to the traditional model and is yet another factor to consider when planning the distribution of your music.
Ultimately, however, the members of the music-buying public make the final decision regarding what they want to buy, and what they want are great songs that are performed well. So be sure your understanding of distribution and the delivery of your music is backed up with musical goods that deliver.
EM contributor Michael A. Aczon is spending the summer conserving electricity in his Richmond, California, home by playing his 12-string acoustic guitar with his family as they sing Beatles songs together.