How to Understand Content Aggregation

It used to be the toughest part about being an indie band or an indie label was not having access to distribution. You could put your record in the local mom & pop, or sell it on the road, but without a distribution deal to actually get it in stores across the country, your wee record was pretty much going to go nowhere.

In the mid-‘90s, as digital recording and duplication technology became more available, bands were able to record and duplicate their own CDs, which caused a beautiful bloom of both bands and labels who could do almost everything but distribute. In a related story, the major labels finally woke up to the fact that they had no idea how to find and develop a worthy act. But they knew how to get them in stores. This resulted in a number of quite simpatico partnerships between indie labels and the distribution arms of majors. It also allowed indie distributors to gain a decent toehold in the distribution market, which in turn gave bands and labels an indie option for distribution of their CDs.

Unless you’ve been living in a hole, you’ll have noticed that a significant volume of retail sales are lately migrating to digital platforms like mobile and the internet — and since anyone can put anything on the ’net, you might imagine that nowadays even the digital distribution playing field has been officially levelled. But you’d be dead wrong.

It has everything to do with choice and access. Because distribution of music on the internet is so accessible, there are literally hundreds of thousands of musicians, bands, labels and other suppliers of music swarming the digital seas. It’s such a vast pool of stuff that there truly is an audience for every song and a song for every buyer. The variety is mind-boggling: if you’re into, say, traditional Scottish reels reinterpreted by Mongolian throat singers, or you’d give anything to hear that guy who sang that thing that one time, you’ll find it eventually. But probably not in the same place as the hits, because even though the shelf space is nearly infinite, no retailer on earth (so far!) has found a way to efficiently catalogue and deliver all the flotsam and jetsam to the comparatively few buyers who might want it.

You can and should contract directly with any digital mom-and-pops you can get to. But although there are tons of places to buy music online, not to mention directly from the bands themselves, the reality is that a combination of marketing, platform, hardware and format supremacy and brute market force have put a very few retailers, most notably iTunes, in the catbird seat. Since its launch in 2001, iTunes has not only gobbled up a chunk of the steadily growing online music retail market, it has also changed the way the music business does business, in a way that makes it harder, not easier, for bands to sell their music online — ironic, given that Apple built its business model on putting tools in the hands of consumer-level producers.

The problem is, you can’t just phone up iTunes and ask them to sell your tracks any more than you can drive over to the Wal-Mart with a box of home-pressed goodness and expect to see it on the shelf that afternoon. There’s a process, and the process involves iTunes pretty much ignoring you unless you’re doing a very high volume of business. iTunes will happily contract directly with major labels representing hundreds of thousands of tracks, but it simply doesn’t have the personnel, or the volume incentive, to deal with thousands of bands and labels coming at it with miniscule libraries of music.

Which is why, if you want to get your music on iTunes or, in fairness, most other major online retailers, you need to get on board with a content aggregator. Content aggregators are in the business of collecting odds and sods of digital distribution rights from all over the place and making blanket license deals with online retailers at rates that apply to their whole catalogue. CD Baby, the Orchard, IODA and Iris are some big names in indie content based in the U.S. Freshly minted in Canada, there is the Independent Digital Licensing Agency (IDLA) (see Meet & Greet).

Content aggregators work on a licensed basis, meaning they never "own” your masters. Licenses are often exclusive, but generally provide an "opt in” option so that if you’ve already got a better deal with a given retailer, you can opt out of the aggregator’s rate. Once you have an agreement with a content aggregator, you send them your music files according to their technical specifications, and they take care of servicing the retailer and reporting sales back to you.

There are a few other important contract points for you to consider, such as the territory. Aggregators will want the world, and if you have better distribution in any territory, you may want to limit the scope of your aggregation deal. Who pays copyright royalties? Mechanical royalties and, in some territories, sound recording copyright royalties are generally deductible from digital sales and if there’s a publisher involved with the material in question, these will have to be paid and reported. It can be an administrative headache, perhaps one you’d best leave with the aggregator. Termination and term are important: if it’s your first date with the company, you may want to either limit the term to a year, or make sure you can easily terminate the agreement if you’re not happy with the service. Don’t get sucked into any mandatory marketing, where the aggregator promises a promotional blast as well as delivery and fulfilment: that’s going to be expensive and if you’re going to spend that kind of money, spend it with someone you can consult with. Try to retain ownership of the converted files and formats so that you can move them along when your aggregation deal ends. Keep a watchful eye for any clause mentioning a payment threshold: like, you don’t get paid anything unless you’re selling a minimum of $200 per month. Don’t sign that deal.

Unsigned bands can make great use of aggregators, but at the end of the day, a basic truth of the music business still applies: to be successful, you have to build your audience. You can’t just sit around and hope they find you. When you are prioritising your resources to choose whether to sell your music through a digital aggregator, or through your own website and off-stage, think about which one of those routes is going to bring your fans closest to you. Then go pack the van. Allison Outhit