How to Understand Major Label Distribution (Re)Search and Distribution
Published Jan 01, 2006In the music scene, issues between independent and major label might seem like more politics than anything a fight between credibility and accessibility but the mechanics of how music goes from the imagination of the creator to the hands of the consumer can have a significant impact on a variety of facets of the music industry: which CDs you find in stores, how much they cost, and what the bottom line is for artists and labels alike.
What's the big deal? Distribution is all alike, right?
Even under the banner of a major label, not all distribution is created equal. For a band signed directly to a label, let's call them Billy Talent, their business is taken care of by the label recording, promotion, manufacturing and distribution. However, many smaller indie labels sign distribution deals with a big label; the indie label takes care of their artists and the major takes care of getting the product into stores. In many cases, the major label in question treats these indies like a farm team; they get "first dibs" on a successful artist, and can promote them to the "big leagues." Indie labels like Arts & Crafts (Broken Social Scene) and Paper Bag (Plastikman) have deals like this. A third form can simply mean access to the distribution stream through a subsidiary like Maple Music's distribution department, Maple Nationwide, which goes through Universal Music. "What we, and many of our competitors do is take a fee to distribute a product (usually a percentage of the net proceeds) and then the act or label gets the majority of the revenue," says Maple Music's Kim Cooke. "But out of that, they're responsible for everything manufacturing, paying publishing mechanicals, any marketing and promotion costs and then out of that they have to run a business. I don't think a lot of acts realise how thin the margin is until they really study it and end up having to pay the bills."
It's got EMI's stamp on it, just watch the cash roll in.
Access to distribution and interest in your artist are two different things. Just because you're on a roster doesn't mean you're in the store. Catalogues are sent to retail by the distributor a couple of months in advance; they will typically hype "event" releases (the new Eminem record), while others will simply be listed, along with an order number, toward the back. It's up to the artist, or the independent label they're on, to promote the artist and raise their profile. But don't fret even being in the catalogue gives you a crack at the big leagues. It will open the doors to music chain powerhouses like HMV, electronics chains like Future Shop and big box stores like Wal-Mart; that kind of access just isn't granted to every indie distributor on the block. It's also much simpler instead of contacting each store individually, the catalogue goes to every major retailer across the country, and the distributor takes care of packing and shipping.
Is that why I can't buy K-OS at Rotate This?
Just as indies aren't in with Best Buy, major labels similarly don't foster relationships with independent-minded retailers. Because they are likely to move less product in large volumes, many "mom & pop" stores across the country don't have priority access to the major label distribution stream. Instead they deal with "one stop" reps, who act as traveling salesmen on behalf of several major and large independent labels; the one stop companies buy in bulk and act as a wholesaler to small stores. However, by adding a step to the process, you also add an additional cost, making it harder for independent stores to compete.
Pump up the volume.
Stores like Wal-Mart are the bulk barn of music distribution the more they sell, the lower the per-unit price. But major retailers and big box stores don't stop there: they don't play fair from the first moment you walk in the door. In music stores, new releases, high profile items and hot sellers are all found at the front of the store at rock-bottom prices sometimes even at a loss. To balance that, back catalogue and higher-end items take the hit, in terms of profit margin. That's why the new U2 is $14.99, but The Unforgettable Fire is $25.99. Big box stores are even trickier: they'll take a loss on music just to get you in the door, in the hopes that you'll pick up a CD and shop for a fridge and stove while you're there.
There has to be a better way!
Any distribution system has its advantages and its drawbacks in the next two sessions of Music School, we'll be looking at independent distribution (December/January) and the opportunities available online (February).
Frequently Asked Questions
I wanna sell tons of records, so major label distribution is the way to go, right?
Not necessarily. First, as a distributor, major labels won't touch you until you've got some success behind you: radio play, good press, solid touring, a growing audience, etc. If your core audience is going to be the independent scene, you'll want to be reaching indie stores like Soundscapes, Zulu or Cheap Thrills stores like that may wear their indie loyalties on their sleeves, in their window displays and on their front racks. As a smaller scale act, you might get lost amongst the Celine Dion and MC Mario records. Also, major label distribution might get your CDs into a major retailer, but you might find it's an uphill battle to get them out. It's much more efficient, but you might lose hands-on control of things like price.
So wait, major label distribution is actually bad?
Also, not necessarily. Just look at the two subjects that bookend this month's Music School. On one hand, What I Play subject Ryan Driver's label Rat-Drifting highlights esoteric, avant-garde releases that need a speciality approach to reaching a niche audience. Major label distribution would be death. On the other hand, Label Life subject Underground Operations just inked a distribution deal similar to Arts & Crafts and Paper Bag; with the backing of a major distributor behind them, their political punk just might be a huge success in smaller towns across the country, where Wal-Mart or similar superstores are the only game in town in terms of retail.
How do I decide what's best for me?
"You have to be evaluating your distribution all of the time and seeing if it meets your needs and if it doesn't, you have to be aware of what else is out there," says Blair Purda, who runs Winnipeg independent label Endearing (distributed through Maple Nationwide). Maple's Kim Cooke agrees that finding the right fit is completely subjective. "It's a lot like buying a car," he says. "They all perform the same basic service. Everybody has certain niches. Some are better than others, some work in one way and not another, some are affiliated with majors and some do everything themselves. It's really just a matter of what kind of car you want to drive."