Traditionally, distribution is how music gets into stores. Distributors have deals with the major record labels and take a cut of each album sold. However, with the rise of digital distribution and a growing interest in indie music, the way that people get their music is changing. 

Here’s a quick look at three avenues of distribution:

Major Labels – The Big Four

Thanks to mergers and acquisitions the landscape of the major label music scene can change dramatically overnight. But basically, the major labels consist of  ”The Big Four”:

• EMI
• Sony BMG Music Entertainment
• Universal Music Group
• Warner Music Group

Why are they called the big four? In the United States the major labels are respresented by The Recording Industry Association of America (or RIAA). The RIAA claims to create and distribute about 90% of the music sold in the United States. According to Nielsen SoundScan, the big four account for more than 80% of the U.S. music market.

What’s so great about the U.S. music market? The United States is the world’s largest music market with about 35% of the world market value. Japan is second and the United Kingdom a distant third.

You can read more about the major labels and market value on Wikipedia: Music Industry

Indie Distribution

An independent record label (or indie record label) is a record label operating without the funding of or outside the organizations of the major record labels.

Heather McDonald has written an excellent definition for indie label’s at About.com:

An indie label is a record label that is independently funded and not connected to one of the Big Four major labels. Indie labels range from home based hobby labels to highly profitable, large businesses. In the 1990s, the line between indie labels and major labels began to blur somewhat, and now some large indie labels are actually distributed by the Big Four major labels.

Indie labels often face an uphill battle trying to get their music heard, as they typically have far fewer financial resources to promote their music than major labels do. Despite the struggle, many labels have survived, and thrived, for years, and many other indie labels may not have lasted forever but had a tremendous impact on music both creatively and in terms of business.

You can learn more about indie music and distribution on Heather’s Music Careers site.

Check out our Top 10 Hits of CD Distribution

Digital Distribution

Digital music distribution involves selling or sharing music in MP3 format. If you are a musician with MP3s of your music, you have two simple options. You can find an MP3 distribution site and have them distribute your music. The advantage of this is that a large site may get millions of visitors every month, increasing your potential audience. Your other option is to create your own website and make your music available there. This method will give you more control and you won’t have to share a cut of your proceeds with a distribution site. However, your music could be hard to find and you will be responsible for promoting your site and getting the word out yourself.

Nowadays, just about anyone with their own music can have it appear in Amazon’s digital downloads or in the iTunes store.  A couple of other big players in online digital distribution are CD Baby and MySpace.

Despite the importance of the Internet to commerce, CD sales through “brick and mortar” stores are still important. National distribution, rather than consignment, is the only practical way to service the big chains like Borders, Tower, and HMV. Although you must cultivate the relationship between yourself and the stores, successful distribution takes into account the entire marketplace. This marketplace is a fluid set of symbiotic relationships between yourself and radio, press, public relations, advertising, venues, the Internet, distribution companies, stores, manufacturers, vendors, and other musical acts in your genre.

Your job is to create a brand, an image, and a story that will engage all of these elements in the service of finding your audience. There is no guarantee that money invested in distribution will be recouped solely through CD sales. However, the prestige of national distribution is a career builder that will enhance your other efforts to make a living. Work smart, be honest with yourself, and hope for the best. But be prepared for some disappointment and failure along the way.

Getting Started

Before seeking distribution for your album, I suggest that you acquire a budget and start your own record label. You’ll be dealing with other businesses and it’s best to be on equal footing with them. Also, when your employees look to you for daily direction, you’re forced to focus your goals. I decided I’d found WaterBoat Music and hired a business-and-marketing team. Kimball Packard came aboard as manager and Louise Miller as administrative assistant. My wife, Jenny Mikesell, an accomplished website designer and graphic artist, worked as the art director.

To record my CD Trust, I hired a production-and-recording team. Berklee grad Dave Locke ’93 engineered and mastered the project. Players included other alumni like guitarist Kevin Barry ’88 (Paula Cole, Mary Chapin Carpenter) and bassist Mike Rivard ’85 (Jonatha Brooke), as well as former Del Fuegos drummer Woody Giessmann. Independent radio guru David Avery of Powderfinger Promotions was hired to work Trust to Triple-A and college radio.

While we made the recording, I searched for a distributor. There where problems. The two elements that distributors look for when negotiating with an artist are extensive touring and a previous track record of CD sales. Because of my commitments to teaching, I couldn’t tour to support distribution. And while my first CD This Distant Light had garnered a Boston Music Award nomination, I had no sales record.

To make up for this deficit, I crafted a marketing plan that highlighted my strengths, drawing upon the entrepreneurial concepts outlined in my book, Making Music Your Day Job. My marketing plan featured a $10,000 budget and focused on national radio airplay, advertising, regional gigs, in-store and in-station performances, and various guerilla marketing techniques. (Visit www.waterboat.com to download a PDF version of the complete proposal.) I sent my proposal out to five distributors, and in December of 2000 I signed an exclusive deal with Goldenrod/Horizon. What made them sign me when others had turned me down? In part, they loved my music. But essentially, they liked my marketing plan and our $10,000 budget.

Before signing me, Goldenrod had presented my proposal to their single largest client, Borders Books & Music, to get their opinion. Their national folk music buyer agreed to take an order, and, based on that promise, I got the deal. I had used my powers of persuasion and business expertise to circumvent the key requirements of a typical distribution deal. Would that fact ultimately hurt me? Marketing plans aside, Trust would have to prove its worth at the cash register. If it couldn’t, WaterBoat Music would be dropped. I decided to risk it.

Be Careful What You Wish For

One day we had no deal and were alone. The next day, we had a deal that involved lots of other people. We now had primary relationships with both the national and regional sales representatives at Goldenrod plus the field marketing manager from Borders. Soon we would develop additional relationships with new performance venues, advertising sales reps, shipping companies, and more.

Suddenly, we had to factor everyone’s schedules and turnaround times into our own plan and things became very complicated. The radio campaign and retail release dates had to be coordinated with all other efforts, including gigs, advertising, and in-store promotion. But it didn’t work out that way. Since we signed the deal in early December, we missed the holiday buying season completely. Major listening rooms book four to six months in advance, so January, March, and April were unavailable to us.

It didn’t make sense to do in-stores and in-stations unless we could support the efforts with advertising and we hadn’t had time to negotiate ad rates, design our print ads, and produce the radio advertising spots. The listening post program at Borders—a key part of our plan—was booked until at least April. It looked like May 1 was our earliest possible start date, but if we waited until May, college radio stations would be winding down for summer break. We decided to forge ahead with a January radio and retail release and work hard to put everything else in place by May. (see sequence of events below)

Trust went to stores in mid-January and Powderfinger worked radio from January 23 to March 12. All in all, we got the CD played on almost 200 stations nationwide. It was a great start. But managing the details was often problematic. Little things snowballed into an avalanche. For example, our first order was two weeks late while we were setting up a FedEx Ground account and frantically designing our point of purchase (P.O.P.) stickers that said “all profits to benefit the Sierra Club.”

While this minor disaster unfolded, we scrambled to call venues, radio stations and the press, design print ads, fix our computer system, update the website, play gigs, send out packages, do interviews, and book in-stores. We were often completely overwhelmed. Finally, May arrived—a full two and a half years after the recording sessions began—our modified marketing plan was in full swing.

Cash on the Barrelhead

The following represents investments I made to support the distribution deal.

• Recording $30,000
• Staffing $10,000
• Radio promo $3,000
• Radio commercials $1,000
• Specialty packaging $1,000
• Total: $45,000

At $7.50 per copy, I must sell 6134 copies to recoup my hard-dollar expenditures. These costs are actual money invested and do not include promotional copies of the CD given to venues, the press, or radio, nor do they include product credit payment of the listening post program at Borders. To date, I am far from recouping my investment via CD sales.

However, all is not lost. My main goal to first establish brand name identity has been successful. Some of the direct, non-sales oriented results of working my distribution deal are as follows:

• More people have heard of me, and heard my music.
• My press kit commands increased respect.
• I’m now able to play key venues and better rooms.
• I’m playing in new markets, including New York City and London, England.
• I’m a more informed and valuable teacher to my students.

I set my sights high and have succeeded in some realms, failed in others, but at the end of the day, I asked and answered questions that were important to me. This has clarified my artistic vision, and increased the scope of my work. The process of working my distribution deal changed and challenged the way I felt about my music, my goals and the industry in general. It was exhilarating, frustrating, and a real learning experience.

Kevin’s Top 10 Hits

1. Get Radio Active
The advent of low-cost digital recording technology has flooded the market with releases. Radio station music directors now rely more heavily on indie promoters they trust to help them program. Unless you are extremely good on the phone and know the radio business, hire a good promoter. Even though I was a music director at a radio station, I found it was best to let a pro help me out.

Develop an effective mailing package that will help you break through the clutter at radio stations. Use radio airplay to increase sales, press, and touring. We sent the weekly radio airplay reports to Goldenrod so they could service stores in national markets where Trust was receiving heavy or medium rotation.

2. You Can’t Eat Good Press
While important, press coverage does not necessarily translate into CD sales. The industry is filled with artists who languish in the “critically acclaimed” ghetto. That being said, you’ll need press before you release your CD on its “street date.”

During the production of Trust I invited members of the Boston press to lunch and then join us while we mixed a tune. We also made 50 “one-offs” and sent them out to the national press to get pre-release coverage. Develop a philosophy of consistency when dealing with the press. For example, on the finished CD booklet, incorporate your picture into the cover art. When you start to get press, control your image by only allowing them to use your CD cover. That way, when people see your CD in stores, they’ll recognize it from an article they read about it. These concepts are road tested and they work.

We had reviews, profiles, and feature cover stories in Billboard, ASCAP Playback, Gig magazine, the Boston Globe, the Boston Tab, and numerous other publications.

3. P.R. Is Good Business
Public relations is the process of building goodwill for your brand in the public eye. Supporting a good cause is a great way to do this. I decided to donate all profits from the sale of Trust to the American Liver Foundation and the Sierra Club, and this has opened quite a few doors for the project. Because I teach entrepreneurship and career planning at Berklee, we also targeted the business editors of nonmusical publications. As a musician, entrepreneur and educator, I am somewhat anomolous in the nine-to-five world. Go where your competitors aren’t and reap the rewards of being a rare find.

4. Get the Word Out
Public-relations efforts go hand in hand with your advertising campaign. We focused our advertising on the listening posts at six Boston-area Borders stores, where customers could listen to the CD through headphones. This type of program is paid for in product credit rather than hard dollars. One month at listening posts “cost” WaterBoat Music $1,071 in product credit. This means that at $7.50 per CD, Goldenrod and Borders keep the proceeds from the first 143 copies of Trust sold.

As part of the Borders listening post program, we also received 15 “free” 60-second commercials on The River 92.5, a great local Triple-A station. We decided to boost the 15 ads with additional commercials to promote gigs and various in-store performances.

To retain control of my image and message, I produced the ads. Berklee alumnus Scott Miller edited cuts from Trust into a commercial bed, I wrote the copy, and station DJs did the voice-overs. For maximized impact, it’s essential that advertising be seen and heard in as many different mediums as possible. Our May ad campaign included radio, print, and the Internet, with a focus on live gigs.

5. For Every Season, Tour, Tour, Tour
Marketing efforts, even very successful ones, are no substitute for live shows. David Tamulevich, a prominent national booking agent, suggests a touring schedule of 225 to 250 nights a year. Touring is actually the best opportunity you have for selling your CDs to a motivated, excited audience. Berklee alumnus Bob Malone set up a merchant account with Visa, and his live-show CD sales have increased significantly.

Ironically, great press and radio airplay can help propel you beyond your capacity. As you start to play bigger and better rooms, it’s tougher to fill seats. Be realistic: if you need to take a step back and work as an opening act, do it.

If you’re serious about a career as an original artist, though, cover gigs can drain your energy and credibility. I strongly suggest making every effort to talk to those in charge of venues before sending your package. Have an honest discussion with them. Don’t be afraid to turn down a gig that’s not right for you; if nothing else, you’ll be memorable! If I were 25, I’d start a band, rent a cheap house in the woods, make a CD, buy a van and hit the road. I’d support the effort with a marketing plan and a great website.

6. Weave a Big Web
Use a professionally designed website that is commercially viable and reinforces your brand. All marketing and advertising should drive traffic to your website. To encourage return traffic, update the site with new songs and new content. The Web is not a static medium. Unless you’re getting thousands of hits a month, it doesn’t make sense to fulfill your own orders. Link your site to CD Baby or Amazon and let them do it; they have the traffic.

Your site should be easy to navigate and unburdened by huge sound or picture files. I post short Real Player song samples on my site and provide a link to my MP3 page for bigger files. My entire first CD, featuring Ellis Paul, Catie Curtis and Duke Levine, is online. I have only 20 copies left, and rather than manufacture more, I give it away in MP3 format. If people dig the music, maybe they’ll come back and purchase Trust. Check out the “Free Goodies” link at www.waterboat.com for details.

Put your gig listings in the table format that allows Musi-Cal and other performance search engines to offload the information automatically to save you from duplicated effort. Register your website with the main search engines. You’ll have to update it every six months to remain current. The Internet is the ultimate guerilla marketing vehicle that allows you to subvert the status quo.

7. Work for Bananas
Branding efforts that are highly creative and cost effective are an essential part of a guerilla marketing campaign. We made a strategic alliance with Club Passim, which has a 15,000-person mailing list for their music schedule newsletter. In exchange for a discount on ad space, we committed to donating 50 percent of the purchase price of my CD to their music education fund. All a customer had to do was write “Club Passim” in the memo section of their check and send it directly to us.

8. Star Wars, Culture Wars
There is a strong interrelationship between press, radio airplay, touring, the clout of your distributor, the strength of your live show, your “buzz” factor, and that ineffable psycho-sexual, gender-war, political, what-is-hip, who-is-hot miasma of fear and loathing we call pop “culture.” Fueling this hot-rod race of fame seekers is cold, hard cash—the more the better. Be prepared to grease the wheels of commerce in the form of advertising, packaging, videos, shelf fees, touring, product give-aways, and other forms of promo.

Country and r&b music are the big sellers. If you’re in these categories, you’re competing with serious star power and huge corporate budgets. If not, set your sights on modest sales appropriate to your genre. Selling 20,000 units would represent big numbers for a contemporary singer/songwriter but would get a pop artist canned.

According to the New Yorker magazine critic Nick Hornby, a recent Billboard top 10 list of bestselling albums includes the song titles, “Bad Boy for Life,” “American Psycho,” and “Pimp Like Me.” If you’re not writing songs that celebrate rampant consumerism, sexism, and the machismo of violence, your potential audience just got smaller. Way smaller.

9. It’s a Big Country, Pilgrim
Remember, it’s your distributor who’s national, not you. Goldenrod focused their placement of Trust in Boston and in select stores nationwide that did well with folk music. That’s fine, because I didn’t have the budget to promote every market properly. Initially, I wanted to do the national listening post program at Borders, which has 350 stores. I would have needed 350 listening-post CDs plus five copies for each store for a total of 2,100 CDs. Because I only had 2,000 CDs to start with, I would have had to manufacture 1,000 more to meet my other needs. Borders wisely suggested I start small, and if sales were hot I could grow into a national campaign. Keep in mind that when your inventory goes into a distribution network, it ties up your capital investment for a long time.

10. It’s Mine, All Mine!
If you’re signed to a label, they will pay up-front costs for recording and some marketing. But they’re merely loaning you money that you pay back through recoupables—a convoluted process that never favors the artist. It’s better to own your own company. Quite frankly, if you’re not willing to make that investment, why should anyone else? Besides, the payback on the other end is potentially better.

Take selling CDs from the stage as an example. If I were on another label, I’d have to pay them wholesale rates for my own work. At a sale price of $15, I might net $7 and pay them $8. But with WaterBoat Music, I get the entire $15. Plus, I have the flexibility to set special sale pricing.

At a recent show, my pricing went like this.

• $15 – Buy 1 CD, get a free tape
• $20 – Buy 1 CD, get a free CD
• $25 – Buy 2 CDs, get a free tape.

That night, I made more on CD sales than I did at the door. And in the End…

After working my deal hard for nine months, I continue to build on what I’ve made. There are no easy solutions and it’s definitely a work in progress! Our industry is not for the faint of heart or the empty of pocket. But as long as we’re willing to invest in our careers, we’ll always have a future in the music business. Only time will tell if it’s worth it in the end.

Nobody’s Buying What They’re Told to Anymore

The Big Labels

The big labels are having a hard time selling CDs. They are panicking because they put a lot of cash into producing, marketing and promoting new releases and the masses aren’t biting. An associate of mine got signed to a record deal last year. The whole package cost the label about six hundred thousand big ones to produce and promote the whole thing and they have only sold about a thousand CDs so far. The music industry is getting nervous. Why do you think this is happening? The answer is simple: the Internet.

The Internet

The Internet has become the greatest sales tool since the radio. It offers you an inexpensive way to promote, distribute and market your own CDs and gives you the opportunity to make much more profit per CD than you ever could any other way. There are millions of music lovers surfing the Web every day searching for music that they want to discover all by themselves. They don’t want to be told what to listen to and buy anymore. There will always be the mainstream market and Tower Records will stay on the street corner. But, let’s face it: the Internet offers consumers many more choices, plus the option of listening before they buy anything. You can also browse for hours in your underwear without a clerk calling the cops.

Choices

A friend of mine who happens to be one of the greatest guitarists around (he’ll get mad at me if I tell you who) and has also been signed to a major label for the last ten years just lost his contract. As I said before, CDs aren’t selling, so artists are losing their contracts right and left. He has the option of shopping around for another contract and could get one without a doubt, but he has decided to do the whole thing himself. His logic is this: he has a big fan base so he can still sell a bunch of CDs without a major label. Granted, he won’t be able to sell as many as he could with a big company promoting every release, but he doesn’t need to.

I’ll tell you why. When he was releasing CDs signed to a major label, he was only making about 6% on every CD he sold. By releasing it himself, he makes more like 80% profit. The more CDs he makes and sells, the higher his profit margin will be. Even if he sells only half of what he has in the past, he’ll still make much more money. A ton more.

Artistic Differences

Prince also did the same thing. The reason I can mention his name is because I don’t personally know him. I never discussed this with him and I don’t know the specific details (so forgive me if I am not completely accurate), but from what I understand the whole thing started because Prince, being the creative genius he is, wanted to release a lot more material on every CD than the record label wanted him to. I guess the record label’s logic is that, the more songs there are on the CD, the more packaging you need: more plastic, more paper. All these things cost more money and cut into their profit margin. Prince probably just wanted to release CDs that suited his artistic needs and at the same time gave his fans what he assumed they wanted, more Prince per CD.

Obviously they couldn’t meet eye to eye. Since he already had an enormous fan base, he decided to do his own releases. Prince is a true pioneer. Record companies aren’t in the game to create art; they are in it for money. They are very particular about what kind of songs you write, how many minutes each song is, and the order of the songs and the mix of the recording. For these reasons, “true artists” have a hard time dealing with producers whom the label decides are best for them. If you don’t want to be told what to do, doing it yourself is a great option. With the advent of the Internet, this is becoming an easier undertaking.

How to Promote Your CD

Gigs

This is an easy way to sell your CDs. Bring ‘em to your gigs, set ‘em up and just take cash on the spot. Or, leave some at the register so people can buy one on the way out. You may want to offer a cut to the club you are playing at. Make sure to mention your CDs during your set, and don’t forget to point people to your site for information on your band and concert schedule.

Marketing

Without a major deal you will have a rough time selling CDs in stores. You won’t have the money for promotion and distributors won’t touch anything under five thousand units. If you want to get your CDs in some stores you will have to think of some different marketing strategies.

This is what I did. I went around to some small music schools. You know, the kind that are inside music stores. I offered them 25% on every sale. All they had to do is play the CD in the waiting room when people where waiting for their lessons. Without a doubt the students would ask whose CD was playing. When they found out they could buy it, a lot of them would. It is a “win win” situation for everyone involved and only sets me back 25% on each sale. To put it in a CD shop would set me back between 50% and 60% for distribution and the cut that the store takes.

I also pay the musicians on my CD a distribution charge of 25% on each CD that they personally sell. I don’t mind letting them make a little money on the deal because, as I said before, I’m making enough profit on the CD to not care too much.

Another thing I did was tie up with an effect maker. HAO, a maker of great stomp boxes, asked me to record a CD demonstrating their distortion boxes. Rather than take money for my studio time, I offered my services for free in exchange for a few hundred CDs that I give away from my site or guitar9.com when anyone buys my new CD, “Prospects.”

Try to figure out whom you can team up with as a marketing partner. How about a restaurant, car wash, veterinarian, or your local church.

Your Site

Important Features

The next thing to do is to get your site up and going. Your site must have three important features: a way to sell your CDs, a way to point people to your gigs where they can buy your CDs, and last but not least, a reason for people to visit your site and leave with a CD ordered or a memo in their schedule book to go to your gig next Friday.

Sell From Your Site

One super easy and cost-effective way of selling from your site is to use PayPal. This system allows visitors to buy from your site using a credit card. PayPal simply charges you a small percentage and credits the rest to your account. You will have to mail each CD out, but can get your girlfriend to do that for you. Another way is to send them to an Internet CD shop that will do everything for you for a slightly larger cut. I’ll get into this a little later on.

Point People to Your Gigs

This is easy. Post your concert schedule. It helps to include the time, door charge, and address and phone number of the club. I would also link to the club’s site if they have one.

Reason to Visit

Since no one is promoting you, you’re going to have to attract visitors to your site. You are going to have to find a way to make people who don’t know anything about you want to become your fan and start a lasting relationship with you through your site. This is what I did: I put my knowledge of the guitar and experience as a teacher to work. I offer free guitar lessons on my site. I cover a bunch of different subjects such as music theory, scale and chord patterns, etc.

This is what usually happens. Someone sitting at home is having trouble sleeping because he is confused about the Phrygian scale. He heard someone say that this scale works nicely over a certain kind of dominant chord and can’t figure out why. He goes over to his trusty computer with his guitar in hand and punches into his favorite search engine, “phrygian scale over dominant chords.”

Low and behold, a link pops up for my website. He visits, finds the information he needs, may even e-mail with a question which I will, without fail, e-mail a reply to. He may even listen to one of my tunes, come to one of my gigs, or even buy one of my CDs. To be honest, I don’t even mind if he doesn’t buy one. I made a friend in the deal and helped an aspiring musician in the process. What could be more rewarding? I have people asking me questions from all over the world, from Russia to Hong Kong and everywhere in between. Spreading knowledge about the guitar is the niche that I fill with my humble site.

Internet CD Shops

If you don’t want to deal with mailing CDs out to different parts of the world you can use an Internet CD store. I use guitar9.com and CDbaby.com. All you have to do is mail a bunch of CDs to them, and they will sell them and send a check to you from time to time. All you have to do is link from your site to your page on their site and the whole thing comes together pretty easily.

The best thing about using a site like one of these is that music lovers browse through, searching for the undiscovered gem and may, by chance, discover you! I can’t tell you how rewarding it is when someone I never met in a country I have never been to, buys one of my CDs because he found me in a Web store, listened to a track or two, found something that connected with him in the music that is very much connected with me, and parted with money that he probably worked very hard for. If I were signed to a major label, the whole thing would probably be a lot less rewarding.

Net Networking

You will want to promote your site by networking. Link from as many sites as you can. I write Articles (just like this one) for different sites from to time to time. No money changes hands but the whole thing works out because the website gets material and I get free promotion. It also helps me get my writing skills in order and organize my ideas on various subjects. Send your CD to Internet radio stations and music review sites.

A Word on Recording

The same computer technology that made the internet possible has also made recording simple and inexpensive. Ten years ago, not only did you have no place to market, promote and sell your CD, you also had no way to record it without spending some real cash. Computer technology has inspired thousands of engineers to open up studios in their houses or in other small spaces and you can get yourself recorded for a fraction of the cost these days because of this. As I said in one of my last Articles; no matter where you decide to record, make sure you are prepared before you go to the studio. The big and small studios both charge by the hour so make sure you have it together. If you want to research this subject a little more, check out my friend David Chambelin’s site: http://www.dbwproductions.com/ He produces and records various artists for a very reasonable price. He’ll even arrange your stuff and play on it for you. His site offers advice on how to prepare for your session.

Have Fun

The whole thing is a blast. You have nobody to blame if you can’t sell any CDs, and that’s part of the adventure. You get a chance to use your head, grow in the process and make friends around the world. What could be better than this?