Distribution Methods – Pros and Cons

Traditional Record Label deal with in-house distribution experts

Pros

Reputation and influence: Many record labels, especially major labels have well-established influence and connections in the music industry. They are better positioned to secure licensing and publishing deals, shows at larger venues and festivals, media coverage, radio plays, and other opportunities and also manage hard copy (Vinyl, CDs) production and distribution of your music.

Existing network and connections: One significant benefit of signing with a label is their existing network. It can present major opportunities for you and your music. Without a label, your network and reach to larger audiences can be limited. Established labels will have a larger fanbase. They may also have relationships with booking agents, music venues, publishing companies, PR companies, and other music industry professionals.

Available resources and budget: Established record labels have the resources and funding to provide support for mastering, distribution, album artwork creation, marketing, merchandise, touring, music videos, and other expenses. However, the budget and resources available depend on the label.

Implemented marketing strategy: Signing with a record label with a robust marketing strategy will increase your music sales, help you reach new fans, and boost your music career. Also, a label may have a large email list, regularly send newsletters, have a strong social media presence, music media support, and more. In addition, a label will have music industry experience.

Cons

Less personal attention: Resources of a record label are spread among many acts so a more limited personal attention from the label and often high staff turnover.

Limited creative control: Signing with a record label gives them control over your music. The label can make deals and decisions with your music without your approval. They also have full control over distribution, marketing, artwork, messaging, and more. However, the control over your music and brand depends on the terms set in the contract.

Transfer of copyright ownership: The record label owns the master rights to your music when you sign a deal. They have the freedom to negotiate music licensing and publishing deals without your approval. As a result, they can keep more profits generated from these deals.

Fewer profits: Records labels take a percentage of the profits generated from music sales, streams, licensing deals, and other revenue sources. Also, some labels use the royalties generated from music sales to pay for mastering, promotional mailers, and other expenses associated with the release.

Bad contract deals: Many independent record labels have artist-friendly contracts. However, major record labels are known to have contract deals that give the artist a lesser percentage of royalties. Also, signing with a label means you have to deal with these complicated contracts and expensive layers if needed. This means limited negotiating leverage for the artist.

Digital online distribution agents like cdbaby, distrokid

Pros

Will help independent artists without taking too much profit. When your album is sold online you will only have to share a small percentage with an online music distributor, but the cut you have to funnel to them will almost always be less than paying a physical distributor and a brick and mortar shop.

Online music services offered to independent musicians: Digital distribution companies can now deliver their music to digital music stores, music platforms, and streaming services without the need for the artist to have a record label behind them.

They do the leg work: Digital distribution companies understand how technology can be used to distribute music. They can respond to the algorithms and read the data accordingly so they can mastermind a campaign to maximise downloads or streams.

Relatively cheap: Digital Distribution companies  require some recompense for their services but in general the deals are now heavily weighted in the artist’s favour.

Cons

Will take some of the money:  Online digital distribution companies will require a certain percentage of the profit and sales made but this is historically much, much less than the record labels although it does mean the artist does not retain %100 control.

Which one?: Many of the digital distribution companies offer different deals which means independent artists may have to do a lot of research to find the deal that suits them best and they may get it wrong.

Totally independent/DIY artist

Pros

You can keep prices friendly. One common complaint cited by music fans about CDs/Vinyls is that the prices are sky high. Because DIY artists don’t have to share so much of the earnings and because they don’t have to consult with a distributor/shop to set the prices, they can make their album price buyer friendly.

100% ownership of your music: Independent artists own the master rights to their music. They also have the freedom to negotiate music licensing and publishing deals. Moreover, they don’t have to worry about confusing contracts, expensive lawyers, and signing over their music rights.

Keep 100% of the profits: DIY artists keep 100% of the profits generated from music sales, streams, licensing deals, merchandise, and other revenue sources.

100% creative control: Independent artists have complete control over the direction of their music. They also have full control over distribution, marketing, artwork, messaging, deadlines, and more. Moreover, an independent artist has free will to make decisions about their creative vision. It’s the ideal scenario for many artists.

It keeps the costs down. When DIY release an album online, you don’t have to pay for pressing or artwork printing, which makes up the bulk of the costs associated with releasing a record (after the recording, of course). All you need for a digital release is a website set up that is able to handle the download demands for your album.

It’s fast and easy. When they release a physical album, they have to deal with designers (who are always late), manufacturers (who are always late), distributors (who always seem to want to push back your release date for one reason or another) and so on. Independent artists need a long lead time to make sure everything falls into place the way they want it to, and a lot of patience to deal with things when they invariably don’t. With a digital album, releasing the tracks can be as easy and fast as point and click.

Cons

Competition is thick. “Competition is fierce” is the cliche, but competition is thick is a better way of describing what is out there on the internet. How the net bears up under the strain of the glut of bad music it contains is a mystery, but even if a DIY artist has the best songs in the world, they still have to get people to find them among the hundreds of thousands of websites hosted by people whose HTML is better than their songwriting.

Limited resources and budget: Funding mastering, distribution, marketing, merchandise, touring, and other expenses are expensive. Many independent artists don’t have the resources and money a record label can provide.

Limited time: Pursuing the independent artist route is time-consuming. Self-releasing music can seem like a full-time job. It requires a lot of time to set up distribution, create all the release assets, develop a marketing strategy, track sales, book shows, and everything else associated with releasing music. All this extra work also takes away valuable studio time.

Limited music business experience: Learning the ropes of the music business is challenging as a DIY artist. It takes time and experience to learn all aspects of the music business. There are a lot of parts to manage, changing trends, music laws, and much more. It’s a complex world! It can also be an expensive lesson to figure out what works and what doesn’t.

There are less people working to sell your music. When there is physical distribution, you have people actively working to sell your music to shops, who actively work to sell your music to people. This is all in addition to any press and radio they might have going. On the net, independent artists are flying blind and all alone.

Limited network: DIY artists starting their music career have a limited network of fans and industry contacts. Whereas record labels will have a larger fanbase and connections with music industry professionals such as promoters, booking agents, media, etc.

Promotion is a nightmare. Some of the larger music publications still show some resistance to covering online-only or a new artist in particular. Yes, a band like Radiohead can drum up a lot of press coverage when they release an album online, but they already have a lot of cache in the bank. Finding a good web promotion company can be tough, and promoting something on the net is hard work.

Significance

In conclusion it’s clear that each option has its own advantages and disadvantages depending on the approach you choose to take as an artist. When working completely independently gives a massive amount of freedom and creative control, this comes at the cost of requiring a lot more time, effort and commitment to be put into a project. Whereas if choosing to sign to a record label a lot of this work is taken off of you so you can focus on actually creating the music, this however is at the substantial cost of needing to pay back the people who work on distributing your work, causing a significant decrease in your profits from releasing music. In some ways this could raise the use of online distribution companies as a comfortable middle ground, as they still allow a lot of creative freedom without as much cost for releases, however this option also has its own flaws, with many different companies on offer in a competitive market it can be difficult to narrow it down to the best one for you, especially with such a wide range of techniques and payments. Overall, this shows that it is very important that an artist looking to release music considers all these options and how they apply to their own requirements, as each artist is different and has a different amount of time and funds available to them.

Distribution – Video notes

Video 1 – Part 1

https://drive.google.com/open?id=115a60-4WGbSCW7I3HPpK5ccRM2wjbwv9

Traditional Method of Distribution

  • Busking, self managing, small artist
  • Noticed by record label
  • Music is recorded in studio
  • Tape is sent to vinyl factory
  • Vinyls are pressed
  • Vinyls are distributed to stores and radios
  • Customers can buy the vinyls and listen limitlessly
  • Artist gains recognition and can grow enough to perform live, continuing to grow their audience

Video 2 – Part 2

https://drive.google.com/open?id=1m8HGsU5vxeFpIfJ6bYdQXlDV-b-Q9INk

Modern Method of Distribution

  • Can all be done within home, recording, mixing, editing, publishing, marketing
  • Is cheaper quicker and easier
  • However a much more crowded marketplace meaning it is more important to be able to stand out as an artist

Video 3 – How the Music Industry works

https://www.youtube.com/watch?v=6fa8lJKTy0I&t=41s 

Typical record deal

  • Label gives artists an advance ($250000)
  • Artist records and sells the album ($10 each giving $5million returns)
  • Label takes around 85% of total sales, leaving the artists with the remaining minus production costs and the advance (-$425000 debt)

Video 4 – What is distribution – then and now

https://www.youtube.com/watch?v=71SwPFNi1Xo 

Traditional Distribution

  • Primarily physical
  • Music distribution companies sign deals with artists/labels to have the right to sell the music

Digital Distribution

  • Music is now released through streaming platforms and online stores
  • Artists receive royalties depending on how much and where music is listened to
  • This comes with the benefit of overall increased speed and lower upfront costs, as well as receiving analytics on who’s listening to the music

Video 5 – who are the Digital Distributors – who’s the best and what do they do?

https://www.youtube.com/watch?v=h_futqlZGa8 

Focal Digital Distributors

  • CD Baby
    • 9% commision
    • $10 per track
  • Distrokid
    • 0% commision
    • $20 a year

Production and Ownership Essay

TASK 6: MUSIC INDUSTRY – QUESTION/ESSAY TEMPLATE 

  1. Discuss the pros and cons of traditional media production/ownership and compare to those of new emerging models of music production/ownership (@750 words).

 

Suggested timeline for this essay

 

  • 1 HOUR RESEARCH
  • ½ HOUR PLANNING
  • 1 HOUR WRITING
  • ½ HOUR PROOFING
  • SUBMIT

 

 

Ownership, within the music industry, covers the rights and ability to earn money from music, and it is a scene that is constantly changing. 

Traditionally artists would sign contracts with record labels to have their work distributed, earning money for their music in exchange for the label retaining all rights to it’s distribution and marketing. However more recently, alongside the growth of technology and the impact it has on our lives the approach to music distribution and ownership has changed as many aspects of music publication have become much more accessible to the public. This digitalisation and democratisation have caused artists to turn to different methods of distribution, signing to smaller Indie labels or producing their music completely independently rather than signing to a larger conglomerate label.

 

Traditionally, an artist will be signed to one of the big three conglomerate labels of the music industry, Warner Music Group (WMG), Universal Music Group (UMG) or Sony BMG (or one of their subsidiaries). These three companies own around ⅔ of the overall market share of the industry and as a result of this have a tight grasp of the industry and strong influence on it. Many artists will sign to these labels due to their well established grasp and back catalogue of successful artists, with promises of success and publicity, among them working with massive artists such as Taylor Swift, Lady Gaga and The Beatles. Their power is further demonstrated through how, in 2012, UMG bought Electronic Music Industries (EMI) for 1.9 million USD, another company previously considered a fourth contender in this group, showing just how powerful they could become when starting to merge together. However, this move by UMG to expand their power also caused some backlash from artists, many switching to smaller labels in protest, considering how the big three often demand a higher share of profits from each artists’ success than independent labels do. This displays how artists are actively choosing to challenge the unfair deals of the conglomerates and are, as a result, transforming the industry.

Alternatively, more recently many artists have begun signing with smaller and independent record labels (often called the “indies”), often specialising in specific genres and styles and appealing to artists through having more personal experience in the industry. Due to their smaller size they will often find some difficulty as a business to begin with, especially when competing against big conglomerate companies, but just because they’re smaller doesn’t mean they can’t be successful. Transgressive Records are a good example of this, over 15 years they went from a couple of friends with £1,000 and little experience as a record label to being called “Britain’s definitive indie label for the 21st Century”. Over this time they stayed loyal to their motives, giving honest feedback and always doing what was best for the artist even if it appeared unconventional. They act as great examples of how with commitment and dedication a small record label can grow to be greatly successful in the industry and that size does not limit your success, painting the picture of how indie labels can offer much more personalised management for their artists and create a more tailored deal for the artist’s individual needs than larger conglomerate labels can afford to.

 

Even more recently, however, a third approach to the industry has emerged, utilising the growing capabilities of digital and converged technologies when creating and distributing music artists can now release their work online completely independently. As the equipment needed to record, create, share and release music becomes increasingly available to the public many artists are shown to be taking advantage of these converged technologies to create a career for themselves. Alongside the wide reach of social media these DIY artists – such as Hardy Caprio, a university student producing music in his free time – can now distribute their music to a wide and expansive audience at no cost. This democratisation of music production introduces a new level of competition to record labels who previously relied on the exclusivity of the industry in order to gain artists, creating yet another defining line between the older, traditional, record label models and the newer, emerging, more independent ones.

 

However the freedom of DIY artists comes with it’s own downsides; as much of their music is released openly to the public it is much harder to defend from issues such as piracy. One perspective on this issue can be seen regarding royalty-free/stock music artists, who create music especially to be licensed for use in film, television, radio or other media. These artists will upload their music to online libraries so as to have the rights to use purchased, with the libraries’ owner taking a portion of their profits. This purchasing of the music’s rights-of-use through online libraries means that the original artists are much more difficult to track back to from where their music is heard. This means that whilst they still make profits from this work, it questions whether they are receiving the full recognition that they deserve, despite the wide audiences their work is reaching. Displaying how despite the freedom gained from emerging digital production technologies, this can come at the price of the artist’s recognition and create issues regarding their rights and ownership in a much more saturated market.

The issue of ownership and rights to music is not exclusive to DIY artists. The company Kobalt, specializing in the distribution of music in a more modern, online scene has addressed the issues surrounding this topic, “Kobalt’s global technology platform tracks and collects royalties for the billions of micro-payments per song in digital music today”. Kobalt are aware of the issues concerning piracy and illegal distribution of music and take actions to prevent it, furthering their success and appeal to artists by doing so. This addresses many of the concerns of the modern production and ownership models, with the company actively recognising and working on these issues for their artists and therefore creating a fair and healthy relationship between the label and artist by helping them earn what they deserve.

Despite Kobalt’s promises of protection to their artists however, there remain issues in this area concerning the platforms themselves on which artists distribute their music. Spotify is one of these platforms, one of the most successful music streaming businesses and worth over $19 billion, however with this power they are held responsible for paying artists correctly for their work, a responsibility they have been found failing to fulfil on occasion. In 2018 Spotify was sued by Wixen for unpaid royalties to artists, seeking damages of $150,000 per song for 10,000 songs. This highlights how easily artists can lose track of the money they are owed through online audiences and how important it is for artists to be able to trust the companies distributing their music, another example of the risks that come alongside the freedom of new technologies in a new industry model.

 

In conclusion, the music industry continues to be a complicated and ever changing landscape, as the decisions artists face when it comes to ownership and production remain massively important to their career yet offer a much wider range of options than ever before, each choice holding its own positives and negatives regarding artistic freedom, audience reach and recognition for your work.

The Big 3 Conglomerates

We were next asked to look into more specific examples of labels/distributors in order to compare them to one another

Music Ownership – Kobalt Case Study Questions

 

Questions:

    1. Who owns the music in a traditional record deal?
      The record label
    2. How many major labels are there and what percentage of western music do they own?
      Three labels own over half of western music
    3. Which is the biggest label?
      Universal
    4. According to Nick Raphael (Capitol Records) is the most important job of a record label?
      To find talent and repertoire
    5. Why do artists feel that traditional music contracts are unfair?
      They’re heavily weighted towards the companies
    6. What did Radiohead do that disrupted the music industry once they were released from their contract with EMI?
      They released an album online themselves and allowed fans to pay whatever they
      wanted
    7. What does Kobalt do for well known artists such as Snow Patrol?
      They allow the artists to retain the rights to the music
    8. What services is it now offering new and upcoming artists?
      To create and release music under a label without sacrificing your rights to the
      music
    9. What is the major label’s best defense against Kobalt?
      They can’t offer as much development and growth for smaller artists
    10. Why is the major labels’ back catalogue so important?
      It creates the income that allows them to continue finding and creating new artists
    11. How are new artists now emerging without the help of a record label?
      Through social media platforms
    12. In what way are fans powerful in promoting artists?
      They repost music and share it in the same way as a label might without costing
      anything
    13. How is the record contract signed by Jacob Whiteside & BMG different from traditional deals?
      Jacob retains all rights to the music