Distribution

Distribution

Ok, so the majority of your distribution is going to be done electronically now. Going forward, that is only going to increase, but that doesn’t mean you don’t need to understand the distribution of physical records and the people involved. Music consumers do still love a physical record or CD, vinyl is making a massive comeback and if fans have downloaded your music and love it, they want to own it in a holdable and touchable form. So, although you might find distributing physical records is a small percentage of your business, you do still need to understand it. Here are the four different distribution methods and who those distributors are.

 

Wholesale

Wholesale distribution is by far the biggest player here. These guys are just the same as any other wholesale business. They buy from the creator or the manufacturing company ie your record label, and they sell the product on to retailers. These are the ones buying and selling the mass market leaders, and that makes them the ones who can distribute your record the furthest and in the biggest numbers. They sell to major record stores and big businesses who carry record stock.

 

Racks

When you go into the supermarket and you see the racks of CDs you presume it’s the supermarket selling those CDs, right? It isn’t. The supermarket rents out space in the store to rack sellers, who bring in their racks of CDs and sell from this lucrative platform. There’s a good reason for this. If you think about how many different lines and products supermarkets carry these days, it’s impossible for store buyers to be expert in every area. And that’s where rack sellers come in. They have a better understanding of what will sell and in what kind of numbers.

 

One Stop

One stop distributors pick up the small slack from the majors. These guys buy their CDs from the big distributors, as mentioned above, and then sell them on to small independent stores. These independent retailers buy smaller quantities of product than big business retailers and aren’t worth the bother for the major distributors. And that’s where these guys step in. Sadly, there is less and less call for one stops as independent record stores disappear from our towns and cities, but they do still serve a purpose for now.

 

Licensees

A licensee is someone who goes one step further than a distributor and actually manufactures and then distributes the records themselves. These guys sign a licensing agreement with the record label and then create their own product and sell it. This most typically happens in foreign distribution where a licensee from another country will buy the right to make and sell the product overseas.

So, why does all this matter? Well, how your record is distributed has a direct effect on how much you earn. Royalties differ depending on how your music is sold. Digital sales have a different rate of royalty to physical sales, and sales though a major distributor and a licensee for example, also have a different royalty rate.

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