Monday, August 23, 2010

Music Business/Law Tips - "Distribution" (Part 1)

The key to selling records is to find a way to place them in stores. This is where the concept of distribution comes into play. Distribution can come in the form of either major or independent or online distribution. Since major labels have distribution down to a science, that will be the focus of this article.

Assuming that an artist signs to a major label, the major label will then distribute the finished record. Another scenario for major label distribution is for an independent label to be distributed through a major label. This usually happens only if the independent label has several acts on its roster (distributors are interested in a steady flow of product). Occasionally, a major label will sign an act off an indie and re-release the record under the major label banner.

Major labels utilize major label distribution systems to position records in physical and online stores. These are giant conglomerates known as "the big 4" which consist of: SONY/BMG, EMI, UNI, and WMG. "The big 4" in turn distribute a multitude of major and independent labels. Each of "the big 4" has a regional warehouse in each major metropolitan area from which the records are distributed to local record stores and other outlets. It is the distributor's obligation to (1) wherehouse inventory, (2) solicit sales from stores, (3) fill orders, (4) process returns (unsold records), (5) bill/collect, and (6) generate sales reports.

[part 2 next week]

Ben McLane Esq

1 comment:

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