With all the challenges the music industry has faced over the last two decades – think piracy, digital downloads, the economics of streaming for example – artists and labels need a multitude of different options when it comes to music distribution to allow them to be flexible enough to keep their heads above water. Our label services team take a look at some of the most commonly used models.
Self-distribution
What once meant going to a pressing plant, getting your track cut to record and selling vinyl out of the boot of your car or cold-calling record shops is now facilitated by services like Bandcamp and direct-to-fan sites and services. Benefits include taking a higher percentage – or all – of the sales, being more flexible with scheduling releases, being able to sell merchandise in the same store, exchanging free downloads for email addresses and offering pay-what-you-want options.
For those pressing up vinyl, taking a portion of the copies to sell direct through such a platform can also reduce the pressure of relying on record stores to sell the entire run. Combined with promoting a release on networks like SoundCloud, YouTube and Facebook, this approach can give an artist or label unparalleled freedom. However, those wishing to go direct to a pressing plant to cut their vinyl will find that they get more expensive rates and slower turnaround times than if they use a distributor.
An increasing number of labels use self-distribution in tandem with the use of a digital distributor to have both their own sovereign storefront and widespread retail availability for their releases. Some offer exclusive material through their own store, or make it the priority site to harness those bigger revenue shares.
Issa – aka Jane Sibbery – first tried the pay-what-you-want model in 2005, before Radiohead brought the idea to prominence by using it to release their album ‘In Rainbows’. Sufjan Stevens reached the Top 50 on the Billboard Album Chart with his Bandcamp-exclusive ‘All Delighted People’ EP in 2010, showing that an artist with a big enough fanbase can do very well with this model.
P&D (Pressing & Distribution)
Here the artist label will handle everything except the pressing (manufacture) and distribution of a physical release. In today’s market, vinyl imprints will often work with a distributor, manufacturer and retailer rolled into one (Juno, Deejay.de etc) or a straight-up distributor/manufacturer (like Prime). A P&D deal enables them to release small runs where, depending on the deal, the label stumps up 50% of – or even pays nothing towards – the manufacturing cost and the rest is fronted by the distributor/manufacturer to be recouped from sales.
Licensing deal
In this model, the label licenses the recording from the artist for a fixed period of time – after which all the rights for the master recording revert to the artist. In this way, an artist can extract all the value that comes with working with an established record label, but eventually be in control of their music in the long-run. As the label won’t profit from the recordings in perpetuity, they will not invest in the production of the recording, and any advance will be lower than if they owned the master recordings forever. As such, it’s a model that works for an artist who has the means to deliver a finished product without the need for label investment.
The advantages of this model include the artist (theoretically) being able to exercise total creative control over the project, and for them to avoid their music being synced to adverts, TV programmes or films that they would normally object to (after the license term expires, that is).
Royalty deal
With this fairly standard model, the record label covers the costs of the recording of music, and pressing, distribution, marketing, promotion and press – with the artist receiving a percentage of the record sales. The record label then owns the master recording (and the rights to ‘reproduce’ it via downloads and physical sales) but not the publishing for the release (although major labels have their own publishing divisions too).
The 360 model
As the more traditional revenue streams from recorded music continued to dwindle, an increasing number of labels (and promoters) have sought to sign artists to so-called 360-degree models, whereby they will control (and profit from) every aspect of an artist’s career – from touring to merchandise and catalogue exploitation. In reality, most of these deals are said to be more like 270-degree models, whereby most revenue streams are included in the deal, but not every single one.
Although it’s generally more a major label model, it could be said that some independent labels who have a roster of artists and also do bookings and merchandise are exercising this model too. Madonna was one of the first major artists to sign such a deal when she joined Live Nation in 2007 to the tune of $120m over 10 years.
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