Distributors:
How To Attract Them
&
How To Work With Them
Christopher Knab
FourFront Media & Music
Background Information
At a time in music business history when there is more product being
manufactured, promoted, and distributed than ever, the role of the distributor,
and their relationship with labels is an increasingly important one. The
purpose of making a record is to (hopefully) sell it. The following information
is intended to introduce the role of, and the relationships between Independent
Distributors, and Record Labels.
Types of Distributors
To begin with, there are several different kinds of distributors in
the US.
- One-Stop Distributors carry a wide selection of major
label
and select independent label product, and sell to Chain Stores,
Independent
Stores, and misc. other retail outlets that sell recorded music
product.
- Rackjobbers are companies that rent or lease space in
large
department type stores, and other mass marketing retail outlets.
They usually
carry only the best selling commercial product available,
concentrating
on major label product, and some independent label product with a
strong
regional presence.
- Independent Distributors are distributors of
Independent Label
product either on a regional basis, or more likely, as national
distributors.
The 1990's has seen as "alliance" of many regional
distributors
(I.N.D.I. & A.D.A.) bonding together to form larger
conglomerates,
representing many Independent Labels, and offering retailers a
wider variety
of product.
Distributor Roles
The primary job of a Distributor is to get CD's, Records, and
Tapes into retail outlets. They do this by working closely with
the record labels to promote and market their CD's, Records, and Tapes. Most
distributors regularly publish catalogs listing the labels they carry, and the
titles available. They accept product on a negotiable billing schedule
of between 60 to 120 days per invoice. They expect to receive a negotiated
number of "free goods" to be used as incentives for retailers
to carry the product, and also need "promotional copies" to be
used in-house, as well as to give away to contacts in the media, and at retail.
they can also arrange for "co-op" advertising, wherein the costs
of media ads are split between the record label and a retailer.
Record Label Roles
The primary job of a record label is to attract the attention
of distributors by having achieved a modicum of success on their
own, by selling product on consignment, or at live shows, and through
various mail order and direct sales methods. Having gotten their product
accepted by a distributor, the job of a record label is to work closely with
their distributor(s), providing them with information on successful
airplay, print media support, and live performance successes. In addition
the record labels create "Distributor One Sheets", or fact sheets
that include promotion and marketing plans, and list price information.The
record labels also provide the distributor with "P.O.P.'s" (Point of
Purchase) items, such as posters, flyers, cardboard standups etc., that can
be used for in-store display.
Working With Distributors
Finding Them
The National Association of Independent Record Distributors (NAIRD)
has an annual Directory available that lists Independent Distributors operating
in the United States.
Format
The CD is the preferred format for recorded product in most cases, with
vinyl and cassettes appropriate for certain "niche" musical genre.
The music should be professionally recorded. A good measuring stick is
to match the sound quality of the independent recording with the quality
of the material played on the radio.
What the Label Must Supply
A Record Label wishing to have their product carried by a Distributor
must have the following:
- Its own trademarked name
- Catalog numbers on each release (usually a 3 letter abbreviation followed
by the numbers, i.e. CJK415).
- A Universal Product Code: The Barcode on the back of the product. This
is required because most retail sales are now tracked through the Soundscan
technology that monitors retail sales. Note: For information on obtaining
a UPC code, contact the Uniform Code Council, Inc., 8163 Old Yankee Rd.
Suite J, Dayton, OH. 45456 (513-435-3870).
What A Distributor Wants To Know
This is the information a distributor cares about when deciding whether to carry
a label's product.
- Has the artist had any success with established mainstream labels?
- Does the artist have a following, if so, how well known are they?
- If the artist is unknown, what specific promotion ideas does the label have?
- Are there any well known "guest" musicians on the recording?
- Does the recording, and artwork meet the standards of the musical genre?
- Is there any current airplay on commercial or non-commercial radio?
- Will there be independent promotion on the release to retail and to radio?
- Has the artist hired a publicist, and/or what is the publicity campaign?
- Will the artist be touring in support of their release, and is there a schedule?
- Does the label have the financial resources to provide "co-op" advertising?
- Does the label have the financial resources to press additional product?
- Does the label have a salable "back catalog" of proven sellers?
- How much product from the label is already out in the stores?
- Does the label have other distributors selling the same product?
- What are the next releases from the label, and when are they coming out?
Shipping
The shipping charges are usually the burden of the label, but may be
negotiated after a label has established itself as a customer. Most national
distributors require an "exclusive" arrangement, making them
the sole distributor of a label's product.
Advertising Requirements
Many distributors have monthly newsletters, and/or update sheets, as
well as catalogs. They may require labels to advertise in them, with the
costs of the ad deducted from a particular invoice.
The Distributor One Sheet
The Distributor One Sheet is one page (8 1/2" x 11")
of basic information about the band, and includes:
- Label's logo and contact information
- Artist Name/Logo
- Catalog # and UPC code (Barcode)
- List price (i.e. $15.98) of each available format
- Release Date (to Radio)
- Street Date (for Retailers, if different from Release Date)
- A brief Artist background description
- Selling Points (Discounts, Marketing, and Promotion plans)
Promo Copies
All "Promotional" product should have the artwork "punched,
clipped, or drilled." This is to make sure that they are not returned
to the distributor as "cleans". "Cleans" are the name
for regular product sold in stores. Many people who receive "Promos"
have friends in retail or at distributors, and can exchange "cleans"
for CD's they personally want.
Pricing
Labels sell their CD's and Tapes to distributors for approximately 50%
of the list price of the release. For example a $15.98 list CD might be
purchased by the distributor for $8. An $9.98 cassette would be purchased
for $5.
Payment Terms
When an invoice becomes due for payment, the distributor may not necessarily
pay that invoice in full. For example, let's say a label has billed a distributor
for a total of $5,000 worth of product. Let's assume that $1,500 of this
product is still in their warehouse. This means that $3,500 worth of product
is out in the stores, some of which is probably still on the store's shelves,
unsold. The distributor is responsible for paying the $3,500 worth of product
placed (less a reserve of 15% to 20% for the label's product which may
be returned to the distributor by the stores.) The distributor would hopefully
send a check to the label for about $2,800 to $3,000.
Co-op Advertising
Co-op advertising is a way for record labels to pay for media ad space
with product, and is an effective way to use their inventory to promote
sales. For example, when a label wants to promote a certain artist's concert,
they approach a retailer through their distributor. The label will pay
for the cost of the ad, the retailer can deduct their agreed upon "buy-in"
of the label's product from their invoice with the distributor, while the
distributor then deducts the amount from their account with the label.
In return for this, the ad features the artist's release, with a mention
of the concert. The retailer, in additon to carrying the product (the buy-in),
also agrees to give it good placement in their store(s), and put the product
on sale for a limited time. Basically, this arrangement is a win/win situation
for all parties involved.
Returns
It is a standard practice that 100% of any defective and overstocked
product can be returned by the stores to the distributors. They insist
that every label they deal with accept this policy. If a specific title
from a label is deleted from their catalog, the label must notify the distributor,
and it can take up to one year for the distributor to get deleted product
back from the larger chain stores. These larger chains will withhold up
to 20% of their payables to distributors as a reserve against returns.
Shipping Instructions
A packing slip must be enclosed with each order sent from a label to
a distributor. This must include details on what was ordered, what has
been shipped, the number of cartons in the shipment, and the Purchase Order
number from the distributor. All product must be shrink wrapped. In most
cases, for CD's, the jewel box is the standard package.
Invoices are sent separately, through the mail. The invoice should include
an Invoice Number, invoice date, a detail of what was shipped, a ship date,
unit prices of each title/format sent. The distributors PO number, and
the total amount due, should also appear on the invoice. Each shipment
must have it's own invoice.
Summary
The distributor's job is to make the buyers at retail outlets aware
of a label's product. They use their sales tools; promos, one sheets, airplay,
press, and live performance reports to try and convince the buyers that
they should stock the product they carry. If a specific title sells, it
is the job of the distributor, in cooperation with the label to provide
the retailers with a continuous flow of the product. It is essential that
a label have a consistent, professional, and mutually respectful relationship
with their distributors. Selling recorded product is a team effort, and
that fact should never be forgotten. In the business of music, no one is
an island.
Christopher Knab
FourFront Media & Music
Throughout his twenty-five year career in the music business, Christopher Knab has
shared his experiences at many industry conventions and conferences, including the
New Music Seminar, the Northwest Area Music Business Conference, and numerous radio
industry seminars. Mr. Knab is also currently an instructor in the music/video business
program offered by the Art Institute of Seattle.
FourFront Media & Music
3825 34th Ave. W.
No. 7
Seattle, Washington 98199
(206) 282-6116
Chris@Knab.com
http://www.knab.com
