"How Do I Get My Label Distributed"
This document was prepared by Twinbrook Music
It originally appeared on the Music Business Solutions Web site
http://www.mbsolutions.com
Reprinted with permission.
If some of this seems ridiculously basic, you're way
ahead of the game!
1. What's the first
step?
Send us a sample of your product. Most distributors accept
finished product for consideration only. CD's are the format of
choice. Most distributors rarely consider cassette only releases for
distribution, and they no longer deal with vinyl, At the moment, Most
distributors are strictly a distributors and not a label (i.e. they
do not manufacture finished CD's from your master)
The music should be professionally recorded, and the artwork
should be appropriate for the genre.
If you are pressing your own CD s and selling them, in
distributor's eyes you are a label. A label must have its own name,
catalog numbers, and Universal Product Code. We recommend a trademark
search when naming your company. When designing the packaging, the
catalog number (preferably consisting of a three letter label
abbreviation followed by the number, [or instance ARC 1001) should be
clearly visible on the spines, The catalog number should be the same
for CD and Cassette. The UPC Code Bar Code) must be on the back cover
of the CD and Cassette. Most distributors cannot distribute any
product that is not bar coded, All of their important accounts
currently insist on bar codes to track product. If you already have
salable product manufactured without bar codes, this can be remedied
by having decals printed with the appropriate codes.
For information on obtaining our own UPC code, Contact The Uniform
Code Council, Inc. 8163 Old Yankee Road, Suite J, Dayton, 0H 45456
(513) 435 3870
2. How do distributors decide what
to pick up for distribution?
The most important thing to remember is that the distributor is
your customer. They purchase pre recorded music that they believe
they can sell to stores, who then sell to the consumer. There are a
great number of factors that weigh upon their decision to distribute
a particular recording or catalog. Some of the most important
questions they ask upon presentation of finished product are:
- Is the artist well known with an established following?
- Does the artist have a sales track record in the mainstream
record trade?
- Is there independent radio and/or retail promotion?
- Is there a co-op ad budget? (see #10 below)
- If this is a new artist, what sort of promotion can they
expect from the label or the artist that will help sell records?
- Is the artist actively performing or touring in their area?
- Is there any current radio activity on this title?
- Are there any well known guest musicians?
- Does the label have the resources to press enough product if
the demand becomes great?
- What are the label's upcoming releases, and when can they
expect them?
- Does the label have a salable back catalog?
- Does the label also sell to competing distributors in their
territory?
- How much of the catalog is already on store shelves?
- Does the quality of the recording, and the artwork measure up
to the standards of its genre?
All of these concerns will have a bearing on the distributor's
decision to pick up a label for distribution. Unfortunately, it takes
a lot more than just the inherent quality of the music to sell
records.
3. Suppose the distributor has
decided to distribute your label-what next?
The distributor will place an initial purchase order for goods to
be shipped to the distributor's warehouse.
The distributor may need a letter from the label authorizing our
exclusivity for certain accounts in their territory.
Some distributors ask that new labels advertise a page in their
monthly new release mailing which goes out to all their nearly
accounts. The distributor will charge back the cost of this
advertising against our account with you.
In order for them to effectively solicit your product, most
distributors ask that you provide them with a suitable quantity of
"One Sheets" and promotional goods with your initial shipment.
The "One Sheet" is a single 8 1/2" x 11" page describing your
release in the terms that you feel will present your product in the
most favorable light to the store buyer. This can include
descriptions of the music, a list of the musicians, a reproduction of
the cover, reviews, etc. The most important function of the "One
Sheet" Is for data entry, so it MUST include the catalog number and
UPC code (either the numbers or a reproduction of the bar code will
suffice). Most distributors will be happy to provide you with
examples of effective "OneSheets" if you are interested.
Distributors prefer at least a box of promotional CDs (Also known
as DJ's). The artwork should be clipped, punched, drilled or
otherwise marked to discourage stores from returning promotional
goods for credit. In store play is a great way to sell CD's. A lot of
stores try a new CD only if the distributor can furnish them with an
in store promo copy. In the long term it is not practical try to save
a few dollars by not sending promos. No one will buy your music
without an idea of what it sounds like.
4. What about your price to the
distributor?
As a general rule of thumb, labels sell to the distributor at 50%
of the list price. The most common price points for front line new
releases are:
For a $14.98 list CD, the distributor pays $7.50, and for an $8.98
list cassette, they pay $4.50. Most distributors will tell you have
that lower price points will stimulate sales on new artists and
catalogue re-issues. If you sell CD's by mail order, the distributor
will want you to charge list price plus a handling charge, in order
to provide consumers the incentive to purchase your product through
record stores.
5. How does your label get
paid?
Some distributor's terms for labels who have established
themselves by releasing product which consistently sells through at
retail and is not returned by the distributor's customers pay on a 2%
60 days/end of month. That is, if the distributor receives your
invoice on January 10, the invoice will be paid, with a 2% prompt
payment discount taken on March 31.
Labels just getting started, or labels coming into a distributor's
system for the first time can expect to be paid down to the
distributor's floor inventory level plus an allowance for product
still on store shelves on the above explained 60 day end of month
basis. Let's say, for example, a label has billed a distributor for a
total of $5,000 worth of product. let's then assume that $1,500 worth
of this product remains in the distributor's warehouse at the end of
the first billing cycle. This means that the distributor has "placed"
$3,500 worth of product at retail, some of which still remains on the
stores' shelves unsold. The distributor is responsible for paying for
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 label should look for a check for about $2,800 to $3,000.
Payment for Christmas product is generally made at the end of
March, after all returns have been taken from the stores and all
excess product has been returned by the distributor to the label.
6. Returns?
One of the unique and unfortunate aspects of the American record
business is the industry-wide returns policy. All goods must be 100%
guaranteed against defects and overstocks, returnable for full credit
for any reason. All the independent distributors, must extend a 100%
guarantee against defectives and overstocks to all of our customers.
We regularly accept returns from our customers, issuing full credit
for all acceptable product returned. If the distributor deletes a
label from their roster, it will take them from 6 to 12 months to
receive all the returns. Additionally, some of the larger chains
currently practice withholding up to 20% of their payables to
distributors as a reserve against returns.
From time to time, the distributor will return defective and
overstocked product to their labels for full credit. Distributors
hate returns, so they should try to order conservatively and often.
7. Shipping and
Invoices?
For all shipments to the distributors, you should enclose a
packing slip detailing what was ordered, what has been shipped, the
number of cartons in the shipment, and the Distributor Purchase Order
number. CDs and cassettes should be shrink wrapped and in salable
condition. CD's should be sent jewel box only. Product sent in
blister packs or longbox will often be subject to a repackaging
charge. Invoices should be sent separately, under separate cover, to
the distributor's Accounts Payable. The invoice should include an
invoice number, invoice date, a detail of what was shipped, a ship
date, unit prices, the distributor's Purchase Order number, and the
total amount due. Each shipment should have its own invoice; do not
bill separate shipments on the same invoice. Often times this is
ABSOLUTELY NECESSARY for any payment to be made. The distributor
warehouse guys don't usually write checks from your packing slips; it
is imperative. that they have the proper documentation to process
payment.
8. Who is responsible for
promotion?
Generally, distributors look to the labels to provide most of the
promotion directed toward the consumer. This includes getting the
records on radio, national advertising, publicity to print and other
media. The object is to get people to go to their local record store
looking to buy titles on your label.
9. What can I expect from the
distributor?
The distributor's responsibility is to make the buyers in their
territory aware of your releases, using their sales tools, promos,
one sheets, airplay reports, touring information, etc., to convince
the buyers that they should stock your product. The distributor can
provide a flow of information to the retailers so that they can order
the product that suits their clientele, and anticipate consumer
demand. Many distributors don't provide store by store sales reports,
but they may run an inventory report by request to gauge product
placement and estimate sell through. If your title is a hit, it is
the distributor's responsibility to make sure that their accounts are
serviced with a consistent product flow. When you call them with
leads, stores that are interested in your product, they should follow
them up right away. Additionally, they may arrange co op advertising
for radio and local print media.
10. What is Co-op
advertising?
Co-op advertising is a method by which a label can effectively pay
for media space with product, preserving cash flow and maximizing the
use of excess inventory. For example if you want to run an ad in a
local newspaper advertising your new release and promote a local
performance by your artist, the retailer will purchase the ad, deduct
the cost of the media buy from its account with the distributor, then
the distributor will deduct this amount from its account with the
label. In return, the ad features your new release and the retailer
is expected to make a significant "buy-in" of the product, give it
favorable placement (end racks, etc.) and put the product on sale for
a specified time period. This is a great way to get more media and
retail exposure for your money. However, the distributors balance
with the label should be significant enough to support this
expenditure.
11. What if you take your label to
another distributor?
For a variety of reasons, labels and distributors part ways. If
you decide to have a third party distributor sell your product into
your first distributor's account base you should expect the
following:
- The first distributor should ship its floor inventory to your
new distributor, or to any location that you decide. Shipping will
be paid by the label.
- The label should issue the first distributor credit for the
product shipped to your new distributor.
- The first distributor should pay the account down to
approximately 15% of the previous total. This is to allow the
distributor to make a deletion announcement to its accounts and to
allow the stores return any of the labels' product to the
distributor.
- After 6 months, the first distributor should zero its account,
making one final return of product sent back to it by the stores.
12. How can you help the
distributor sell more records?
Keep them informed of your artist's whereabouts, tour schedules,
etc. They need advance notice when your artist is playing in their
territory. Then they can effectively solicit the stores to pay more
attention to your product. If your artists are good with people, send
them into the stores to meet with the buyers. Send them your radio
tracking so that they know what stations are playing your music.
13. What is their territory? What
about the rest of the country?
Many distributors belong to a coalition of independent regional
distributors, and they can recommend that your label be picked up by
the other members if potential national sales can justify their
involvement.
14. What about
overseas?
Does the distributor do any export business to areas outside North
America? Some distributors look to the labels to provide them with a
discount price for export, which they should pass on directly to
their foreign territory customers, (who often bear all the freight
and promotional expenses). Because export sales are one way (no
returns) this can work out to be a pretty good deal.
Peter Spellman is Director of Music Business
Solutions, a provider of music business info products, training and
consulting, and Career Development Coordinator at Berklee College of
Music in Boston. He is author of the book, Music Biz Know-How:
Do-it-Yourself Strategies for Independent Music Success (Bootstrap
Press Intl.) and percussionist for Friend Planet, a multimedia
world music ensemble.
success@mbsolutions.com
