Part I: Distribution and Doing It Yourself

You can sell your music yourself right to your fans, on CDs you mail out of your home, from the trunk of your car, from a knapsack or on a collapsible table at your concerts or on a street corner. Direct selling has some real advantages—piracy is practically impossible, and as long as you track your inventory well, theft and even damage can be kept to a minimum. You keep all the money, other than your expenses. You can even decide who gets to be your customer.

But if you want help selling, if you want other people to sell or even give away your music for you, you have to get the music into their hands. That’s distribution: getting your product into the hands of other people who sell it for you. It costs, because there’s no way people are going to do the work of selling your music unless you pay them somehow, and it costs to get the music into their hands. How are you going to decide who should sell your music for you and under what deal terms? How do you get them the music, how will it be stored, how quickly and effectively can stock be replenished? How will you track the process, audit them to make sure they aren’t making mistakes or skimming? You’ll need to communicate with them about errors and suggest how you want your music sold. There’s a lot to keep track of when distributing, which is why musicians and labels traditionally hired experts, distributors, and paid them (often with a percentage) for their full-time efforts.

The digital music revolution changed many things: you don’t have to make CDs or vinyl or cassettes any more; you only have to make one unit and then you can duplicate it instantly, infinitely; you don’t have to store copies or even make them before you sell them; you don’t have to ship anything physical, and the cost of “shipping” the music is negligible per copy; there’s no such thing as damage, and if something goes wrong, replacement costs almost nothing extra. Even “returns” can be dispensed with, in some cases. But it’s still distribution, and the core problems remain: who do you get to sell your music and under what deal terms? How do you get them the music, how do you track the process? Once again, it’s time to call in the experts, the distributors who specialize in this new digital world, the digital distributor.

A word about doing it yourself

Right now, millions of people are their own digital vendors, selling their music off their Websites, using PayPal or accepting checks in the mail and using file transfers to get the music to their fans case-by-case. That works if you have a few fans, but if you have hundreds, thousands or more, it gets expensive: your Website might not be able to handle the traffic, downloading and bandwidth costs could wipe out profits, as might the costs of credit card processing, etc. Taxes and Internet vending laws can keep you up nights, too.

But by 2008, a few key stores have emerged as the “big guns” of online music retail, and they’re the only ones attracting customers in huge numbers and generating the sales revenue. So if you want to be your own digital distributor, you need to find some way to get your music into iTunes, eMusic, Rhapsody, Napster, Beatport, AmazonMP3 and, in the case of more specialized music, a few key genre-specific online stores that attract fans of certain types of music.

Many of these stores will not work with individual artists or even small labels. They just won’t do it, as a matter of policy. Remember, every time a store sets up with a distributor, there has to be a contract, there has to be auditing tools, a relationship must be in place, the deal terms. The stores have enormous businesses to run, they have to be able to count on the music coming on time, in the proper format, with all the legal bases covered. When it comes time to pay royalties, the stores have to issue accounting statements and checks. iTunes, for instance, would have to employ a staff of hundreds or even thousands to set up and manage deals with individual bands and artists. Even labels with less than 100 releases might be too small to warrant that kind of commitment. The legal exposure alone could cripple iTunes. So they are very, very picky about doing deals with labels directly: they prefer distributors. It’s pretty much impossible to get into iTunes on your own.

So even though in this day of incredibly cheap and available options for creating your music, for recording it, for mixing it, mastering it, producing it and even marketing and promoting it, the one thing you can’t do on your own is distribute it, not to the top digital music retailers in the world. You’re going to need a digital distributor for help.

If you want your music up for sale in iTunes, Rhapsody, Napster, AmazonMP3, eMusic, Amie Street, Zune, BestBuy.com or any of the stores that have emerged as “big guns,” you either have to build a direct relationship with each one of them, or go with a digital distributor. Most people can’t do it on their own: as I wrote in Part I, stores simply won’t set up a deal with you, as a matter of policy, unless you’re big enough (around 200 releases or with some top-tier material already proven to generate considerable revenue, so as to attract the stores’ attentions). If you’re that big, you have your own legal staff, have been in this business a while and probably don’t need any advice from me.

So if you are a small label or individual artist, you’re going to have to go with a digital distributor. How do you pick one?

Aggregators

The phrase “digital distribution” can confuse: after all, aren’t CDs digital media, and haven’t they been distributed for decades? The companies that sprang up over the last few years to deliver digital music over the Internet to stores that sold downloads or streams call themselves “aggregators.” They aggregate music and materials from lots of individuals and small labels and deliver them in regular packages (weekly, daily, nightly, however they batched them together). As an individual musician or small label, you’d negotiate a deal with the aggregator to deliver the music and data and collect sales figures and earnings on your behalf. The aggregator already had the infrastructure to deliver your content to the stores, so you had to work out some way of getting your music to the aggregator (mail a disk, send the masters FedEx, etc.). Then, when the stores report sales of your music and send money, the aggregator passes it on to you. For all this service, you would pay them something.

Aggregators are in a pretty good position: since the “big gun” stores won’t do deals with individuals or small labels but will work with giant aggregators, they’re in the driver’s seat. They were “gatekeepers,” since you can’t get your music for sale in the big stores without them. Furthermore, aggregators were born into a very well established music business that has more than a hundred years of experience with distribution. There was ample opportunity to set up deals and terms that resembled traditional physical distribution.

So if you go with an aggregator, you’ll probably enter into a deal with them that looks a lot like the deals traditional physical distributors used: you pay an ingestion fee of some kind, are responsible for delivering your product to the aggregator somehow at your own expense, and then the aggregator takes a percentage of your sales, for however long you’re in the stores “through them.” This model is standard in the industry now, and just about everywhere you go, you’ll find some variation on it. I’ve seen percentages as high as 30% and even 50% and ingestion fees that added up to well over $100 per release. That’s a hefty cut, but hey, how else are you going to get your music into the stores to sell so you can make anything at all?

TIP #1: Check the Percentage

When you choose a digital distributor, ask:

* What percentage are they going to keep?
* Is there a cap, or do they take that percentage forever?
* Will that percentage ever go up?
* What are they doing to justify the percentage?

The last point is key: What are they doing to earn that percentage? Remember, this isn’t traditional physical distribution, this is digital. They only need to send the stores your music and data ONCE. They don’t have to have a warehouse to store it, only a hard drive (and trust me, storage is pretty cheap!). They don’t need trucks to ship it, though they do need bandwidth, ONCE, to send it along. They don’t need to package it in cling wrap or load it on pallets, but they do have to format the data to the stores’ specifications (again, ONCE). They don’t have to keep a staff of salespersons wandering from store to store to make sure your music is on the shelves as promised, it can be checked automatically, instantly. They don’t have to deal with insurance for your product (a leaky roof in their warehouse could destroy your stock of CDs, but in the digital world there’s no stock). About the only thing that isn’t changed is delivering money and sales data back to you: that’s the same for all distribution (more on this later).

So why are they taking a percentage? Because they can: because they are gatekeepers and you’ve no choice but to use them. There is one other reason, and it’s the most important: do they MARKET or PROMOTE your music? That’s where most aggregators say they work for you, and the reason they deserve a percentage.

The Myth of Marketing and Promotion

Aggregators take a percentage of your earnings, forever, with no ceiling—why? Because they can, but it’s hardly good public relations to say so. They control the only path a small label or band can take to reach the big digital retailers like iTunes, so they can set up any terms they want. In Part II, I showed why distributors might have been entitled to a limitless cut in the past, when physical product had to be placed into brick-and-mortar stores, with all the risk and overhead and managing required. But in the digital world, it’s almost indefensible. A new reason has to be claimed for taking a percentage: marketing and promotion.

Distributors aren’t traditionally marketers or promoters, that’s part of the label’s job. In addition to getting you gigs and making CDs and setting up deals with distributors and such, the label would market and promote you, because the label had signed you, and you worked for them now. It was in their interest to make you as big as possible, because they got the reward and paid you some very small percentage (whatever terms were dictated in the contract you originally signed with them). So labels would shell out lots of cash for posters, stickers, t-shirts and hats; they hired publicists for $5000 a month and crafted press releases and schedules, fought for news space in print, broadcast and radio; they purchased ads on your behalf, TV spots and billboards. Labels can sink millions of dollars into marketing and promoting a band, hoping it’ll pay off in sales, in licensing deals, even selling the contract to bigger labels for a wad of cash.

Distributors in the old days, especially the good ones, did help a bit with marketing and promotion. In a record store, if your CD was at eye level, it sold better. CDs on the end of the aisle (“end cap”) or by the register, it would sell better. Certainly if it was up on the release day, when your hype was timed to peak, it helped! If you give your distributor a percentage, you encourage them to take these steps, to leverage the stores (who, after all, rely on the distributors for content to sell) to push your music in these ways—even get the staff of the record store to wear a big shiny pin with your band’s name on it. Given that kind of effort, distributors deserved a percentage.

I showed that digital aggregators don’t have to do this or take risks to put your music into digital stores, so why are they still taking a percentage? They claim to be marketing and promoting you, but traditional brick-and-mortar tricks don’t apply: there’s no such thing as “eye level,” there’s no register, and no staff to wear a shiny pin. There are feature pages and genre pages on iTunes and AmazonMP3 and other stores, yes, but as I’ll talk about later, it’s not up to the aggregator to put your releases there. Some stores accept ads, but no aggregator is going to pay to put your ad up at their own expense.

Anyone who does claim to be marketing and promoting you requires very careful investigation. They’ll all say they are doing something, and it’s up to you to decide if it’s viable, reasonable, and worth the cost. This is sound advice for anything you buy, but there’s a special wrinkle when it comes to digital distribution.

Aggregators make their money by putting many, many artists and small labels into digital stores: it’s a volume game. The big aggregators have 50,000+ clients. How, exactly, are they going to market and promote them all? They’re taking a percentage from all, but they couldn’t possibly treat everyone the same. No matter what their plan is, this central fact remains.

TIP #2: Check the Marketing and Promotion Plan

When choosing a digital distributor who says they’re going to market and promote you, ask:

* How, precisely? Get very specific.
* How will you know if it’s working and who decides if it is? What tracking/feedback is there?
* Can you “opt out” of their marketing efforts and reclaim your percentage?
* If they claim to market you at the expense of some other person, what guarantees do you have they won’t do that to you later?
* What are they going to do to make you stand out from their own customers, let alone all the content in the stores, and what guarantee do you have they’ll do it for a reasonable return of value commensurate with the percentage they’re taking?

The single most important thing to keep in mind is this: are you getting what you’re paying for, and is it worth it? Let’s say an aggregator offers to put your name on a list that goes to college DJs and indie radio program directors. Fine, but if they have 10,000 names on that list, how does that help you? Who gets to be at the top of that list? Does anyone read those? Is there space on that list for you to sell yourself (describe your music, or say anything that might get you noticed)? And finally, that percentage comes down to real money: could you get better value out of that money by spending it yourself on your own marketing and promotion?

That’s key: if I were in a band and wanted to get publicized, I’d hire a publicist. They’d get a flat fee, and I’d be able to monitor exactly what they’re doing. If a publicist told me they only wanted a percentage, but took it forever, with no cap, and I had no way of telling what they were doing or if it benefited me, I’d call them crazy!

Part IV:

Part IV: Good Marketing and Bad

Things get a little tricky from here, because marketing and promotion needs context: what’s right for one person could be very wrong for another, at any price. Everyone has a different idea of “success,” so what is “success” to you? Do you want to:

* fill the local bar every third weekend with forty or fifty happy drinkers, sprinkled with a few die-hard fans?
* fill a football stadium and tour the world on a private jet?
* remain perpetually “alternative,” always outside the mainstream, attracting fans that despise Top 40?
* record and sell your church choir’s concerts only to the congregation?
* see your music up in the biggest, most powerful music store of any kind in the world (iTunes), and don’t care if anyone listens or buys?

How about sales? Is this your hobby or career? Do you want to make back the cost of your instruments or buy a mansion in every major metropolis in the world? Are you supporting a family with your music, or a drug habit, or a charity, or are you hoping for a bit of mad spending cash reserved for fun purchases only? Are you dead-set against MP3s, or compact discs? Are you vinyl only, or compose exclusively on software for DJs to download and mix? Are you against the idea of selling music at all?

TIP #3: Define Your Own Success

Before looking into any kind of marketing and promotion, ask yourself:

* Who do you want to hear your music and why?
* How do you want them to listen?
* Do you want them to buy your music, and when, and how?
* Where do money, fame and your own musical career fit in?

Notice the first question—why should you ask why? Your music is good, right, isn’t that reason enough? And why should it matter how they listen? Isn’t it understood you want them to buy your music? What does “buy your music” really mean? These questions all highlight a trap, and if you don’t ask why, right at the beginning, you’re going to fall into it and exhaust yourself pursuing the wrong marketing and promotion.

Everyone markets and promotes for a different reason. A toothpaste manufacturer is wholly interested in making money (or perhaps branding), and selling toothpaste is how they plan to accumulate it. They promote their toothpaste to encourage people to buy it, they market their toothpaste to drive desire, to build demand. Music isn’t always so commercial: in fact, most people feel contemptuous towards music produced solely to sell or brand. Many consider it crass consumerism, or devoid of art. When you bring in beauty and art and even politics (if you don’t think music can have political aims, listen harder), the goals of creation are often very much at odds with making money.

So get a good idea of what you want your music to do. You wouldn’t be reading this article if you didn’t want it to get into at least a few hands, and presumably you’re not averse to making money when they get it. So now you have to ask “who, when and how,” and each of these has a value. Here are a few scenarios:

I want my music in EVERYONE’S HANDS, IMMEDIATELY, and in EVERY POSSIBLE FORMAT. I’m sure you do, since that means the most people will have the greatest opportunity to become familiar with your music, come to love it and buy it, in whatever format is easiest for them. Making things easy on the consumer means making it rough on the distributor. Are you really unwilling to disappoint the guy who insists on buying your album on 8-track? It’s going to cost you a fortune to make 8-track tapes, and fulfillment is going to be a nightmare (be prepared to ship them one by one). You can have all these, but you’re going to spend millions and millions of your own dollars on TV, radio, print ads, billboards, promotional giveaways, a full blitz. You’ll have to sell more than the Beatles and Elvis combined to make all that money back. No label is going to take that kind of risk on you, and unless your measure of “success” is to get your music to everyone and hope it’s liked, this isn’t a good strategy.

I want my music in AS MANY HANDS AS POSSIBLE as SOON AS POSSIBLE in THE MOST POPULAR FORMATS. Better—now you don’t have to make vinyl or reel-to-reel tapes, you are willing to let it grow a bit (what does “as soon as possible” mean?) and you’re willing to give up on some potential customers. This would still bankrupt any but the biggest labels, and unless your music is so beloved it outsells Cher and Pavarotti, this is another overoptimistic goal.

I want my music to reach AS MANY TEENAGED BOYS IN AMERICA as possible BEFORE THE SUMMER SEASON ENDS as UNENCRYPTED AUDIO FILES. Finally, you’ve reached something that’s actually reasonable, but it’s still wildly expensive. That demographic (teen boys) is heavily exploited, especially in summer. That’s also the group that tends to patronize music pirating software, so you’re running a higher risk by insisting on DRM-free audio formats. Labels target teen boys all the time, as do movies and the snack food industry and just about everyone. It’s possible for you to wade in, but again, heavy on the wallet.

I want my music to reach EVERY CIVIL WAR RE-ENACTOR in RICHMOND, VIRGINIA in time for CHRISTMAS on COMPACT DISKS and MP3s. Christmas is a long way away (I’m writing in August), and there are plenty of services who can help you in time for Christmas, as it’s a common demand. Richmond, Virginia, is a big city, but a little hard work with fliers by you and your friends could probably reach the few physical places where re-enactors gather, and they perhaps have a Website whose administrator you can reach out to. Just about everyone can play a CD these days in America, even if they don’t have a computer, so very few will be disappointed. In fact, you probably already know much of this crowd already, because why else would you be writing music that would appeal to such a narrow group?

Hidden in these scenarios are the keys to understanding not only the right kind of marketing and promotion, but also how to value it, put a hard dollar amount on it, and ultimately deciding where to put your marketing resources.

source: reuters

By Mariel Concepcion

NEW YORK (Billboard) - When rapper Flo Rida set a digital sales record with his single “Low,” which moved 470,000 copies the first week of January despite not being available on an album, it was emblematic of an intriguing trend.

Digital hip-hop song sales are at an all-time high, but in terms of digital album commerce, hip-hop is lagging behind other genres. In 2007, of 500.4 million albums sold industry-wide, 10 percent were sold digitally. In comparison, of the 41.7 million rap albums sold, only 7 percent (2.9 million) of those were digital.

So far this year (through the week ending February 17), according to Nielsen SoundScan, overall album sales stood at 56.4 million, with 15.4 percent of that figure being digital (8.6 million). Of the 4 million rap albums sold, 11.2 percent have been digital (447,000).

Two indie labels are seeking a solution. Amalgam Digital, which claims it is the first hip-hop-specific online retail store, and Def Jux, which is finalizing plans to expand its label site to a full-blown digital store, are experimenting with new ways to boost the genre’s download sales stats.

Amalgam general manager Jay Andreozzi believes that the label not only creates a platform for indie hip-hop artists who otherwise might find it difficult to get music featured on iTunes or Rhapsody, but that it also will aid in shifting hip-hop’s digital figures.

The label is committed, Andreozzi says, to “new strategies like additional bonus tracks or a cappella versions of the album or exclusive digital-only albums.”

An example of the latter is Joe Budden’s “Mood Muzik 3.5.” The digital-only album was made available earlier this year exclusively on Amalgam’s Web site before the release of “Padded Room,” the New Jersey rapper’s official sophomore release, due this spring via the label. In addition, a limited-edition a cappella version of “Padded Room” will be made available free to fans who buy the album from the Amalgam site.

SINGLES VS. ALBUMS

Bill Crowley, vice president of digital/mobile for Koch Entertainment, says that although specialty stores have been successful in the past, he isn’t certain a hip-hop-specific store will do as well.

“There’s a really healthy hip-hop market on the digital side, but they aren’t the most likely to buy full-length albums,” he says, referring to the that hip-hop culture historically has centered on singles rather than full-length releases.

“While a lot of hip-hop fans can tell you their top 10 hip-hop albums, there are plenty that love the genre, but aren’t embedded in the culture, that can’t,” says Jason King, artistic director at New York University’s Clive Davis Department of Recorded Music. “Hip-hop has never really been a concept-album-driven culture.”

Still, Def Jux plans on adopting the same free/bonus content policy Amalgam has implemented when it expands its online store in coming months. Currently, the site sells only music by Def Jux artists.

“You can put all the B-sides and exclusive digital content on there to further draw people in,” label manager Jesse Ferguson says. “You can add CDs, sneakers, sweatshirts, plus an entire catalog digitally, and not worry about it being in stock or not.”

Andreozzi believes that signing former major-label artists like Budden (whose 2003 self-titled Def Jam debut has sold 526,000 copies) to indie labels will further facilitate growth in online album sales.

“We had the highest-selling individual album on Amalgam with Joe, and now, when we do his next album, we will hopefully be able to do it on a bigger scale,” Andreozzi says.

Crowley says, “There’s a lot of success to be had when a high-profile artist finds their way to an indie,” but he still believes singles sales will remain on top. “It all comes down to delivering tracks people want,” he says. “Still, if they buy an album or a single, it beats the alternative of people not caring at all, or caring so little they’d opt to download illegally.”

Reuters/Billboard