Digital Distribution Deals
Sites like iTunes, Apple Music, Spotify, Amazon, Google Play and Tidal, typically don’t allow users to directly submit content. They only deal with approved distributors or digital distribution aggregators.
Thankfully, finding a distributor is much easier than getting a record deal. Many companies like CDBaby, TuneCore and Distrokid allow users to create an account and sign up online. However, some companies like The Orchard, Stem or AWAL are invite-only, meaning they only work with clients they hand-select. They’ll have their people call your people.
So what does a digital distribution aggregator do? Basically, they upload your music to different outlets in exchange for a fee (more on that in a minute). They don’t own any rights to your music — they simply help you distribute it. You retain 100% of your rights. An artist can have distribution deals with multiple distributors, but only one distributor per release.
So, what sets one distributor apart from another?
How They Charge You in Digital Distribution Deals.
The biggest difference between distributors is how they charge for their services.
Some companies charge an annual fee. Typically, this is broken into several tiers based on how many songs you release. For instance, $X to release up to 10 songs a year, $Y for up to 25 and $Z for unlimited songs. The unlimited option works best for artists who release a lot of music in one year.
Other companies charge a one-time fee when you upload music. Rates are different for singles, EPs and full-length albums. This option works best for artists who release projects less often.
Finally, some distributors don’t charge any fees to distribute your music — they take a cut of your profits. Again, no distributor should be asking for a percentage of the rights to your music. But, some companies choose to charge a commission instead of taking a fee. That means, they get paid when you get paid.
So, aside from your budget, what else sets distributors apart?
How They Distribute Your Music
Most distributors will tell you that they distribute to over 100, 150 or even 200 outlets. Neat! Can you name more than 10 places where people stream music?
Just because your music is available somewhere, doesn’t mean anyone will listen to it.
When it comes down to it, most of us only really care about a select few streaming services. Most distributors upload to all of the major streaming services, so take this figure with a grain of salt.
The next big factor is the speed of delivery. Some distributors can get your music uploaded in less than 24 hours. Others can take up to a week or more.
It’s always best to plan the timing of your release for marketing and promotion. But, some artists like the immediacy of being able to release hyper-current content. You’re not going to win a rap beef waiting 5 business days to respond with some bars.
If you’re not the spontaneous type, you may be more concerned with how your distributor handles pre-orders. Some offer pre-order options for free. Others charge per project. Some don’t offer pre-orders at all. Remember, pre-orders count towards first week sales, which can help land you on the Billboard Charts.
How They Handle The Paperwork in Digital Distribution Deals
One of the major benefits of working with a distributor is that they offer to handle some of the administrative paperwork for you. Which can be great for DIY artists who already have 100 other things on their plate.
If you want to distribute a cover song, you need to obtain a mechanical license. Without getting too deep into copyright law, once a song has been released to the public, if you want to use it, you must license it from the copyright owner.
It costs you ~$.09 in royalties to the copyright owner every time you print your cover song on a physical medium. Unfortunately, streaming royalty rates aren’t so cut and dry. You can see the formula used to determine the rate from the Harry Fox Agency.
Some distributors will obtain mechanical licenses for your cover songs for a fee. Others won’t release cover songs at all. Don’t forget, you can distribute different projects through different companies. Maybe one distributor makes sense for your original music, and another makes sense for your tribute band.
Many outlets require you to imbed an International Standard Recording Code (ISRC). An ISRC is essentially a digital fingerprint that keeps track of a song. They’re used to organize credits and royalty payments.
You can apply for an ISRC yourself on the website, but you’ll need one for each song. Plus, you need to embed them on each of the files. Obviously, this can be time-consuming, which is why some distributors offer to take care of it for you.
Now that the songs are traceable, you need to make the album purchasable. That requires a Universal Product Code, or UPC. UPCs are used to track sales — they’re the bar codes on the back of products. Even digital goods need UPCs. Thankfully, most distributors include them for free.
How They Handle Royalty Collection in Digital Distribution Deals
Obviously, you’ll need to sign up with a PRO to collect the majority of your royalties. But, there are other companies that can help you collect your remaining payments.
SoundScan is a sales tracking system that measures how many records are sold at brick-and-mortar and digital retail outlets. The problem is, they aren’t entirely accurate.
Roughly 14,000 stores report their sales each week. Stores are “weighted” based on the market they’re in. Which means a CD sold in a small market may count as a single sale, but a CD sold in a larger market could count as 3 or 4 sales. Record labels, distribution companies, managers, booking agents and promoters all subscribe to SoundScan. Their data is also used to form the Billboard’s charts each week.
If you want to make an impact on the music industry, you need to register your titles with SoundScan. If that sounds tedious to you, find yourself a distributor that will do it for you. Some do it for free, others charge a small fee, and some don’t offer the service at all.
But wait, there’s more! Non-interactive services like Pandora and SiriusXM pay out performance royalties too. 50% goes to the owner of the sound recording, and the other 50% is split between the performing artists.
Of course, collecting these royalties requires you to register your titles with another service — SoundExchange. Most independent musicians keep their master rights, which means they can collect royalties as the sound recording copyright owner, as well as the performing artist.
Some distributors offer to collect sound recording performance royalties from SoundExchange. A few also collect songwriter royalties. Of course, they don’t do it for free. Distributors charge between 10-30% commission for collecting SoundExchange royalties.
How They Handle Your Money in Digital Distribution Deals
After you’ve found a distributor that works with your budget and your administrative needs, the next thing you should think about is their payment structure.
Some companies will pay you as soon as someone purchases your music. Others will hold on to your money until you hit a “payment threshold”. Payment thresholds can be as low as $10, or as high as $50.
Some companies pay out on a schedule. Weekly, monthly, quarterly and even yearly disbursement schedules are common. If you’re relying on your royalties to pay rent (which I highly recommend against), make sure you find a company with a low threshold and frequent payout options.
After your music is posted, there are opportunities for further monetization. Both YouTube and SoundCloud offer ad revenue for highly-streamed content. Some distributors automatically upload your music to these sites and start collecting ad revenue. Others simply require your approval, and some don’t do it at all.
Some distributors offer these services for free to their clients. Others take a commission between 5-30%. Remember, you can technically do any of these administrative tasks yourself — all it takes is time.
Bells and Whistles of Digital Distribution Deals
At this point, you’ve probably narrowed it down to a few solid choices. If you’re still on the fence about choosing a distributor, check and see if they have any extra features. Some offer to submit your music to specialty sites like Pandora or Beatport.
Unfortunately, simply making your music available to people isn’t good enough. In the past, record labels, radio stations and film studios were the gatekeepers. Today, it’s Spotify. Spotify playlists are driving listeners (back) to consuming singles instead of albums. It’s changed the way people listen to music forever. So, make sure your distributor has an in-house Spotify playlist plugger!
Last but not least, a few distributors will actually offer you cash advances like a record label. Of course, they’re all recoupable. Aside from that, the details vary from company to company.
What’s the Best Music Distribution Service?
You guessed it… it’s the same answer you always get when you ask a question in the music business — it depends.
Companies like CD Baby and TuneCore have been doing this for a long time. Since back when music was released on pieces of plastic. They’re the trusted names in distribution, but that doesn’t always come cheap. Distrokid popped up in 2013 as an independent digital alternative, and have been going strong ever since.
In 2017, there were two interesting new additions to the distribution game.
LANDR started a few years ago as an automated online mastering service. Clients who are getting their music mastered need somewhere to release it. It only made sense for LANDR to incorporate a distribution deal into their mastering packages. If you plan to master your own tracks, they also offer a release-only option.
Amuse.io is “The world’s first mobile record company.” They’re an app-only service that offers 100% free distribution. There are no fees, and you keep 100% of your royalties. Here’s how they do it: “If we discover artists we believe in, we will offer them a record deal that includes marketing, financing, promotion and playlist pitching. We pay for the project but thereafter we split the profits 50/50 with the artists. If offered a record deal there is no obligation to sign with us.”
iMusician Digital is a digital distributor for independent artists and labels, based in Zürich and Berlin. They use a tiered pricing system that allows you to choose how much commission you pay, if any. They have options to pay-per-release or pay an annual fee to release as much as you want. Musician Digital makes it easy for musicians to spend more time making music by offering simplified contracts, fast customer support in multiple languages and no minimum for payouts.
It can be almost overwhelming. There’s a lot of information to take in, and it all feels really important. Like if you mess up, you could be one of those people you hear about who got suckered. That’s OK, most DIY musicians feel that way at first. Just make sure to read everything very carefully. Always weigh your options. Don’t be afraid to ask questions. Welcome to the music business!