PRESENTS

DISTRIBUTION
REVOLUTION

MAPPING THE 21ST CENTURY DIGITAL MUSIC SUPPLY CHAIN

DISTRIBUTION
THE ASSOCIATION OF INDEPENDENT MUSIC
REVOLUTION 1
AIM.ORG.UK
 AIM & CMU INSIGHTS

‘Distribution from artists including AJ Tracey, Arctic

Monkeys, Aphex Twin, Blood Orange,
Revolution’ is a new Bonobo, Danny Brown, Hot Chip, High
report based on Contrast, Little Simz, New Order,
research undertaken Radiohead and many, many more.

by CMU Insights More at aim.org.uk

on behalf of the
the Association Of ABOUT CMU INSIGHTS
Independent Music. CMU helps people navigate and
understand the music business through
media, education, research and
ABOUT AIM
events. CMU Insights is the company’s
AIM is the not-for-profit trade body business intelligence unit.
exclusively representing the UK’s
independent music sector, which now CMU shares its insights with thousands
makes up a quarter of the recorded of music industry professionals every
music market. year through its own programme
of seminars and masterclasses; the
Now in its 20th year, AIM’s members training courses it delivers for music
range from the largest, most respected companies and organisations; the
record labels and associated speed briefings it presents at music
music businesses in the world to conferences around the world; and
self-releasing artists and the next the three full-day conferences it
generation of entrepreneurs in music. curates as part of The Great Escape
AIM promotes and supports this showcase festival in Brighton each
exciting and diverse sector globally May.
and provides a range of services, CMU also supports grass roots
commercial opportunities and artists and future industry talent
practical help to members; enabling through partnerships with the likes
them to innovate, grow and break into of the Featured Artist Coalition and
new markets. the Roundhouse; the Pathways Into
At the larger end, AIM member Music guides and courses for music
businesses include companies such educators; and by delivering guest
as Beggars Group, Domino Records, lectures at a range of music schools
Warp Records, Mute Records, Ninja and colleges.
Tune and [PIAS]. They release music More at cmuinsights.com

DISTRIBUTION
2 REVOLUTION
CONTENTS

EXECUTIVE SUMMARY p04

1. THE DIGITAL MUSIC SUPPLY CHAIN p09

2. THE PHYSICAL DISTRIBUTION BUSINESS p14

3. THE EVOLUTION OF DIGITAL DISTRIBUTION p16

4. DIGITAL DISTRIBUTION TODAY p19

5. EXPANSION OF SERVICES & CLIENTS p25

6. THE MENU OF SERVICES p28

7. CHOOSING A PARTNER p41

8. CHALLENGES & ISSUES p51

9. CONCLUSION & RECOMMENDATIONS p57

DISTRIBUTION
REVOLUTION 3
 EXECUTIVE SUMMARY

As the digital music DISTRIBUTION

market has grown REVOLUTION
over the last two With this in mind, AIM commissioned
CMU Insights to undertake an in depth
decades most review of the music distribution sector.
attention has been We wanted to provide an overview
given to the evolution of how music distribution works
of the consumer- today, while also summarising the key
trends and developments of the last
facing digital two decades, to better understand
platforms. why distributors have evolved their
businesses in the way that they have.

But behind the We also wanted to gather in one place

a menu of the many different services
scenes the a music distribution partner may now
companies that help offer, and to explain the different ways
labels and artists different rights-holders might access
those services, and the pros and cons
deliver their music to of the different approaches now
those platforms have regularly employed.

also been evolving In doing so, we can help rights-holders

their businesses. make more informed decisions when
choosing a partner, by ensuring that
they ask the right questions and
In particular, the role of the music consider all the key factors.
distributor has changed considerably
during that time. Distribution partners Finally, AIM wanted to identify what
will now usually offer a much wider issues have been posed by the
range of services and work with a evolution of music distribution, to help
more diverse range of clients, including inform debate within the independent
those artists who self-release their music community - between both
recordings, usually via single-artist- rights-holders and distribution partners
labels. This means rights-holders now - as to how individual artists, labels
have much more choice when picking and distributors, and the community at
a distribution partner. large, can deal with those challenges.

DISTRIBUTION
4 REVOLUTION
THE DIGITAL MUSIC The digital music service providers
are the consumer facing digital
SUPPLY CHAIN music platforms, including download
Between the artists who make the stores and streaming services. There
music and the fans who consume it are various different kinds of DSPs
are a number of entities who together with different business models and
make up the digital music supply chain. consumer offerings.
The main three entities involved in
this process are the rights-holders, Today streaming services generally
distribution partners and digital music have by far the biggest user-numbers,
service providers (or DSPs). while premium streaming platforms
bring in the most money.
The rights-holder is the entity which
controls the copyright in any one sound
recording. It may own the copyright or
EVOLUTION OF
alternatively represent it on behalf of DIGITAL DISTRIBUTION
the actual owner. This group includes The first digital distributors appeared in
what we traditionally call record the very early days of the digital music
companies or record labels, but also market.
artists releasing their own recordings,
possibly in partnership with their In many ways they were the digital version
producer or manager, via a ‘single- of the physical product distributors that
artist-label’. already existed, although the initial
digital distribution companies tended
The distribution partner sits between to be start-up enterprises. The physical
the rights-holder and the DSP and is distribution companies subsequently
the main focus of this report. The key moved into digital distribution, while
role of the distribution partner is the some of the new digital distributors
delivery of music to the DSP and the added physical product services as their
processing of the money and the data businesses grew.
that flows back.
When the first digital music services
But the distribution partner may also came to market they generally wanted
provide a wide range of other services to secure as much content as possible
to the rights-holder. Depending on what by doing as few a deals as possible.
services they offer, these companies This gave the major record companies
may be variously called an aggregator, an advantage as they could bring
a distributor, a label services provider bigger catalogues to the negotiating
or an artist services provider. table.

DISTRIBUTION
REVOLUTION 5
 This in turn provided a gap in the market Even if a rights-holder can negotiate a
for companies which aggregated the direct deal, there is then the challenge
catalogues of independent labels and of providing content according to each
which, as a result of that aggregation, DSP’s requirements and processing the
had sufficiently sized catalogues to be money and data that is returned. Many
of interest to the digital start-ups. rights-holders who do secure direct
deals will still look for a distribution
Though aggregation wasn’t the only partner to help with that process.
approach for protecting the interests
of independent music businesses in a The other two options are the modern
digital market where the DSPs wanted equivalents of the two main approaches
to do as few deals as possible. Some that emerged in the 2000s. Which is to
indies came together to collectively say, become a member of Merlin and
negotiate deals meaning that, while utilise the deals it has negotiated with
each label was in theory securing a each DSP (and probably again hire the
direct deal with the DSP, they could services of a distribution partner to
command better terms by bringing a facilitate content delivery).
much bigger catalogue to the deal-
making process. Or sign up with an aggregator, or what
we’d know more likely call a distributor.
This approach ultimately led to the This company may have its own direct
creation of Merlin, a more formal deals or may be utilising a Merlin deal.
globally focused organisation that now Either way, it will have systems in place
negotiates DSP deals on behalf of 800+ to deliver the content and process the
labels and distributors. money and data.

DIGITAL DISTRIBUTION EXPANSION OF

TODAY SERVICES & CLIENTS
Today a rights-holder basically has The key trend in the music distribution
three options when seeking to make sector over the last two decades is
their music available via the digital that the range of services distributors
music services. offer has increased. Partly to deal with
new tasks that have emerged as the
They can seek to negotiate direct deals digital market has matured. But also in
with each DSP. Whether they can do a way that sees distributors increasingly
that - and secure favourable terms undertaking tasks that previously would
- will still often depend on the size of have been handled by the label itself or
their catalogue. a specialist agency.

DISTRIBUTION
6 REVOLUTION
This expansion of services has partly THE MENU OF SERVICES
occurred because of the evolution of
Many distributors now offer an
digital music, partly because labels
extensive menu of services, usually with
have requested additional services, and
some kind of pick and mix flexibility. You
partly because of music distribution
can organise these services into four
becoming an incredibly competitive
main groups
market place.
Arguably not all of those services
With the majors expanding their
are strictly ‘distribution’, and once
distribution divisions and a number
distribution partners start providing
of well-funded start-ups entering
them they could be said to be operating
the sector, rights-holders have often
more in the label or artist services
sought more favourable financial
domain.
arrangements with their distribution
partners. One way that distributors
The four groups of services are as
have sought to justify keeping their
follows:
existing rates in place is by providing
other services. Or, if a distributor needs
to be more competively priced when AGGREGATION:
offering basic distribution, it can get DSP deals, content delivery, content
involved and share in other related checking, content identifiers, data
revenue streams. feeds, payment processing.

In addition to distributors offering DISTRIBUTION:

more services, another key change has
been in the range of clients. Whereas Sales and B2B marketing, analytics.
many distribution companies previously
worked primarily for traditional record MARKETING SERVICES:
labels, many now also work for self-
Consumer marketing, creative and
releasing artists and their single-artist-
content services.
labels. Some distributors have made
the latter type of client their primary
concern. ADDITIONAL SERVICES:
Physical distribution, direct-to-fan,
This has started to blur the lines between catalogue management, channel
labels and distributors, and might mean management, neighbouring rights
that a rights-holder’s trusted business management, royalty administration,
partner is also potentially a competitor. sync, anti-piracy activity.

DISTRIBUTION
REVOLUTION 7
 CHOOSING A issues for the rights-holder community to
consider and tackle:
PARTNER
Through this research we have identified
twelve criteria that rights-holders should
• Transparency issues around DSP deals.
consider before choosing a distribution • Questions around the sharing of value
from DSP deals.
partner:

• Price. • Balancing upfront and long-term

benefits of each approach.
• Advance. • The allure of the advance.
• Commitment and reach. • The need for a clear exit strategy.
• Platform or portal. • The risk of distribution partners
• Range of services. becoming competitors.
• DSP deal specifics. • The short and long term impact of new
• Genre or regional expertise. competition in the market.

• B2B marketing abilities. CONCLUSION &

• Physical distribution abilities. RECOMMENDATIONS
• Scale. Finally, based on the research we have
• Independence. made three main recommendations,
including that the independent music
• Key people. community should:

CHALLENGES & • Agree on codes of practice for

distribution partnerships.
ISSUES
Through this research we have also
• Identify the whole digital supply chain.
identified eight specific challenges and • Promote a distribution checklist.

DISTRIBUTION
8 REVOLUTION
1. THE DIGITAL MUSIC SUPPLY CHAIN

The digital music markets, the song rights are usually licensed
separately from this supply chain.
supply chain begins
with the artists, The rights-holder may actually own the
songwriters, musicians, copyright in any one recording. This may be
because this entity is the default owner of
record producers the sound recording copyright according
and sound engineers to the default or presumed ownership
rules of the local copyright system. So, in
who make recorded the UK, that would mean that the rights-
music and ends holder organised the studio session where
the recording was created. Alternatively,
with the music fans it may have been assigned the copyright
who consume their through an assignment deal. In that case
the default, or another previous, owner
recordings. transfers ownership of the copyright to the
rights-holder through contract.
In between there are a number of
businesses involved in the delivery of the Alternatively, the rights-holder may control
music from artist to fan. The exact number a sound recording copyright on behalf of
of businesses will vary from artist to artist the actual owner via a licence agreement.
and release to release, though there are Licensing agreements of this kind often have
three key categories of partners involved in a lot in common with the aforementioned
the process. assignment deals, except ownership of
the copyright isn’t actually transferred.
1.1 BREAKING DOWN THE Nevertheless, the rights-holder will often act
as if it is the copyright owner until the point
SUPPLY CHAIN at which its licensing agreement with the
As a starting point, we will briefly introduce actual owner expires.
each of these three categories of
businesses that sit between the artist and In the music industry we would traditionally
the fan. call this kind of rights-holder a record
company or a record label, and in many
cases that term is still used.
THE RIGHTS-HOLDER
The rights-holder is the entity which controls Though the rights-holder might also be an
the copyright in any one sound recording. artist who has chosen to self-release their
This entity probably won’t control the music. Depending on their level, they may
accompanying song copyright (ie the do this on their own, or in partnership with
lyrical and musical copyrights) and, in most a producer or artist manager, or a studio

DISTRIBUTION
REVOLUTION 9
 KEY STAGES ON THE DIGITAL SUPPLY CHAIN

ARTIST
RIGHTS-HOLDER

DISTRIBUTION
PARTNER

DIGITAL MUSIC
SERVICE PROVIDER

FAN
CONTENT MONEY DATA

DISTRIBUTION
DISTRIBUTION
10 RREEVVOOLLUUTTIIOONN
or artist management company. As part of music service provider, or DSP, there are
this process they may formally or informally often distribution partners. These are the
set up a standalone single-artist-label companies that are the main focus of this
that their recordings will be released under. report.

When it comes to record labels, it is The digital music distribution process

common to distinguish between major involves brokering DSP deals, content
labels and independent labels. Today, the checking and delivery, managing data
term ‘major’ usually refers to any record feeds, payment processing, B2B marketing
label majority owned by one of the big and analytics. A rights-holder may
three music rights groups: undertake some or all of these activities
itself, but most will rely on a distribution
• Sony Music (owned by Sony Corp). partner to handle at least some of these
• Warner Music (owned by Access
Industries).
tasks. The distribution partner may also
provide other services to the rights-holder,
• Universal Music (owned by Vivendi). all of which we will discuss later.

The independent labels are everyone else. There may be a single distribution partner
As a result, the independent label community undertaking all of this work on behalf
includes a very diverse range of companies of any one rights-holder or there may
from global players with hundreds of be multiple partners involved in the
employees to single person operations. distribution process. This may be because
Self-releasing artists and their single-artist- a rights-holder appoints different partners
labels would also often be included in this for different tasks or because one primary
independent label community. distribution partner outsources some of
the work to others.
For the purposes of this report we will
use ‘rights-holder’ as a neutral term for As for what we call this distribution partner,
all of the above. Where we say ‘label’ we the terms aggregator, distributor, label
specifically mean a company which works services provider and artist services
with and releases music from multiple provider have all been variously used.
artists. We will refer to ‘single-artist-
labels’ where we specifically mean artists These terms are not necessarily synonyms,
releasing their own music, with or without but instead describe different categories
the support of a producer, manager, of distribution partner or different
studio or management company. categories of services that a distribution
partner might provide. However, there isn’t
really an industry-wide consensus on how
THE DISTRIBUTION PARTNERS these terms should be used, which we will
Between the rights-holder and the digital come back to later.

DISTRIBUTION
REVOLUTION 11
 THE DIGITAL SERVICE Soundcloud, YouTube), whether that
UGC be music and mixes uploaded
PROVIDERS
by amateur artists and DJs, or music
The DSP is the consumer-facing digital that soundtracks other video content.
music platform. There are a number
of different kinds of DSPs, though a In the 2000s, download platforms
common distinction is made between the generated the most digital music revenues,
download platforms – like the iTunes with Apple’s iTunes Store dominating,
Store and Beatport - that allow users to especially in markets like the UK. In
download permanent copies of a track, more recent years download platforms
and the streaming platforms - like have generally gone into decline while
Spotify and Apple Music - that provide streaming services have experienced
access to tracks that can be streamed. significant growth, so that since 2016 -
on a global basis - streaming revenues
Streaming services can be further broken have out-performed download revenues
down by a number of different criteria (according to figures from the International
including… Federation Of The Phonographic Industry).

•
Whether the service offers fully
on-demand access to tracks (eg
Streaming alone became the global
record industry’s single biggest revenue
Spotify, Apple Music) versus a steam in 2017 and now accounts for
personalised radio experience (eg about half of the recorded music sector’s
Pandora, iHeartRadio). combined income.

• Whether users pay to access music

(eg Spotify Premium) versus access
In most countries fully on-demand
streaming platforms dominate, both in
being free to the user paid for by
terms of users and revenue. The main
advertising (eg Spotify Free).
exception is the US where Pandora and
iHeartRadio’s personalised radio services
• Whether the service
ranging catalogue
offers a wide
of tens of
are also major players, particularly in terms
of user numbers.
millions of tracks (eg Amazon Music
Unlimited) versus a smaller
catalogue curated in some way (eg In most markets the free-to-access
Amazon Prime Music). streaming services have more users but
the premium streaming services generate
• Whether the service only carries
music content provided by labels
the most revenue. On a global basis,
premium streaming generated 37% of
and distributors (eg Spotify, Apple total recorded music revenues in 2018,
Music) versus those that encourage compared to 10% from free services.
user-generated content (eg

DISTRIBUTION
12 REVOLUTION
1.2 THE SHIFT TO DIGITAL a sales model to a consumption model. In
the physical market rights-holders received
The shift to digital resulted in a number of whatever the consumer paid for their
significant changes for rights-holders. physical product (minus any costs of sale).
In digital, they share in a DSP’s revenue
First, traditionally rights-holders generated based on how much of total consumption
most of their income by directly exploiting their catalogue accounts for. This also
their recording copyrights through the means that rights-holders earn tiny micro-
process of pressing and selling physical payments every time their recordings are
product like vinyl records, cassettes and streamed, rather than a one-off but larger
CDs. In the digital domain, they have payment whenever a copy of one of their
become licensing entities, granting recordings is sold to a fan.
permission to DSPs which then exploit
various elements of the sound recording
copyright in order to deliver the music to Everyone in the wider music community is
the fan. still adapting to the challenges that these
changes have created. This includes the
various supply chain challenges this report
Second, with the shift to streaming, the discusses.
recorded music business has moved from

DISTRIBUTION
REVOLUTION 13
 2. THE PHYSICAL DISTRIBUTION BUSINESS

Before reviewing The major record companies often built

their own distribution networks, even if they
the digital supply were ultimately utilising the warehouses
chain in detail, it is and logistics expertise of third parties
along the way. They would also employ
worth considering sales teams to persuade retailers to stock
the physical product their releases.

supply chain that For most independent record labels building

preceded it, and a network of this kind was not feasible.
Instead they would rely on distribution
which is still part of partners to provide a network for them.
the recorded music
The major record companies – keen to
business today. justify the investments they had made in
building their own networks – would often
As explained in Section One, in the set up bespoke independent distribution
traditional record industry, rights-holders divisions to sell distribution services to other
would usually directly exploit their sound rights-holders. Meanwhile a number of truly
recording rights by pressing physical copies independent distribution networks were
of their master recordings. In making these also built.
copies the rights-holder would also exploit
the song copyright that is contained in These physical distribution networks
any one recording. It didn’t usually control became all the more complex once you
these rights, so would secure a licence go global. Separate networks were built in
from whoever did, usually via the collective each key market and these were then linked
licensing system at industry standard rates. up by distributors in one territory forming
alliances with their counterparts in other
The rights-holders would then rely on music territories. Some distributors – including the
retailers to sell their discs. Getting the majors – had their own networks in multiple
discs from pressing plant to each individual countries, but most would rely on third
record shop was no small task. It required parties in at least some parts of the world.
a network of warehouses – some run by
the rights-holders and their distribution As an individual rights-holder, you could:
partners, some by the retailers and their
suppliers – and a considerable logistics
• Lock into one distribution network in your
home market and utilise any international
operation moving product around the partnerships that distributor had entered
network. In addition to all that, someone into.
had to persuade each retailer to stock
each release, every record shop having
• Do separate deals with different
regional distributors in each market
relatively limited shelf and storage space. where you wished to sell your music.
• License your recordings to another

DISTRIBUTION
14 REVOLUTION
 rights-holder in another territory and In addition to these high street and mail-
utilise whatever distribution partnerships order retail operations, it is also worth
it already had in place. mentioning the steady growth of direct-
to-consumer - or direct-to-fan - sales of
Of course, the sale of physical discs is physical product by both labels and artists
still a sizeable revenue generator for the over the last two decades.
record industry today, accounting for
25% of global recorded music revenues in This is where labels and artists sell product
2018. And while it is true that the German directly to fans via their own online stores,
and especially Japanese markets – where often built on third party platforms.
physical sales have remained particularly Depending on the platform a label or artist
strong - skew the global figures to an uses for these direct-to-fan transactions,
extent, physical also accounted for nearly these sales may or may not be counted
23% of UK revenues last year, according to in chart data and official record industry
figures from the BPI and the Official Charts stats. Where labels and artists are selling
Company. direct-to-fan they may set up their own
logistics operation to fulfil sales, or they
The vast majority of these physical sales may also rely on the traditional physical
remain compact disc. Although, of course, distribution network.
while CD sales have been in decline for
nearly two decades, vinyl sales have seen Either way, the complicated global network
significant growth in the last ten years. of local physical distribution networks joined
up through alliances that we described
The extent of the so called vinyl revival is above continues to operate today.
often exaggerated, but many independent
labels and record shops were the first to Though the steep decline in CD sales and
capitalise on renewed consumer interest in the number of specialist retailers in the
this format, and the labels and shops that 2000s resulted in a significant contraction
did so have been key beneficiaries of the of the physical distribution market, with
growing vinyl revenue stream. some distributors going out of business,
others merging, and others outsourcing
There are a lot less specialist music retailers increasing amounts of fulfilment to another
in the UK today, of course, and Amazon’s player in the market.
mail-order operation accounts for a not
insignificant amount of physical music sales. This contraction and consolidation has
resulted in a trend in many markets where
Nevertheless, there remain significant just one single significant player still exists,
numbers of high street retailers stocking with most other distributors then utilising
both CD and vinyl overall, and Amazon and that player’s network. Even the majors have
other mail-order operations also make use started to outsource some or all of the work
of the music industry’s physical distribution to this ‘last man standing’ in some countries.
networks.

DISTRIBUTION
REVOLUTION 15
 3. THE EVOLUTION OF DIGITAL DISTRIBUTION

It is tempting to see industry – and the major record companies

in particular – which were still in the midst
digital distribution as of the CD boom and saw digital music
a natural evolution as a threat to that revenue stream. The
push back only increased after Napster
of the physical launched in 1999 – followed by a long line
distribution sector of other popular file-sharing networks -
meaning the digital music conversation
described above. increasingly focused on piracy.
After all, there are a
number of parallels However, plenty of people in the music
industry – and especially the independent
between the physical sector – saw the opportunities digital music
and digital distribution created. Meanwhile others recognised
that the shift from physical product to
businesses. digital services was inevitable even if they
didn’t particularly welcome the change.
Plus, many physical distribution companies
moved into digital distribution as the Many of the early digital music start-ups
digital music sector grew, while many were founded by tech entrepreneurs
digital distributors subsequently started who struggled with the complexities of
offering physical distribution as an add-on securing content.
service. However, the digital distribution
sector originally evolved in isolation from Even when services involved former record
the world of physical distribution. The first label executives in their businesses, those
players emerged in the late 1990s when people didn’t necessarily understand
the initial digital music platforms started the ins and outs of the kinds of licensing
to come to market and were therefore deals that would be required to launch a
seeking content from the record industry. download or streaming platform. After all,
most labels at this point were primarily in
Between 1995 and 2005 there were a the business of pressing and selling discs,
plethora of start-up businesses trying to not negotiating catalogue-wide licensing
capitalise on the opportunities created deals.
by the growth in mainstream internet
usage and the potential that created for Either way, it quickly became clear that
providing and monetising music downloads most digital music start-ups were keen
and streams. to secure as much content as possible by
negotiating as few deals as possible. This
In the first part of that ten year period wasn’t just laziness.
there was some push back from the record

DISTRIBUTION
16 REVOLUTION
Because of the complexities of these 3.1 AGGREGATION
deals there were considerable legal and
admin costs associated with them. Rights- The first approach was aggregation.
holders would also incur these costs, and New businesses launched that would
as the digital market evolved they would aggregate the catalogues of multiple
sometimes seek to pass their own set-up independent labels and then approach
expenditure onto the DSPs, especially the DSPs to negotiate deals.
with new services. Which made the DSPs
even keener to secure as much content as The logic was simple, by performing the
possible from each deal they did. role of an aggregator, these companies
were helping the DSPs achieve their aim
This created a challenge for the of securing as much content as possible
independent labels, because DSPs seeking via as few deals as possible.
as much content as possible via as few a
deals as possible would often start with Therefore, the DSPs would generally be
the major record companies. willing to sit down with these aggregators
and negotiate a deal that would then
apply to all the catalogues the aggregator
That said, in the very early days the had aggregated.
independents had an edge simply by being
more receptive to digital music start-
ups. The majors were also investigating These aggregator companies then built
launching their own download stores at platforms via which each client label could
this stage. But as the wider record industry upload their individual catalogues to a
began to embrace digital, the DSPs central server. The aggregator could then
tended to start their licensing journey by provide this content to each DSP through
negotiating deals with the major record one ‘pipe’ according to each service’s
companies. requirements.

Once the majors were on board, a DSP 3.2 COLLECTIVE

would then often circulate a template
‘done deal’ contract for independent DEAL-MAKING
labels which wished to make their music The second approach was collective deal-
available via its platform. This was not making. Independent labels would come
ideal. together and form a committee which
would then seek to negotiate deals with
In this challenge, though, lay an opportunity. the DSPs on behalf of all the members of
And two different approaches emerged to that committee. The aim of this approach
meet this challenge and capitalise on that was to get more bespoke deals that
opportunity. were better than the standard terms a
DSP may have already circulated to the
independents.

DISTRIBUTION
REVOLUTION 17
 Persuading the DSPs to negotiate such a individual agreements and have a direct
deal generally required the involvement relationship with the DSP. Those labels
of rights-holders that controlled certain would then need to provide their content
key releases from certain key artists. The to the DSP. Most labels couldn’t afford to
collective might also try to exploit the build their own platform to do this, which
fact that many digital music start-ups provided an opportunity for another new
presented themselves as being ‘indie in a set of businesses to provide content
spirit’, and therefore didn’t necessarily delivery, similar to what the aggregators
want the spotlight to fall on the fact they were doing but as a standalone service.
had mainly prioritised doing deals with
major corporate rights owners first. These two different approaches employed
in the early days of digital music had a
Once a deal of this kind had been big impact on how the digital distribution
negotiated by the committee, market subsequently evolved.
participating labels would usually sign

DISTRIBUTION
18 REVOLUTION
4. DIGITAL DISTRIBUTION TODAY

Today there are three It is generally assumed that these off-the-

shelf template deals will be less favourable
main approaches that to the rights-holder than something
a rights-holder can negotiated bespoke. And as bigger rights-
holders will have negotiated bespoke
employ for their digital deals, that gives them an advantage.
distribution.
That said, some of these off-the-shelf
template deals have their origins in the
OPTION ONE: collective deal-making of the 2000s and,
DIRECT DEALS where that is the case, are generally
A rights-holder can try to secure a deal considered to be fairer to smaller rights-
directly with each DSP and then build or holders. Though any rights-holder relying
buy in a platform to deliver the content on these arrangements needs to closely
and process the usage and royalties data monitor any changes that are made by
feeds the DSP returns. However, there are the DSP, especially when they launch new
several questions to consider regarding services.
this approach.
This is particularly true if the new service is
very different and therefore the nature of
WILL YOU GET A DEAL? the deal is very different too. For example,
Although DSPs today are generally much there was a short-lived but highly public
better equipped to negotiate and manage stand-off between the independent
rights-holder relationships than in the label community and Apple over some
early days of digital music, most platforms of the terms it added to existing iTunes
would still like to secure as much content agreements when it was first preparing to
as possible by negotiating as few deals as launch the Apple Music streaming service.
possible. Therefore a DSP might suggest
or insist that smaller rights-holders employ
CAN YOU DELIVER
an alternative approach in order to get
their content onto its service. THE CONTENT?
Once you negotiate a bespoke deal or
opt in to an off-the-shelf template deal,
WOULD YOU WANT you then need to start delivering content
THE DEAL? to the DSP according to their specific
Some DSPs will have an off-the-shelf requirements. Most DSPs are very particular
template deal that they will offer to about the way they receive content and
smaller rights-holders that don’t have a accompanying meta-data, and will often
sufficiently large catalogue to justify the be wary of a new rights-holder’s abilities to
cost and time involved in negotiating a meet these specifications when entering
bespoke arrangement. into a deal.

DISTRIBUTION
REVOLUTION 19
 To this end most rights-holders on direct called Merlin. In many ways this grew out
deals will utilise a third-party platform of and was informed by the collective
to deliver content to most – if not all – of deal-making of the mid-2000s, and
the DSPs they work with. Where content especially initiatives of this kind led by the
delivery of this kind is provided to a rights- UK independent community.
holder as a stand-alone service, they will
usually be charged a fix fee based on the
quantity of recordings they are delivering.
THE PURPOSE OF MERLIN
Merlin, which has sometimes been referred
to as the “virtual fourth major”, sought
Some DSPs might provide rights-holders
to secure better deals for independent
some kind of browser or app-based tool
rights-holders – seeking more parity with
via which they can deliver content directly
the deals secured by the majors - by
without having to build or buy in a delivery
negotiating on behalf of a large group of
platform. This is particularly true for those
labels and distributors.
streaming services that grew out of or
exist as part of user-upload platforms
Having a more formalised and global
like YouTube and SoundCloud. For a time
approach to collective deal-making was
Spotify was also developing a direct-
attractive to the DSPs because it created
upload tool of this kind, although after a
an efficient single point for licensing,
beta test it decided not to proceed with
reporting and processing payments in
this service.
relation to a large combined catalogue
of recordings. By offering these increased
Even where such tools are available – and efficiencies to the DSPs, Merlin could
if more such tools were to be developed secure better terms for its members.
by DSPs in the future – as rights-holders
generally want their music to appear on all
The need for collective deal-making - and
platforms, it is much easier and therefore
a more formalised and global approach
more attractive if a single system can
to that process - had become ever more
deliver content to multiple services.
important as the 2000s progressed in no
small part because the deals being made
As the costs of developing such a system
between the DSPs and the music industry
are high, for individual rights-holders it
were getting more complex.
makes sense to utilise a third-party delivery
service that offers this flexibility.
In addition to core revenue share
arrangements, the majors started to
OPTION TWO: insert other elements into the deals such
MERLIN DEALS as minimum guarantees, cash advances
and – with start-up services – equity in the
In 2007 the independent music community
DSP’s business. The indies rightly argued
came together to form an organisation
that it was unfair if the independents were

DISTRIBUTION
20 REVOLUTION
not offered these additional kick-backs as the return of a sizeable catalogue to the
well. independent sector by brokering a deal,
alongside pan-European trade group
Especially the equity arrangements. IMPALA, with Warner Music.
Because successful DSPs would build
their businesses in part on the back of Merlin negotiates template deals on
the value of the independent community’s behalf of its members, exploiting both
catalogue. If and when that DSP was the size and significance of its members’
sold or listed on a stock exchange, the combined catalogue and the efficiencies
majors – ie the independent community’s it can offer DSPs to secure competitive
competitors – would profit from that terms. Once the deal is finalised, Merlin
sale, and therefore from the value of the members can opt in on a deal-by-deal
independent repertoire. basis. Where a Merlin deal is employed,
the DSP will report usage and royalties to
By stepping up the collective deal-making Merlin, which passes that information back
approach through the creation of Merlin, to the individual rights-holders.
more parity was achieved between
the deals offered to the major record Royalties also flow through Merlin on
companies and the independent rights- which it charges a commission. This
holders. commission covers the costs of running
the organisation. The current commission
MERLIN’S OPERATIONS rate is 1.5% for members of AIM and other
independent sector trade bodies and
TODAY 3% for other parties. Any excess monies
Today Merlin represents a membership of generated through these commissions
over 800 labels and distributors. To date over and above the organisation’s running
it has paid over $1.5 billion in licensing costs are returned to the members via
revenues to its members. rebates, so that the effective commission
rate is actually lower than 1.5%.
It has also generated value for its
members in other ways too. Sometimes as Merlin doesn’t get involved in content
a result of the other elements of the DSP delivery. Therefore, as with most direct
deals described above, for example by deals, a rights-holder would need to build
successfully securing and selling shares in or buy-in a delivery platform. A number
Spotify. of companies now provide delivery as a
standalone service, with CI and FUGA
And sometimes via other initiatives. For the main providers of this service to
example, delivering tens of millions of Merlin members in the UK. As before,
dollars to the independent community the companies providing this standalone
via infringement actions. And facilitating delivery service would likely charge the

DISTRIBUTION
REVOLUTION 21
 rights-holder a fixed fee based on the entered the business over the last two
quantity of recordings they are delivering. decades.

OPTION THREE: You can organise the digital distributors on

the market today in a number of different
AGGREGATOR DEALS ways. This would include the following
Finally, a rights-holder can appoint a classifications…
distribution partner to handle all of their
digital distribution. • MAJOR-OWNED DISTRIBUTORS
All three major record companies
This partner would have pre-existing provide digital distribution, usually
deals with all the DSPs (though these through a standalone distribution or
may actually be Merlin-negotiated deals) label services division. The main divisions
and would then deliver the content and of this kind are The Orchard (Sony
process the usage and royalty data that Music), ADA (Warner Music) and Caroline
the DSP returns. and Ingrooves (Universal Music). All three
majors have expanded the distribution
Each DSP’s deal would be with the sides of their businesses in recent years,
distribution partner not the rights-holder, often through acquisition, with Sony
and the DSP would pay the partner which being most aggressive in this domain.
would then pay the rights-holder. These
partners often work on a revenue share
basis and take their commission as the • INDEPENDENT DISTRIBUTORS
There are then the large global
monies flow through the system. independent distributors which
are not allied to one of the major
Some of the big distribution partners today music rights groups, but which also
have evolved from the original aggregators operate in multiple territories
that emerged in the late 1990s and early around the world, and usually work
2000s. Most have expanded the services with a wide range of clients.
they offer and, as such, would no longer
describe themselves as aggregators, and
would instead refer to themselves as being
• REGION OR GENRE SPECIALISTS
There are also smaller independent
distributors or providers of label or artist distributors that will usually specialise,
services. However, part of the service either on the markets in which they
they provide their clients is still basic distribute, and/or on certain genres
aggregation. of music. These companies may have
alliances with a major-owned or bigger
Some of the old physical distributors have independent distributor in order to have
also moved into digital distribution, while access to a larger infrastructure.
a wide assortment of new players have

DISTRIBUTION
22 REVOLUTION
 DIGITAL DISTRIBUTION OPTIONS

OPTION ONE: OPTION TWO: OPTION THREE:

DIRECT DEAL MERLIN DEAL AGGREGATOR
DEAL

DSP DEALS Rights-holder Rights-holder Distributor

negotiates its opts in to negotiates deal
own deals a deal or opts into a
negotiated deal negotiated
by Merlin by Merlin

CONTENT Rights-holder Rights-holder Distributor

DELIVERY builds or builds or delivers
buys-in a buys-in a content
delivery delivery
platform platform

ROYALTIES Rights-holder Merlin Distributor

& DATA processes processes processes
royalties and royalties and royalties and
data data - passes data - passes
onto rights- onto rights-
holder holder

OTHER Rights-holder Rights-holder Distributor may

SERVICES buys in any buys in any provide (many)
extra services extra services other services
it needs it needs depending
on the deal

COSTS: COSTS: COSTS:

Cost of negotiating Merlin’s 1.5-3% Distributor’s commission
deals (legal, admin etc), commission, cost of and/or fees (commonly
and delivering content delivering content and 10-30%, or possibly higher
and other activities. other activities. if involved in marketing).

DISTRIBUTION
REVOLUTION 23
 • DIY DISTRIBUTORS
And then there are those distributors Below is a selection of widely
that predominantly work with very recognised independent
small labels and single-artist- businesses that are involved
labels. These companies are usually in distribution at the time
distinct in that they of publication: Above Board
will provide services to any rights- Distribution, Absolute Label
holders, whereas the others will
Services, AWAL, Beatchain,
usually only work with clients that
meet certain creative or commerical
Believe Distribution, Cargo,
criteria. Some companies operate a CD Baby, Cygnus Music,
DIY distribution service alongside a more Discovery Music Distribution,
extensive service offering for selected Ditto, EmuBands, FUGA, IDOL,
clients, with the former providing an K7!, Kartel, Kudos, Kycker,
entry point for grass-roots rights-holders Label Worx, Landr, MTX Music,
who might ultimately move up to latter. [PIAS], Proper Music, Redeye
Two of the majors also have separate
Worldwide, Republic Of Music,
divisions offering DIY distribution.
Secretly Distribution, Sequence,
State 51, TuneCore, and
MIXING UP THE OPTIONS Zebralution.
It is worth noting that a rights-holder
does not have to pick a single option for
AIM has a comprehensive, up-
its entire catalogue. Some rights-holders
might have some direct deals and use
to-date, directory of businesses
some Merlin deals. Or they may use direct in its community offering
or Merlin deals in certain markets and a distribution services at:
distributor in others. So there is some www.aim.org.uk/#/resources/
flexibility in how a rights-holder organises aim-distribution-directory
things.

DISTRIBUTION
24 REVOLUTION
5. EXPANSION OF SERVICES & CLIENTS

Over the years most perspective, it can be attractive to involve

a distributor in these other areas, rather
digital distributors than hiring a specialist agency, principally
have expanded the for cash flow reasons.

range of services they As a rights-holder, most of the costs

offer to rights-holders associated with releasing new recordings
are incurred upfront before release. But,
so that, in addition even if a record sells well around initial
to negotiating deals release, it can take months to see the
financial return. With the shift to streaming
with DSPs and then – where monies come in per play overtime
delivering the content, rather than through sales around release –
it can now take years to see that financial
they now routinely return.
support their clients in
This creates a cash flow challenge for the
an assortment of other rights-holder. Many distributors help labels
ways too. meet this challenge by providing their
services without charging any up-front fees
and then recouping their costs by taking
Most distributors say that this expansion monies out of future income. This makes
of services was in response to requests by taking additional services from a distributor
rights-holders. First, as the digital music attractive to the rights-holder.
market evolved, it became apparent that
there were extra tasks involved in releasing That said, there has been another
music digitally, and rights-holders often motivation for distributors to expand their
looked to their distribution partners to service offerings other than meeting client
undertake these tasks. But beyond that, demand. Music distribution has become
some rights-holders also began to ask very competitive in recent years, with the
their distributors for support in other areas majors competing more aggressively in the
of their businesses, such as marketing space and a small number of well-funded
and promotions, or the management of new players operating in the sector working
performing or neighbouring rights. hard to build market share. In such a
competitive market, many distributors have
This is likely true to an extent, even though had to offer much better revenue share
– especially for things like marketing and deals to the rights-holders for the provision
promotions - there are many established of the core aggregation services.
third-party agencies within the music
industry able to offer these services to One way to deal with the impact of
those rights-holders that can’t justify hiring increased competition driving down the
in-house expertise. From a rights-holder’s going rate for aggregation is to diversify

DISTRIBUTION
REVOLUTION 25
 and offer extra services. The distributor We mentioned earlier that, with this further
may charge additional fees for this work expansion of services, some distribution
- often recoupable out of subsequent companies have started to adopt the term
income - or simply use the extra service ‘label services’ or ‘artist services’.
offering to justify taking a bigger cut of
revenue overall. In some cases distributors prefer to identify
their businesses using these terms, mainly to
Or, where the extra work sees the distributor communicate that they offer clients a wider
get involved in another of the rights- range of services than those traditionally
holder’s revenue streams, there is another associated with aggregation or, even,
source of income of which the distributor distribution. Other companies might use
can take a share. So, providing these extra the terms label services or artist services
services means additional revenue streams to describe those teams within their
for the distributor beyond the monies made businesses providing these extra services,
from aggregation. or those clients who opt to receive a wider
service offering.
These extra services include tasks closely
linked to the distribution of digital content, There is no real industry-consensus as
like playlist pitching and analytics tools for to what extra services are still part of
understanding usage data. It’s providing distribution and what extra services
these extra services that arguably moves a constitute label or artist services. Though
company from being merely in ‘aggregation’ many would probably agree that the more
to being involved in full-on ‘distribution’ – so consumer-facing marketing activity takes a
a ‘distributor’ rather than an ‘aggregator’. company or project beyond distribution.

But, as noted above, the expansion of Where a distribution partner is providing

services has also seen distributors taking all of these extra services to a client, it
on – or at least funding - some or all of is actually undertaking the majority of
the marketing and promotional tasks the tasks traditionally associated with
associated with a new release, ie work that a record label. The main area of the
would traditionally be undertaken by the label’s operations excluded from this list
rights-holder or by a specialist agency paid is A&R, so the signing of new talent, artist
by the rights-holder. development, and overseeing the creative
process of producing new recorded music.
And finally some distributors also provide
additional services to rights-holders beyond Where a rights-holder takes as many
activity around specific releases, which services as possible from a distributor, you
might include things like neighbouring basically have a situation where the label
rights management, royalty administration is in essence an A&R operation that then
and the pitching of catalogue to potential plugs into a distributor’s infrastructure for
sync clients. everything else. There are parallels to this
approach in music publishing, where a

DISTRIBUTION
26 REVOLUTION
small publisher is principally an A&R outfit, When it comes to distributors offering a
with a bigger publisher actually handling all much wider range of services to single-
the rights management and administration. artist-label clients, it’s worth noting that
some labels also partner with artists in this
A small number of distributors have now way as an alternative to a more traditional
even started offering extra services which record deal. In this scenario a label - which
arguably take them into the A&R domain, by is often also concurrently signing other
helping to support the recording process. artists to more conventional record deals
- would provide many but not all of the
Concurrent to this expansion of services, services of a traditional deal. The artist
many distributors have also expanded the would then expect more favourable terms
range of clients they work with. In particular, when it comes to rights ownership and
by working with more self-releasing artists revenue share.
via their single-artist-labels. For the DIY
distributors we described above this is You could argue that distributors offering
the primary client base.However, some more services than normal and labels
distributors whose clients are traditionally offering fewer services than normal results
labels now also routinely work directly in a similar proposition from an artist
with artists – though these are likely more perspective. This is particularly true if and
established artists who run their single- when a distributor starts to provide A&R-
artist-label in partnership with a producer like services, as some have, at which point
or manager, or studio or artist management the line between distributor and label
company. really starts to blur. Either way, for more
established artists, especially heritage
Once a distributor is regularly working acts, this option of forming a single-artist-
with single-artist-labels we can again label which is actually run day-to-day by
reconsider the definitions of label services a producer or manager, and then hiring a
and artist services. Is ‘label services’ when distributor to do much of the actual work,
the client is a label and ‘artist services’ has created an attractive alternative to
when the client is an artist? Or, in fact, is signing a more traditional record deal with
‘label services’ about providing the services a more traditional record label.
of a label to an artist, and therefore it
should apply more to single-artist-label This evolution of the music distributor in
clients? terms of services offered and client base
– and the blurring of the line between label
Again there is no industry-wide consensus and distributor – creates an interesting
on this and, in many ways, it’s mere challenge. Because it means that some
semantics, ie precise definitions do distributors are now in essence competing
not matter, providing a rights-holder with their own label clients. We will discuss
understands that different distributors and this challenge – and what it means for both
different distribution deals may involve a labels and distributors – in Section Eight.
very different service proposition.

DISTRIBUTION
REVOLUTION 27
 6. THE MENU OF SERVICES

In this section we of overall listening in any one month

was accounted for by a rights-holder or
outline in a little more distributor’s catalogue.
detail the range of
services a distribution Though there may well be minimum
guarantees, advances, equity and fees
partner may now offer included in the deal too, the size of which
a rights-holder. may be reliant on the scale and popularity
of the rights-holder or distributor’s overall
catalogue.
We organise these services into four
groups: those provided by the original
aggregators; the additional services CONTENT DELIVERY
involved in full distribution; the extra The distributor delivers the digital content
marketing and promotional services some to the DSP. To do this it will build – or buy-
companies now also offer; and other ways in – a platform that facilitates this process.
a distribution partner might work with a The rights-holder will upload recordings
rights-holder. and accompanying images and meta-
data to this platform, which will then
automatically push that content into each
6.1 AGGREGATION DSP according to that DSP’s requirements
These services relate to getting music and specifications.
onto the digital platforms in line with each
DSP’s requirements.
In the early days of digital music, some
distributors would have been more hands-
DSP DEALS on in the actual content upload process
The distributor has deals with all the key if working with rights-holders who were
DSPs, which the rights-holders can then more used to releasing physical product
participate in, meaning that the rights- and who were therefore still adapting to
holder doesn’t need to negotiate or the digital world. Most rights-holders also
manage deals itself. The distributor may had to undertake the task of digitising
have negotiated these deals with the DSPs back catalogue.
directly, or it may be a Merlin member and
therefore utilise Merlin-negotiated deals Though these days most distributors are
for some or most services. assuming that rights-holders are able
to manage the upload process via their
platforms, especially for new releases,
As outlined above, DSP deals – especially
which will today be put together with
in the streaming domain – have a number
digital delivery in mind.
of elements to them. The core deal is
revenue share based on what percentage

DISTRIBUTION
28 REVOLUTION
 MENU OF SERVICES

AGGREGATION
DSP DEALS CONTENT DELIVERY

CONTENT CHECKING CONTENT IDENTIFIERS

DATA FEEDS PAYMENT PROCESSING

DISTRIBUTION
B2B MARKETING ANALYTICS

MARKETING SERVICES
CONSUMER MARKETING CREATIVE /CONTENT

OTHER SERVICES
PHYSICAL DISTRIBUTION DIRECT-TO-FAN

CATALOGUE CHANNEL MANAGEMENT

NEIGHBOURING RIGHTS ROYALTY ADMIN

SYNC ANTI-PIRACY ACTIVITY

DISTRIBUTION
DISTRIBUTION
RREEVVOOLLUUTTI IOONN 29
 CONTENT CHECKING functionality, and some will be used for
payment purposes.
As part of the content delivery process, the
distributor needs to check that the content
provided by the rights-holder - including Among the key data points are some
the audio file and accompanying visuals unique identifiers used by the record
and meta-data – meet the requirements industry. These include the International
of the DSP. Most DSPs take these Sound Recording Code, or ISRC, which is
requirements very seriously and, to that the unique identifier for the track. Single
end, might rank distribution partners based and album releases often also have a
on their adherence to said requirements. Universal Product Code, or UPC.

Part of this process is also having checks Rights-holders may be in a position to

in place to confirm that the rights-holder issue these code themselves or they may
is indeed the rights-holder, ie they own or need their distributor to provide these
control the sound recording rights in the identifiers for them.
files they are uploading. DSPs increasingly
look to their distribution partners to ensure DATA FEEDS
that people do not use their systems to
Once a rights-holder’s music is streaming,
infringe copyright.
the DSP will return both usage data
(how often tracks were streamed) and
There have been a number of high profile
royalty data (how much money tracks
cases where unofficial (and therefore
have generated). The former is provided
illegal) uploads have occurred and this
on a very regular basis (commonly daily)
issue is currently subject to litigation in
while the latter will come in monthly. The
the US, with lawsuits claiming that the
distributor needs to work out how to pass
problem is much bigger than previously
this information onto the rights-holder.
acknowledged.

Some DSPs now publicly rank or certify Most distributors will provide some kind of
distributors, and these content checking portal via which rights-holders can access,
processes – including anti-piracy measures utilise and understand this data. Bigger
– are key criteria for securing a top ranking. rights-holders may also want this data in
its raw form and will then build their own
platforms for processing it. Smaller rights-
CONTENT IDENTIFIERS holders will likely want as much help as
When recordings are delivered to DSPs, possible from their distributors in handling
an assortment of meta-data must also be this information.
provided. Some of this will be displayed
by the DSP on its platform, some will be
PAYMENT PROCESSING
used to enable search and discovery
Once a rights-holder’s music is streaming,

DISTRIBUTION
30 REVOLUTION
the DSP will also start making payments for distributor. Rather than simply providing a
its exploitation of each recording. These DSP with content, it tries to persuade that
payments will be made to the distributor DSP to place the content in a prominent
according to the terms in the distributor’s position on its platform.
deal with the DSP. The distributor then
needs to report this income to the rights- This kind of activity was also a key part
holder and pass the money on minus its of physical distribution and was generally
commission and fees. referred to as ‘sales’. In the physical
domain, a key challenge was persuading
It’s generally important to the distributor a high street retailer – with its limited
that this money passes through its bank shelf and storage space – to even stock
account, as – assuming it is charging a a release.
commission for its services – this is how it
both knows what commissions it is due and Although a retailer could always order
ensures those payments are made. a specific release at the request of a
customer, having a record actually on
As part of the payment process, rights- display would greatly increase sales.
holders will need to know what specific Beyond having a release stocked at all,
recordings any payments it receives relate the other sales challenge was having it
to. Because it may also have to account stocked in a prominent position in the
to other beneficiaries of the recording, store – eg by the entrance or tills – as this
principally the main artists who appear on would increase exposure for the release
it. and lead to all important impulse buy
purchases. This was usually referred to in
the record industry as ‘racking’.
6.2 DISTRIBUTION
These services are also directly linked to With the shift to digital, stocking ceased
the rights-holder’s relationship with the to be an issue, because digital platforms
DSPs, although they involve the distribution can in theory stock everything. However,
partner going one or two steps further. So, prominence within a digital store was
not just getting content onto the platforms, even more important, given the increased
but working with the platforms to drive choice for the consumer.
sales and streams. And not just passing on
DSP data, but helping rights-holders make
In the download space this meant
sense of that information.
securing positions on home pages and
genre home pages, ensuring a track was
SALES & B2B MARKETING correctly categorised so that it would
This is probably the key activity that appear in appropriate genre charts, and
moves a company from being a simple getting featured in any editorial or direct
aggregator to actually becoming a marketing a DSP produced.

DISTRIBUTION
REVOLUTION 31
 In the streaming space this may also mean domain, which has closer parallels with
being featured on home pages or in direct how the music industry has always pitched
marketing activity. For those streaming music to radio, what was traditionally
services that also carry advertising, a called ‘sales’ is now sometimes referred
distributor may also have access to to instead as ‘B2B marketing’. The latter
advertising slots as part of its deal. Though term correctly implies that playlist pitching
increasingly the most important thing in needs to sit closer to other marketing
this domain is getting releases featured activity than perhaps the sales function
on relevant playlists on the streaming traditionally did.
platforms.
ANALYTICS
Playlists are incredibly important for
This is another enhanced service that
driving listening and discovery in the
arguably moves an aggregator into
streaming domain. On most streaming
distribution. A distributor has to pass on
platforms anyone can set up a publicly
usage and royalty data that it receives
available playlist. Many distributors have
from the DSPs to its rights-holder clients.
set up their own playlists which they can
Many distributors have built – or bought
use to promote and test new releases.
in – an online portal via which to share
Though with the DSPs that are biggest in
this data. Some distributors have then
Europe, the playlists curated by the DSPs
also developed and evolved these portals
themselves have the most prominence and,
to help rights-holders better process,
in most cases, by far the most subscribers
understand and utilise the data they are
and plays.
receiving.
Rights-holders are therefore now
The music industry now has significantly
constantly pitching music to the people
more data at its disposal about fans and
who curate these playlists at the DSPs. A
consumption, with data from social media,
relatively small number of people compile
ticketing and other direct-to-fan channels
these playlists and they obviously have
on top of that which is provided by the
a limited amount of time available to
DSPs. Everyone has struggled to cope with
be pitched to. Therefore those rights-
this influx of insights - which data really
holders with existing relationship with
matters and what should you do with it?
these curators have a real advantage.
Therefore it is helpful to rights-holders if
Many smaller rights-holders increasingly
their distributors can provide tools and
rely on their distributors having those
portals to help with this process.
relationships.

Where the rights-holder is a label, they

As this activity has shifted away from
may also want or need to share some or
stocking and racking – or the digital
all of this information with each artist and
equivalent – and into the playlist pitching
their management teams. Although some

DISTRIBUTION
32 REVOLUTION
DSPs now provide usage data directly to the marketing of artists and records. This
artists and managers via their own popular work is what arguably takes a distributor
artist-centric analytics platforms, such as beyond distribution and into what might
Spotify For Artists and Apple Music For be called label or artist services.
Artists. Through these services, the DSPs
are circumventing the distributor and
rights-holder when it comes to the delivery
CONSUMER MARKETING
of usage data. If a distributor gets involved in consumer
marketing it means it is helping to promote
the release to existing and potential fans,
That said, there is still significant value in a
rather than just pitching it to decision
distributor providing a rights-holder – and/
makers at the DSPs.
or artists – with tools to receive, crunch
and utilise streaming data, because the
DSP’s own platforms always provide a The distributor may do this by advancing
relatively narrow view, being limited to monies to help pay external marketing
the data of one service. This will become agencies or by employing its own teams
more of a limitation as the streaming of marketers and making them available to
market matures and, in many countries, a rights-holder. Some physical distributors
no one service dominates. If a distributor had already started to offer marketing as
provided analytics platform can pull in the an added value service before the rise of
other fan data too – especially downloads digital, but many digital distributors have
and physical sales, but also other stats - it made such services a core part of their
becomes even more valuable. offer.

Although some distributors – and rights- The record industry traditionally splits its
holders – have invested heavily in consumer marketing activity into a number
developing analytics tools, it does feel like of strands.
there is still much more potential in this
domain. It’s also important to note that • The marketing team oversees budgets
and strategy, commissions creative
a number of start-ups have emerged in
recent years that specifically offer this as materials used in the campaign,
standalone service to rights-holders and and likely manages any advertising,
artists, pulling in data from a variety of promotional events and/or mailing list
sources. activity.
• The press team pitches releases
to editors and journalists at blogs,
6.3 MARKETING websites and music magazines, and
SERVICES other newspapers and magazines
where appropriate.
This group sees the distribution partner
getting much more actively involved in • The promotions team pitches releases
to DJs, producers and heads of music

DISTRIBUTION
REVOLUTION 33
 at radio, TV and clubs, seeking to get will also help rights-holders further
new releases played. monetise their releases and catalogues,
• The digital or social team manage
online activity, usually utilising the social
and manage their data and channels, by
providing additional services.
channels of both the artist and the
label. Some companies may see some of these
extras as actually being part of the core
Many distributors offering consumer distribution proposition, while others will
marketing will organise teams and activity consider them to be added-value activity
according to this traditional structure for that goes beyond distribution.
record industry marketing campaigns.
Some distributors may also have separate
divisions working in some of these areas,
CREATIVE / CONTENT possibly signing their own clients.
This could be seen as part of the
consumer marketing operation, though
it is increasingly important so is worth PHYSICAL DISTRIBUTION
mentioning separately. Of course, for traditional distributors this
was the core service. However, many
Social channels constantly eat content, digital distributors have also added
while in the streaming age the music physical distribution into the mix, this time
industry needs to keep new releases in both as an add-on service.
the media and people’s social feeds for
much longer. As a result, a large quantity For some rights-holders, physical is no
of marketing content is now required for longer much of a concern beyond possible
each release. So whereas in the CD era direct-to-fan activity. Though for others
a new release would be accompanied by physical is still very much part of the
a band photo, album artwork and promo business. This may mean the continued
videos for each single, today a constant release of CD versions of new albums,
supply of visuals is required. and/or further capitalising on the vinyl
revival.
Those distributors seeking to help rights-
holders with marketing may get involved Some rights-holders see physical and
in this process, becoming generators of digital distribution as two different things
marketing content. and are therefore happy to work with
different partners for each side of the
business, perhaps keen to ensure that
6.4 ADDITIONAL neither physical nor digital is seen as an
SERVICES add-on to the other.
In addition to aggregation, distribution
and marketing, many distribution partners Bigger rights-holders may also work with

DISTRIBUTION
34 REVOLUTION
different physical distributors in different Nevertheless, some rights-holders now
territories or on different releases, as utilise these channels, and therefore some
described in Section Two. distributors have been looking at ways
they can facilitate this process. This may
However, some rights-holders would prefer mean providing tools and platforms to
to have all of their distribution in one place. help with the e-commerce side, or helping
Some digital distributors have substantial manage D2F stores and campaigns built
physical distribution operations of their own, on third party platforms, and/or doing the
possibly because they began as a physical fulfilment on sales.
distributor, or because they acquired a
physical distributor, or because they have CATALOGUE MANAGEMENT
invested in this side of the business. Others
In addition to the distribution and
actually outsource most of the heavy lifting
marketing of new releases, a distributor
involved in physical distribution, but may
may also get involved in helping a
keep the sales activity in-house.
rights-holder get more out of their back
catalogue. And the shift to digital, and
DIRECT-TO-FAN especially streaming, has opened up
Beyond the download and subsequent new opportunities for exploiting a rights-
streaming revolution, another key change holder’s wider catalogue of recordings.
in the music industry caused by the rise
of digital is that artists now have a direct Whereas catalogue activity in the past
connection with core fanbase. This means largely involved re-releasing an album
artists can communicate to core fanbase – and basically treating it as if it were a
directly and then seek to commercialise new release, often with bonus content
this relationship by selling products and or in different formats – in the streaming
services direct-to-fan. Artists and their space exploiting catalogue is more about
business partners are still learning how to staging new marketing campaigns. Some
capitalise on the potential of these direct distributors are now getting into this space
relationships. too. They would already be likely providing
basic distribution services on this catalogue
Although some labels initially saw direct- anyway, but they might now offer the extra
to-fan as a competitor – the narrative marketing services in relation to catalogue
being that D2F channels would allow as well as new releases.
artists to cut out labels – in fact these
channels create another retail partner for
all rights-holders. Though, with the shift
CHANNEL MANAGEMENT
away from downloads to streams, these While artists will usually have their own
channels probably offer more potential ‘channels’ on most DSPs where their various
for selling physical and merch rather than releases are collated, these channels are
digital product. more important on certain platforms.

DISTRIBUTION
REVOLUTION 35
 They are perhaps most important on So any artists who appear on a recording
the user-upload platforms like YouTube are due a cut of neighbouring rights
and SoundCloud, where each creator’s money, even when they are not the
individual profiles are much more copyright owner and/or have no royalty
proactively pushed by the platform. share agreement with the rights-holder.
Rights-holders may, therefore, want to put This artist payment is often referred to as
more effort into managing these channels. ‘performer equitable remuneration’.

Some distributors can assist in this Neighbouring rights are usually

process. And while that activity might administered by the collective licensing
centre on new releases, again this work is system and therefore collected in first
often done on an ongoing basis and often instance by a collecting society, sometimes
sees distributors getting more involved in called a performing rights organisation
marketing a rights-holder’s catalogue. (PRO) or a collective management
organisation (CMO).
NEIGHBOURING RIGHTS The CMO for the record industry in the UK
MANAGEMENT is PPL. Because of the way this money is
When the record industry talks about shared out between rights-holders and
‘neighbouring rights’, these days they are artists, in some countries there will be one
usually referring to the monies paid to society for the rights-holders and another
rights-holders by radio and TV stations, for the performers. However, in the UK PPL
and pubs, clubs, cafes, gyms and any represents both groups. Although where
public space that plays recorded music. an artist is both the rights-holder and the
In copyright terms, these people are performer they basically join the society
exploiting either the ‘public performance’ twice, so that PPL is able to pay them both
or ‘communication to the public’ controls the rights-holder and performer share of
of the copyright. the money.

Royalties of this kind have always been due As neighbouring rights have become an
to the record industry (in most countries), ever more important revenue stream, many
but became much more important in distributors have started to help rights-
the 2000s as CD sales slumped and holders with this side of their businesses
new digital revenue streams were yet to too.
compensate for this decline.
At a basic level, this will mean ensuring
It’s worth noting that this revenue stream that all the appropriate data is submitted
also works differently to all the other to the relevant CMOs when any new
revenue streams in that, in most countries, recording is released. This includes data
artists have a statutory right to share in about both the copyright owner and
this income at industry-standard rates. the performers. Where distributors take

DISTRIBUTION
36 REVOLUTION
responsibility for this, it’s important that ROYALTY ADMINISTRATION
they do so as an agent of the actual
Another service now offered by some
rights-holder, and not by claiming to be
distributors is royalty administration, which
the rights-holder themselves.
is to say helping rights-holders calculate
what monies are due to the artists a
Distributors taking responsibility for logging
label works with, and then reporting
recordings with the CMOs is now so
those calculations to the artists and their
common, that you could argue doing so is
managers and accountants.
part of basic distribution, rather than an
added value service. However, there is a
Royalty administration of this kind is a
more advanced way in which a distributor
considerable task for rights-holders and
may be involved in neighbouring rights which
bad royalty reporting can often damage
goes beyond the basic role of a distributor.
artist/label relationships. The shift to
streaming and the high number of micro-
Each CMO generally only collects
payments this involves has only increased
royalties in its local market. A rights-
the royalty administration task. Therefore
holder can either join every society around
many rights-holders look for people and
the world to collect its royalties or allow
platforms to help with the process.
its local society to represent its rights
globally. In which case that society will – in
theory at least - collect royalties from its SYNC
counterparts across the globe whenever Another revenue stream that became
the rights-holder’s music is used. increasingly important as CD sales
slumped in the 2000s was sync, ie the
As this revenue stream has become more synchronisation of music into TV, film,
important, a market has emerged for games and ads.
neighbouring rights agents which allow
rights-holders to connect directly to all Like the vinyl revival, the sync market can
societies around the world through a sometimes be exaggerated. Overall sync
single access point. In theory appointing accounts for just 2% of global recorded
your local society to represent your rights music revenues (though that figure
globally achieves the same, though these excludes most TV sync income, which
agents argue that they can get rights- in most countries sits with neighbouring
holders paid their global neighbouring rights).
right royalties faster and more accurately.
That said, for some rights-holders, sync
A number of distributors have also set is a more important revenue stream, and
themselves up as neighbouring rights accounts for considerably more than
agents and therefore can provide this 2% of income. This is true of certain
more advanced level of neighbouring independents who have a catalogue that
rights management as an extra service. is particularly suitable for synchronisation

DISTRIBUTION
REVOLUTION 37
 and/or have made particular efforts to This usually involves providing tools for
secure sync deals. monitoring the distribution of music
on unlicensed or semi-licensed online
The music supervisors who curate and platforms, so that the rights-holder can see
license music for the TV, film, gaming when their recordings have been uploaded
and advertising sectors are another small by third parties to blogs, websites, digital
group of decision makers who are being lockers, file-sharing networks, social
pitched a lot of music by a lot of people. media, user-upload platforms and similar
Like with playlist pitching, personal services.
relationships with these people gives you
an advantage, and many smaller rights- These tools then usually simplify the
holders will struggle to form and maintain process of issuing takedown demands
such relationships successfully. against these platforms. Some platforms
respond to such demands, others do not.
To that end, many rely on third party Even where they do, often when recordings
agents to represent their catalogues in the are removed at the rights-holder’s request,
sync domain, and some distributors have the same recordings quickly reappear,
seen this as another opportunity to again requiring another takedown to be issued.
expand the services they offer their rights- Hence why rights-holders need tools to
holder clients. help them manage this process.

Once a distributor is offering sync licensing Where a platform does not respond to a
services, there is possibly the opportunity takedown request, it is then for the rights-
to expand this even further by looking holder to decide whether they wish to take
for other licensing opportunities and/or further action to enforce their copyrights.
negotiating brand partnership deals that
go beyond just sync. It feels like it’s early
days for distributors moving into those 6.5 PICK & MIX
areas, but we would expect a further All distributors will offer at least some of
expansion of services in this domain in the these services. Aggregation is a given and
years ahead. the other distribution services are also
increasingly the norm.

ANTI-PIRACY ACTIVITY Even the DIY distributors usually offer

In addition to ensuring that their platforms some sort of analytics platform, even if
are not being used to upload music they can’t realistically offer anything other
onto the streaming services without the than occasional B2B marketing support
permission of the copyright owner, some with such a large number of clients. Of
distributors may also offer their clients a the other services, the exact menu varies
wider range of anti-piracy services. greatly from distributor to distributor.

DISTRIBUTION
38 REVOLUTION
Many distributors will allow clients to pick also some agencies that will offer B2B
and mix from their menu of services or offer marketing – especially playlist pitching – as
various tiered packages. When working a standalone service.
directly with artists or single-artist-labels,
this flexibility will be pitched as a unique A rights-holder with direct deals may
selling point over doing a more traditional also need help with things like rights
deal with a record label. Because a label administration, neighbouring rights
would usually assume it is going to provide and sync. Again there are specialist
all of these services and therefore won’t agencies that provide these services on a
necessarily be used to negotiating on standalone basis. Though a rights-holder
royalty rates by reducing the number of may nevertheless choose to work with
services it provides. a distributor in these areas – especially
neighbouring rights – even if they don’t
Quite how a rights-holder picks from this work with that distributor on actual
menu of services will be influenced by distribution.
which of the above described distribution
options they have gone for – ie the direct
deal approach, the Merlin deal approach
OPTION TWO: MERLIN DEALS
or the aggregator approach. Those rights-holders utilising Merlin-
negotiated deals for some or most of their
DSP relationships will also need to at least
OPTION ONE: DIRECT DEALS build or buy in a content delivery platform.
Those rights-holders with direct deals Merlin, of course, provides the deal, and
with the DSPs but without the resource also handles data feeds and payments.
or expertise to build their own content
delivery platform may be looking for just As with those who have direct deals, rights-
content delivery and/or data feed services. holders utilising Merlin-negotiated deals
Some companies specialise in offering just may still need help with B2B marketing,
these services on a standalone basis. In analytics, consumer marketing and so on.
the UK that would include CI for content Again they are probably more likely to hire
delivery and Entertainment Intelligence specialist agencies to undertake most
for processing data. Some distributors of this work, although might work with
will also offer these services standalone, distributors as well, especially in areas like
which in the UK would include FUGA. neighbouring rights.

The rights-holder may also want help

with marketing, though would probably
OPTION THREE:
be more likely to hire the services of AGGREGATOR DEALS
specialist marketing, press, promotions These are rights-holders who rely on a
and/or digital agencies rather than using distributor for the full aggregation process,
a distributor for this work. There are now so DSP deals; content delivery, checking

DISTRIBUTION
REVOLUTION 39
 and identifiers; data feeds; and payment from monies generated by the recording,
processing. But many will also utilise other either by recouping specific budgets or
services offered by the distributor, with simply taking a higher commission.
B2B marketing and analytics often a given,
and the other services also attractive. In order to offer this option, the distributor
needs to be in control of the payment
It is much easier for rights-holders processing on digital income, which is to
employing this option to utilise the say the DSPs need to pay the distributor
distributors’ other services. As discussed first, so that it can deduct its fees and
above, one of the reasons why it is commissions from that income before
attractive for rights-holders to take these passing monies onto the rights-holder.
extra services from a distributor is that And once a distributor is in control of
doing so often reduces the up-front costs payment processing, it might be attractive
of releasing new music. Because the for a rights-holder to take more services so
distributor will cover its costs down the line to further reduce its upfront costs.

DISTRIBUTION
40 REVOLUTION
7. CHOOSING A PARTNER

There are various one-off charges, per-release charges and

annual charges all employed in different
criteria rights- ways.
holders could and But for higher level distribution (and some
should consider DIY distribution) the commission model
when deciding which is more common. The exact rate will
vary depending on the level of services
distribution partners to offered and the status of the artist and
work with. likely revenue they will generate. That
said, commissions of between 10-30%
Obviously those utilising direct DSP deals are common, and possibly higher once
or Merlin-negotiated deals will only need consumer marketing services are being
the content delivery component of the provided. Additionally, the distributor may
core aggregation process, and possibly also seek to recoup certain defined costs
assistance on B2B marketing and analytics. or fees relating to specific services from
They will therefore probably focus on total income and/or the rights-holder’s
those companies that provide these as share, in addition to taking its standard
standalone services, usually on a fee basis. commission.

For those looking to utilise the DSP deals As already mentioned, digital distribution
of a distributor, and therefore at least all is a very competitive market place.
six elements of the aggregation process - Major record companies expanding their
and probably other services too - there will operations in this domain and the arrival
be a much greater range of companies to of a number of well-funded start-ups
choose from. The criteria they employ when seeking to build market share has seen
choosing a partner may include some or all commission levels pushed downwards.
of the following. Certain distributors may also develop
ways to automate previously labour-
intensive tasks, allowing them to offer a
PRICE lower commission rate without affecting
A distributor will commonly have a core their profit margin.
revenue share deal with a rights-holder
that will see it take a commission off Recorded music has traditionally been
any revenue streams it is involved in. The perceived as a famously risky business.
exception is the DIY distribution model. Though most independent record
Some, though not all, DIY distributors companies have become experts at
charge the client a modest upfront fee managing this risk, as evidenced by many
and then pass on 100% of all subsequent such labels having been in business for
income it receives. There are various 20-40 years.
manifestations of this approach, with

DISTRIBUTION
REVOLUTION 41
 That said, there is still a significant level DSP deals or investing in infrastructure, it
of risk management required whenever can be a disadvantage too. Particularly
releasing new music, and especially when when it comes to more labour intensive
working with new artists, with large upfront activity or if a distributor is pitching
costs and few guarantees any one release music – for example for playlists – where
will be profitable in the long-term. Many realistically you can only ever pitch a small
independent labels also operate on low number of releases at any one time.
profit margins and as a result experience
frequent cash flow challenges. Though, sometimes a major or newly
launched distributor with access to cash
Steep revenue declines across the record chooses to pursue a loss-leading market
industry in the 2000s and the challenge of share growth strategy. Either because
shifting to a new streaming model in the of the aforementioned advantages of
2010s both increased the risk associated scale, or to impress investors and potential
with the business. Although the global clients, particularly where the distributor
record industry has now been back in gets a big name client to add to its roster.
growth for five years. Where a larger or newer distributor is
pursuing such a strategy, it may in fact be
But either way, given the continued risk for able to offer the rights-holder considerably
labels, a distribution sector increasingly more than they are really paying for, in the
competing on price has arguably been short term at least.
advantageous for rights-holders, even
if price wars tend to give bigger players But, of course, that isn’t necessarily for
an advantage and can ultimately drive the long-term good of the market, given
smaller players out of business (or force that loss-leading market share building
them to sell to a bigger player – likely a can only ever be a short-term strategy. So
major record company) reducing overall rights-holders will only enjoy the benefit
choice. of that strategy for a time, meanwhile
other good independent distributors may
That said, most smaller distributors – struggle to compete. Which can result in it
especially when criticising bigger or newer being acquired by a bigger rival or major
rivals – often say rights-holders should record company.
remember the mantra that, generally
speaking, “you get what you pay for”. As referenced above, increased
competition pushing down the price of
Which is to say that, even with the most core distribution services is also one of
tech-savvy distributors, only so much of the motivating factors for distributors
the work can automated, and quality diversifying their range of services. Adding
manpower costs money. And while in marketing and such like can justify
representing a larger catalogue can be an retaining a higher commission, while
advantage when it comes to negotiating moving into things like neighbouring rights

DISTRIBUTION
42 REVOLUTION
CHOOSING A DISTRIBUTION PARTNER

What commissions and fees will the distributor

charge you and how long are you committed?

Will they advance any money?

Are you relying on a cash advance?

Do they have a good portal for providing assets

– and accessing and understanding data?

What services can they offer?

And which ones do you actually need?

What DSPs do they work with – and do they use

direct, Merlin or partner company deals?

Do they offer relevant genre expertise?

Do they offer expertise in your priority markets?

What level of playlist pitching and

other B2B marketing support can they offer?

Is physical distribution important to you -

and if so can they provide it?

Are they a big or small distributor -

and what best suits your needs?

Are they and their entire supply chain

independent - and does that matter to you?

Who are the key people working there

- and can you work with them?

DISTRIBUTION
DISTRIBUTION
RREEVVOOLLUUTTI IOONN 43
 management allows distributors to share direct deals – may in turn look to the DSPs
in another revenue stream. to advance them money. So in some ways
this advancing of monies works its way
When rights-holders are negotiating down the digital supply chain: ie the DSP
distribution deals, price must, of course, advances to the distributor who advances
always be balanced with quality of to the label who advances to the artist.
service. A distributor unable to compete
on price, but which offers a more hands- Of course more recently, in a small number
on service and/or particular expertise, of cases, Spotify has started paying
may be able to deliver a more successful advances directly to single-artist-labels, in
release campaign, so that the rights- essence cutting out the middle men. If this
holder is ultimately better off, even though becomes a more common trend, it could
the distributor took a bigger cut. make things tricky for any distributors
or labels using the payment of a cash
advance as the key negotiating tool when
ADVANCE signing rights-holders and artists.
In addition to price point, the other
financial element of any deal between a Nevertheless, for any rights-holders
distributor and a rights-holder relates to navigating the financial challenges of
whether the former will advance monies to the recorded music business described
the latter. These advances may be to cover above – especially smaller rights-holders
specific costs the rights-holder will incur who can’t draw on their own cash reserves
around a release or be a general cash or credit facilities - cash advances from
advance on future income. Advances may distributors are attractive.
relate to whole label or artist accounts or
to specific releases. Advances are, of course, often used as
a negotiating tactic that benefits the
Cash advances are also common in deals advance giver down the line in return for
between labels and artists. Therefore, offering a short-term cashflow benefit to
when a distributor works with single-artist- the advance-receiver.
labels, the artist may well be banking on
a cash advance to make a deal feasible. Which might mean the rights-holders – and
Meanwhile more conventional labels may any beneficiaries of those rights – seeing
well look to their distributor to provide an lower ongoing payments in the future.
advance so that they are in a position to in Therefore the short term benefits of
turn advance monies to the artist, as well advances always need to be considered
as cover other upfront costs associated in the context of the long-term costs.
with a release.

On top of that, in the digital domain, COMMITMENT & REACH

distributors – and rights-holders with Other key elements of any distribution

DISTRIBUTION
44 REVOLUTION
deal will cover exclusivity, geographical In theory, rights-holders will want to be
reach and time period. Which is to say, locked in to any one deal for as short a time
what music is the distributor distributing as possible, while distributors who incur
on what basis in which countries for how various upfront costs will want to share
long? in any revenues generated by the rights-
holder’s catalogue for as long as possible.
A general trend in the music rights Though realistically a rights-holder doesn’t
business is that the time periods that deals want to be switching distribution partners
run for have come down in recent years. too often either.
So, traditional label and publishing deals
with artists and songwriters do not last Because another issue for rights-
as long as they used to, in terms of the holders to consider is how easy it is to
number of recordings/songs the artist/ change distribution partners logistically
writer is obliged to deliver, and how long speaking. Even if the rights-holder is
the label/publisher will control the rights only contractually obliged to work with a
in that work. distributor for a relatively short period of
time, the logistical headache and risks
In both recordings and publishing ‘life-of- of switching partner can result in rights-
copyright’ assignment deals were once the holders sticking with a distributor beyond
norm, giving the label or publisher control the original deal period.
over the rights they acquired for decades.
In the record industry life-of-copyright This issue has been raised numerous times
assignment deals are still regularly signed, by labels in recent years, with the logistical
especially by new talent. Though over issues related to switching distributor
the last two decades independents in sometimes seen as “invisible hand cuffs”
particular have generally become much that can lock a rights-holder to a distributor
more flexible on this point, and may even when they have no contractual
compete against a bigger rival by offering obligations and are not entirely happy with
a shorter fixed-term assignment. Or even the services they are receiving. It is also
a fixed-term licence, which it is generally felt that some distributors exacerbate this
agreed is even more favourable to the problem by deliberately making it harder
artist. to move away from their platform in order
to retain business.
This general move in the music rights
industry to shorter term deals has also To avoid this, rights-holders should
impacted to an extent on distribution deals consider exit strategy when negotiating
as well. And, indeed, some DIY distributors any deal, and ensure they have access to
offer deals with no time commitments, their content, meta-data and DSP usage
where a rights-holder can leave by giving data should they wish to switch distribution
as little as a month’s notice. partners down the line.

DISTRIBUTION
REVOLUTION 45
 The independent label community should services available the better. This is most
also develop a code of conduct with the true for those rights-holders interested
distributors, so that those who do not in outsourcing lots of activities to their
seek to exploit the stress of exiting in distributor, most likely to reduce the upfront
order to win competitive advantage can costs associated with new releases.
be championed. We discuss this further in
Section Eight. Other rights-holders might actually prefer
distributors that offer a smaller range of
services, assuming that this will mean
PLATFORM OR PORTAL their distribution partner is more focused
Once a deal is done, a rights-holder will on the core elements of aggregation and
likely be connected to the distributor day- distribution.
to-day via an online platform or portal
through which they provide content, Some rights-holders say they sometimes
assets and meta-data and access usage feel their distributors are forcing services
and royalty data. This portal may also onto them - possibly in a bid to justify a
include any analytics tools the distributor higher commission or to enable them to
provides to help the rights-holder process, share in another revenue stream – when
understand and utilise the flood of they’d rather hire specialist agencies to do
streaming stats. that work or have decided they don’t need
said services at all.
Many digital distributors have invested
heavily in their portals. Rights-holders Most distributors insist that they operate
should consider how easy these portals a very flexible approach when it comes
are to use and what kind of data and to rights-holders choosing services. And
analytics they provide against the in some cases there are logistical as well
commission level being paid. They might commercial reasons why a distributor
also want to consider whether these wants to lock certain services together.
portals can help with their own reporting That said, it may also be in the distributor’s
to any beneficiaries of the rights which financial interest for as many services as
they control, such as artists and their possible to be utilised.
managers.

DSP DEAL SPECIFICS

RANGE OF SERVICES Each deal done between a DSP and a
We discussed the range of services a rights-holder or distributor is different.
distributor may offer in Section Six. The basic structure of each deal is usually
the same, but the exact revenue share
For some rights-holders, this range of percentage may be slightly different
services may be factor in deciding which (DSPs in the UK usually pay between 50%
distributor they work with, with the more to 60% of revenues to recording right-

DISTRIBUTION
46 REVOLUTION
holders). There may also be differences the specifics. And they should also make
in any minimum guarantee agreements. a commitment to always prioritise the
And both of these may be influenced by interests of the clients – rather than the
any advances that the rights-holder or distributor’s own business or any parent
distributor received. company’s business – when negotiating
any new DSP agreements.
Where a rights-holder is relying on a
distributor’s deal, therefore, the month- Again, we will return to this issue in Section
to-month payments they receive from any Eight.
one DSP will depend on the specifics of
the deal they are benefiting from. And
while in terms of percentages or average
GENRE OR REGIONAL
per-play rates the differences between EXPERTISE
deals may be only slight, when that is Some rights-holders may be drawn to a
applied across an entire catalogue over distributor because they have particular
a few years, the total financial difference expertise in a specific genre of music.
might be significant.
Although there is generally less genre
One challenge here, though, is that most specialism in the digital domain than there
deals between DSPs and the music industry was with physical – in that most DSPs cover
are confidential, and a distributor may not most genres – nevertheless there are still
be able to share key information about its some niche DSPs for certain kinds of music.
deals with rights-holders because of non- And when it comes to playlist pitching and
disclosure agreements or competition law marketing, knowledge of and contacts in a
concerns. This hinders a rights-holder’s particular genre can be very valuable. Also,
ability to choose a distributor based on some rights-holders simply like working with
the specifics of its DSP deals. people who have a passion for the same
sorts of music as they do.
Some distributors argue that, ultimately,
across all the different DSP deals, things Regional expertise can also be key.
probably even out. Though some bigger Although – unlike with physical distribution
rights-holders who have worked with – it is relatively easy for smaller distributors
multiple distributors at the same time have to upload music into DSPs worldwide,
been able to crunch the figures across the it nevertheless remains valuable for a
board and see which of their distribution distributor to have specific knowledge of
partners seem to have better deals with and contacts within any markets that are
which DSPs. particularly important to a rights-holder. It
should also be noted that some markets
Either way, distributors should be willing are harder than others to manage from
to explain the structure of their deals, abroad and therefore require substantial
even if they are not allowed to share local expertise.

DISTRIBUTION
REVOLUTION 47
 We should also note that, while services to playlisters at the streaming services,
like Spotify, Apple Music, Amazon and realistically you can only ever pitch a
YouTube dominate on a global scale - few new tracks at a time. For distributors
there are still other services that are key in distributing hundreds – if not thousands –
certain territories. of tracks each week, clearly it is going to
be difficult to provide solid support in this
That includes Pandora and iHeartRadio in area for all clients.
the US, the Tencent services and NetEase
Cloud Music in China, Yandex.Music and In addition to pitching to the curators of
VK Music in Russia, JioSavvn and Ganna playlists at the streaming services – or the
in India, Anghami in the Middle East, and owners of third party playlists that have a
Boomplay in Sub-Saharran Africa. Local decent audience on services like Spotify
distributors will usually have stronger and Apple Music – many distributors
relationships with these regional services. operate their own playlists on most of
the key platforms. These may or may not
And even the global DSPs also have command big audiences, but can be
regional playlisting teams, so local useful for both testing and seeding new
contacts can be important with those releases. And curators at the streaming
companies too. platforms may also be influenced by how
tracks perform on these playlists.
B2B MARKETING ABILITIES Distributors who set up their own playlists
Although every rights-holder obviously on the streaming platforms early on are
has their own priorities, pitching music to generally at an advantage here, because
the curators of streaming service playlists there was a time when the DSPs pushed
has become such an important part of third-party playlists much more proactively,
the music marketing mix that this has whereas they now tend to mainly push
become a key service distributors provide. their own playlist brands.
Especially for smaller rights-holders not
able to afford to build up their own in-
house playlist teams. PHYSICAL DISTRIBUTION
ABILITIES
Most distributors have put a lot of effort We mentioned above that for some rights-
into building this service in particular. As holders physical distribution remains
previously noted, this is an area where important, for now at least. Where this is
smaller and genre specialist distributors the case, the rights-holder needs to decide
have an advantage over bigger distributors, whether it wants a single distributor for
and especially the DIY distributors. both physical and digital or if it is happy to
have different partners.
This is because, even if you have a B2B
marketing team that regularly speaks Utilising different distributors for physical

DISTRIBUTION
48 REVOLUTION
and digital is pretty common, because we have said several times now, are more
many distributors have particular strengths likely to be able to include any one right-
in one or the other, but often not both. holder’s tracks when speaking to playlist
This is especially true when you go global. curators.
Working with different distributors in
different regions is also more common Smaller distributors may actually be
with physical than digital distribution. outsourcing some of the work to or utilising
the platforms of another distributor. This
When you have one distributor working on isn’t necessarily a problem, indeed it might
both, it might actually be relying on a third allow a rights-holder to have the benefits
party to deliver either the physical or the of a smaller distributor while also having
digital part of the distribution. When that access to some of the scale of a bigger
is the case, some labels may feel that they distributor. Though rights-holders should
might as well work directly with whoever is know whose servers their content and
actually doing the work. data sits on, and who has sight of that
data and how it is used as it flows from
However, there are advantages to having DSP to rights-holder.
both sides of distribution handled by one
distributor. This is particularly true if the
distributor is involved in marketing activity,
INDEPENDENCE
because they will be fully informed about Related to scale is the issue of whether or
the full release campaign and incentivised not a distributor is owned by one of the
to promote each element with equal three major music rights groups, ie Sony
vigour. Music, Warner Music or Universal Music.
Or whether their independent distributor is
outsourcing some of the work to a major-
SCALE owned distributor.
There are, of course, pros and cons to
working with big distributors versus small Again, there are pros and cons to working
distributors, in just the same where there with the majors, either directly or indirectly.
are pros and cons in artists working with But some independent rights-holders are
big labels versus small labels. very proud of their independence and
of the independent music community –
Bigger distributors generally have more and/or may want to publicly express any
weight when negotiating deals and will concerns they may have with the majors -
likely have on-the-ground personnel and therefore might not want to work with
and expertise in multiple markets, which a distributor owned or allied with a major.
remains important for some rights-holders.
There is also the issue that, when it comes
Smaller distributors can offer a more to negotiating some elements of the DSP
focused and dedicated service and, as deals, market share can become a factor.

DISTRIBUTION
REVOLUTION 49
 When negotiating their deals, majors will consider what happens (ie what is written
include the recordings they distribute in in the contract) if an existing distributor is
their market-share. acquired by or starts working with a major.

Therefore an independent rights-holder

might be helping a competitor secure a
KEY PEOPLE
more preferential deal with a DSP. That Finally, although it’s a cliché to say so, the
independent rights-holder will, of course, music industry is a people business. Artists
benefit from at least some elements of the often pick labels to work with because they
deal in the short-term, but not necessarily like the people who work there. Likewise,
all elements, and not if and when they when picking a distribution partner, rights-
switch to another distributor down the line. holders might be swayed by its people.

As mentioned above, the majors – and There is nothing wrong with this, as a
specially Sony Music – have been growing distributor will become a close partner
their distribution business in recent of a rights-holder – especially if they are
years, often via acquisition. Meanwhile providing a wide range of services – so
distributors which outsource some of the a good working relationship between
work will inevitably switch suppliers from both parties is important. Though, of
time to time. course, people move on and up, so it isn’t
guaranteed those people will remain the
Therefore rights-holders who have issues rights-holder’s main contacts throughout
with working with the majors need to the duration of the deal.

DISTRIBUTION
50 REVOLUTION
8. CHALLENGES & ISSUES

The evolution of the a decent period of time. Also there tends

to be more variation in minimum guarantee
distribution sector, arrangements than revenue share splits
and the growth in the (though arguably the minimum guarantees
become less relevant as any one service
number of services gains momentum in a market).
distributors provide, As also noted above, certain bigger
has greatly increased rights-holders who have worked with
the choice available to multiple distributors and who have been
able to crunch the figures have noticed
artists and labels. But some significant differences in different
these changes have distributor’s deals and have then used that
information in part to inform their decision
also created some making. But this information is generally
challenges and issues not available to smaller rights-holders.

for the independent

DSP DEALS -
music community.
SHARING THE VALUE
Although day-to-day, for a rights-holder,
DSP DEALS - the revenue share agreement between the
TRANSPARENCY ISSUES distributor and the DSP – and any minimum
As mentioned above, the distributor’s deal guarantees directly linked to plays – are
with each DSP will have various elements most crucial, the other elements of the
to it. With streaming services, the core deal are important too.
deal is likely to be revenue share based
on consumption share. But there may be In particular, there is the question as to
advances and minimum guarantees as what happens if a distributor receives an
well, plus equity and fees in first deals with advance from a DSP which is recoupable
start-up DSPs. but not returnable, and then it is not
recouped within the agreed time period.
Every DSP deal is different and most are So a distributor is advanced $1 million for
covered by non-disclosure agreements, a calendar year, but during that year only
which may mean the distributor cannot generates $900,000 under its revenue
share the specifics of any one deal. share agreement with the DSP.

Distributors often argue that the differences Under most deals the distributor would
between the deals are not significant, get to keep the remaining $100,000.
but – as referenced above – they may These unallocated advances have been
become so across a large catalogue and somewhat confusingly referred to as
‘breakage’ by the music industry (for

DISTRIBUTION
REVOLUTION 51
 historical reasons related to physical distribution, ie whether to seek direct
product). deals with DSPs; or opt-in to Merlin deals,
and then probably buy-in content delivery
Additionally, there is the question as to and data support; or whether to work with
what happens if a distributor secures a distributor on the entire aggregation
equity in a DSP and then subsequently sells and distribution process. Beyond that,
that equity for profit. there is the option to then work with that
distributor on wider marketing activities,
In both scenarios, the question is: does and/or utilise other services the distributor
the distributor share the profits from its offers.
advance and equity with the rights-holders
whose recordings it was representing at As referenced above, for rights-holders
the point it negotiated its deal. tackling the financial challenges of
meeting the upfront costs of a new
It is mainly the majors who are profiting release, it can be attractive to take a
from unallocated advances and equity range of services off a distributor which
sales in this way, usually from deals that will be paid for by future income, therefore
involved both their own rights and those reducing upfront expenditure.
of the rights-holders they distribute. To
that end, questions around breakage and Whether or not this approach works out
equity sale profits are relevant to major- more expensive in the long-run depends
label signed artists but also to those rights- on a number of variables, not least how
holders utilising a major’s distribution
successful the release is, especially if the
services.
distributor is recouping all of its costs
out of its commission, rather than initially
This has been a big topic of conversation
recouping certain upfront expenditure out
in recent years, initially in the artist
of all monies or the rights-holder’s share
community, and then subsequently
of income.
among independent labels distributed
by the majors. Some commitments have
But, if a rights-holder has the ability
been made by distributors to share some
and resource to manage most of the
of these additional profits, though the
distribution and marketing process, then it
commitments vary from major to major,
and have generally been more favourable
is likely more profitable in the long-run to
to directly-signed artists than to distributed operate under direct or Merlin-negotiated
labels. deals. Even if that means paying a Merlin
commission as well as fees to a content
delivery platform and possibly for data
COST BENEFITS AND and analytics support.
CONTROL
Unless, of course, a distributor is offering
Above we described the various options
an incredibly good deal on its commission,
rights-holders have when considering

DISTRIBUTION
52 REVOLUTION
which some market-share building doing well, and so will therefore work
distributors have been doing in recent harder. Which may or may not be true.
years for the reasons outlined above.
If the bigger advance enables the rights-
That said, whether or not the direct holder to invest in, for example, a bigger
or Merlin deal approach is more cost marketing campaign, then there can be
efficient in the long run also depends on sound business rationale to choosing the
what other marketing or admin services deal that provides that level of upfront
the rights-holder has to buy in, and also money. Though if the bigger advance is
the sometimes hidden resource costs of being sought to deal with unrelated cash
internal teams undertaking marketing and flow crises or simply because of a gut
other work. instinct that the bigger the advance the
better, then choosing a distribution partner
Even if the cost benefits of the different based on advance alone is probably less
approaches are hard to assess, because of wise.
all the variables, it is true that by keeping
as much work as possible in-house - or Though we should acknowledge the
relying more on specialist agencies for financial challenges faced by many rights-
marketing, who tend to work on a project holders, both self-releasing artists and
basis rather than retainer – the rights- independent labels (especially smaller
holder has more control over its business. lables), which may result in primarily
pursuing a big advance from a distributor
Which is to say its success isn’t reliant on a rather than focussing on the longer term
single supplier, which may cease to be so potential or wider benefit of a deal.
competitive on future deals as the market
evolves, and which could potentially For most labels, a small percentage of
become a competitor down the line (more catalogue will account for a significant
on which below). portion of income. Meanwhile many
smaller rights-holders are still to put out
what will become their ‘cash-cow’ release.
THE ALLURE OF THE ADVANCE Some who have got such releases in their
Most people in the music industry like catalogue nevertheless struggle to work
cash advances, and there are plenty of out how to use a sudden influx of money
deals that have been won by a label or to ensure the long-term future of the label
distributor simply offering to advance the overall.
most money.
But if, when they do secure that release, a
There is sometimes an assumption that a rights-holder can invest that income wisely
label or distributor that has advanced a and, as a result, advances become less
lot of money has more of a vested interest important when negotiating distribution
in that artist or rights-holder’s recordings deals, the rights-holder will have a greater

DISTRIBUTION
REVOLUTION 53
 choice of distribution partners to work There are, however, things the rights-holder
with. And will be in a better position to can do to make moving distributors an
select the services they take in order to easier process. First, and most importantly,
retain control. is that rights-holders should never treat a
distributor as its archive for recordings and
assets, and should always store copies of
EXIT STRATEGY all these things on its own server, preferably
As previously noted, one key issue a number backed up in the cloud.
of labels have raised is the logistical and
administrative challenge of moving from Second, rights-holders should ensure a
one distributor to another. Some rights- well thought-out exit strategy is included
holders fear that such a move may result in any deal along with suitable sanctions
in losing content, assets or data, or in if it is not followed, and that any tasks
problems occurring on the streaming they will need their outgoing distributor
platforms, like tracks or stats associated to undertake when moving suppliers are
with them disappearing. contractual obligations of that distributor.
Such contact terms should also be clear on
So much so, the work and risks involved whether the outgoing distributor is allowed
in moving suppliers can result in a rights- to charge fees for this work.
holder sticking with a distribution partner
even if they are not entirely happy with the Some labels and distributors have
services they are receiving. suggested that this is an area where
some kind of industry standard could
It was also felt that some distributors have be developed, to both manage the
exploited this issue to keep the business of expectations of and to provide some
unhappy rights-holders. Though, in some security for rights-holders.
cases, this may instead simply be due to
a lack of competence on a distributors’
part when it comes helping a client exit (ie
PARTNERS AS COMPETITORS
rather than a deliberate attempt to hinder This is another key issue raised by rights-
the process). holders. As noted above, as distributors
have expanded their range of services,
Obviously if a rights-holder parts company and have started to increasingly work
with a distributor even on good terms, that with self-releasing artists – usually via
distributor may not be hugely motivated single-artist-labels – they have started
to go out of its way to help with the to compete with their more conventional
transfer of content, data and services to a label clients.
competitor. Though future business, word
of mouth and professional pride should be Plus, of course, it has always been the
drivers to encourage distributors to help a case that some distributors are one part
rights-holder exit in as clean and efficient of a business that also operates more
a way as possible. conventional labels.

DISTRIBUTION
54 REVOLUTION
It’s not uncommon in the music industry music distribution is a fiercely competitive
for companies to collaborate on one market.
project and then compete on another,
and this need not be a problem. Though Physical distributors have obviously had to
rights-holders would understandably be deal with 20 years of significant decline
frustrated if their distribution partner in the sale of physical music products.
actively sought to work directly with As discussed in Section Two, this side of
their artists as soon as any contractual the market has downsized considerably
commitments to the rights-holder are – through closures, liquidations and
completed. mergers – so that we are getting to a
stage where there is one main last-man-
Concerns in this area have arguably standing physical distributor in each
increased with the shift to digital. market, to which pretty much everyone
Distributors are now usually in possession else outsources the work.
of much more detailed information about
the businesses of the artists they distribute, Some physical distributors successfully
and even more so if they are involved in moved into digital distribution, though that
marketing and other activities. too has proven to be a very competitive
market, with majors and certain well-
This information could then be used by funded start-ups competing aggressively
the distributor or a sister label to try to to build market-share. Meanwhile artists
secure a deal with an artist who previously have the option to use a DIY distributor
worked with a rights-holder client. which, although in theory aimed more at
grass roots talent, have sometimes also
Obviously in an open and competitive been used by more established artists who
market place for talent, there is only so prefer the business model.
much you can do to counter this issue.
And arguably more competition – and a This has often forced other distributors to
greater variety of deals on offer – is good become more competitive on price which
for the artist community. in turns hits their margins. This likely forces
them to take on a bigger client base and/
Though rights-holders and artists should or offer more services, which then creates
give some consideration to who has challenges around fulfilment. For many
access to any data relating to their smaller and middle-sized distributors, this
recordings and fans as it passes down makes merging with a bigger player more
the supply chain. This should also apply to attractive.
any other third parties that the distributor
outsources work to. Also, as noted, distributors who diversify
their range of services – and especially
those who start working with lots of
NEW COMPETITION single-artist-labels - also need to consider
As mentioned several times already, to what extent they will begin competing

DISTRIBUTION
REVOLUTION 55
 with their label clients, and whether that Therefore, in the main, a rights-holder
might damage future relations. needs their music to be streaming on all
the key platforms. Having to deal with and
Another recent talking point has been the manage separate uploading systems for
possibility of streaming services offering each and every platform would be time-
more direct-upload tools to artists, consuming and impractical. Therefore
allowing those artists to circumvent both the idea of having a single delivery point
labels and distributors. Some platforms – as a distributor offers - is very attractive
have offered this option for years, but it indeed.
was Spotify’s aforementioned experiment
with a direct-upload tool that kick- The platforms that are most notable for
started a much bigger debate about this having always provided direct-upload
approach possibly becoming the norm. options are YouTube and SoundCloud.
But these platforms are also marketing
There are, however, various issues with the channels and therefore managing these
idea that every DSP would ultimately offer separately may make sense for marketing
a direct-upload tool. And Spotify’s decision reasons. But with most of the other
to not pursue its direct-upload product services, there are no real benefits for
after a beta trial perhaps suggests that the extra work platform-specific-delivery
those issues mean that such a practice will would require.
not, in fact, be widely adopted.
All that said, it is inevitable that in the years
The biggest issue in that domain is that ahead distributors will see some of the
artists and labels really need to have services they currently provide automated
their music available on as many DSPs as and commoditised – by competitors, start-
possible. Yes, there was period when some ups or the DSPs - so that they no longer
artists were doing exclusivity deals with command the same value for rights-
single platforms. But those were generally holders. To this end, distributors need to
superstar artists agreeing to be limited to constantly consider the range of services
one DSP in return for a substantial upfront they offer and how they can continue to
payment. And, in the main, it was felt such add maximum value to the rights-holders
exclusivity deals were counterproductive, they work with.
even for the biggest name acts.

DISTRIBUTION
56 REVOLUTION
9. CONCLUSION & RECOMMENDATIONS

The music distribution to rights-holders. Especially smaller

independents and single-artist-labels that
market has evolved find it easier to work with fewer partners
dramatically over the overall, and who like being able to secure
extra services upfront paid for by a share
last two decades, of revenue down the line.
with the rise of digital
Though rights-holders need to assess
distribution and the whether their distributor really is the best
consolidation of the partner to provide all these services, rather
than using a bespoke agency or hiring
physical distributors. in-house expertise. Plus, as distributors
start to offer pretty much all the services
Today music distribution companies are of a label, and work directly with artists,
offering more services to a wider variety rights-holders face the challenge of their
of clients, to the extent that in some distributor partners becoming competitors.
cases the line is blurring between the
distributor and the label.Meanwhile, new These are all factors rights-holders
competition in the market, from major should be considering when choosing
players and well-funded start-ups, has a distribution partner, selecting which
resulted in commission rates being pushed services to take and negotiating on price
down and the amount of extra services point.
being provided going up.
The rights-holder should also be
This evolution has changed the thinking long-term and ensuring that
rights-holder/distributor relationship. their distribution agreement provides
Competition in the market has enabled a workable, efficient and enforceable
many rightsholders to secure more exit strategy, so that they do not end up
favourable deals. Though too fierce locked to an under-performing distributor
a price-war will result in further for logistical reasons.
consolidation of the market, reducing the
choice of suppliers for rights-holders long- Based on the research behind this report,
term. And where a distributor is offering we would also recommend that the
an extremely good deal to a rights-holder independent music community consider
in terms of fees or commission, that rights- the following actions.
holder should consider if the distribution
partner can really provide a quality service
at that price. • Agree on codes of practice for
distribution partnerships.
The widening range of services provided
by distributors has also proven attractive
• Identify the whole digital supply chain.
• Promote a distribution checklist.
DISTRIBUTION
REVOLUTION 57
 1. Agree on codes of 2. Identify the whole
practice for distribution digital supply chain
partnerships We have discussed above how
Rights-holders and their distribution distributors may actually outsource some
partners together should agree some of the services they offer to the client to
basic working standards for both to another company. Also, the distributor
follow. may have their own directly negotiated
DSP deals, or use Merlin deals, or they
AIM supports the ‘5 Cast Iron may utilise the deal of a parent, partner
Commitments’ cited by Simon Wills or external business.
of Absolute Label Services in a 2017
opinion-editorial piece for Music Business All these things can be to the benefit of
Worldwide, and see these as a sound the rights-holder, who wants to access the
starting point from which a wider code of best services and the best deals through
conduct can be developed. a single access point. But rightsholders
should be able to choose who they work
In his piece, Simon set out his belief in the with and – even more importantly in the
importance of distributors ensuring that modern music industry - who has access
the client has access to all their assets to and use of their data.
and data, that profits of unallocated
advances or equity from the DSPs is To achieve that, there should be
shared with the client base, and that the full transparency of the deals and
clients’ interests should always come first partnerships the distributor has in place,
when negotiating DSP deals. so a rights-holder – and, where the rights-
holder is a label, the artists they work with
One other area that has been identified – can understand the full digital supply
by AIM members as of particular chain from artist to fan.
significance and which currently creates
friction between rights-holders and It would be useful for AIM and its
distributors - and which would be community to fully map the digital supply
suitable for alleviating via a code of chain, but in an ever-changing landscape
conduct - is exit strategies. Therefore any of deals and acquisitions, this would fast
code of conduct should include specific be out of date and would likely knock its
exit strategy obligations. head against commercial confidentiality
issues. AIM can however encourage
distributors in this area to help enable
more transparency and inform rights-
holders so that they can identify every
entity involved in their own process.

DISTRIBUTION
58 REVOLUTION
3. Promote a Next steps
distribution checklist To stay updated with AIM’s future work
on the issues raised in ‘Distribution
Based on this research we have been Revolution’ – including follow-up
able to compile a music distribution activity and related training, events,
checklist, helping rights-holders get to conferences, networking and more -
grips with what is now on offer, and sign up to AIM’s newsletter and other
guiding them as to what they should be bulletins.
considering when choosing a distribution
partner and negotiating a distribution You can do this at bit.ly/aimupdate.
deal.
Key developments will also be promoted
As part of its remit to educate and inform via AIM’s social media as follows:
the independent music community, Twitter: @AIM_UK
AIM will be sharing this checklist with Facebook: @aim.music
its members, and especially newer Instagram: @aim_insta_uk
labels, self-releasing artists and other
businesses releasing music. CMU will also report on this future activity
via its media: the CMU Daily bulletin and
It will also share this knowledge via its Setlist podcast. You can sign up to both
other activities, including via its ‘AIM for free at cmusignup.com.
Academy’ training and conference
programme through the year, so that
everyone is asking the right questions
and fully understands the challenges
and opportunities of distributing music
in the digital age.

This guide © 2019 The Association of Independent Music Limited. All rights reserved.
No part of this guide may be reproduced or copied in any manner whatsoever without the
prior written permission, except in the case of brief quotation embodied in articles, reviews or
academic papers and in such instance a full credit must be provided prominently alongside.

DISTRIBUTION
REVOLUTION 59
 ‘Distribution Revolution’ is a
major new report from the
Association of Independent
Music (AIM) and CMU Insights.
It explores how the role of the music distributor has
evolved over the last two decades as distribution
companies have expanded the ways that they work
with independent music businesses, increasingly
moving into so called artist and label services.

It then explains the options now available to those

independent music businesses – including self-
releasing artists – who are seeking a new distributor,
outlining essential knowledge required before
selecting any new partner, for distribution and more.

THE ASSOCIATION OF INDEPENDENT MUSIC

AIM.ORG.UK
DISTRIBUTION
60 REVOLUTION