The Indy Record Company and Distribution, The Dilemma
Published: October 11, 2008
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I had planned on writing this article on a completely differend subject. However after reading my weekly trade publications, I felt compelled to revisit the distribution world. A recent front-page article in Billboard magazine made me realize just how fast he distribution of music is changing. The headline read,“Is National Indie Distribution Making It’s Last Stand?” Reading beyond the headline, the article states,“The U.S. independent distribution landscape is shrinking, and the ground is shaking.” In case you haven’t noticed the “ground shaking, here’s the recap of events since 1999. Established Indies such as M.S. Distributing, Platinum Entertainment, KTD and Paulstarr Distribution either closed their doors or filed for bankruptcy protection. Last fall, DNA went bankrupt, Valley Media’s assets were liquidated, thus leaving the future of every national independent distributor in question.
What then is the destiny of the major owned Indies, like Alternative Distribution Alliance (ADA) operater by the Warner Music Group, RED Distribution, owned by Sony Music, and Caroline Distribution, oporated by EMI Recorded Music? Well, it is generally believed that senior executives at those firms could decide to exit the independent distribution business to cut their losses. Further, the article states, “National independent distribution has become a tought commodity to come by for some smaller-volume companies that can’t do the $1 million in net sales that most national distributors see from a record company. Some players envision a return to regionalism as an alternative.”
A growing number of CDs released into the marketplace are distributed through independant networks. However, when you look over the distribution landscape, whether your focus is independent greatly diminished within the last 18 months. Also, many distributors have slammed their doors in the face of small record labels that cannot generate a million dollars in annual sales. Some established companies might be equipped to sell direct to retail or opt for self-distribution. But one of the major drawbacks of self-distribution is that you are responsible for collecton money from potentially hundreds of retailers and a hand-full of “one-stops” who have decided to sell your product. Just be mindful that you could be burned for large sums of money in the event your independent distributor folds his/her operation.
As I stated in my previous article, all of the “Big Five” distributors (BMG, WEA, EMI, Sony & Universal) are launching Gospel projects backed with very aggressive marketing plans and budgets. As far as the charts go, Independents charted 49 albums, while the “Big Five” charted 71 during 2001. Independent companies are finding out what it’s like to compete on a un-level playing field. Independents are being forced to leverage a much greater portion of their cash flow and stretch marketing dollars to satisfy their artists. Major companies can afford to make a financial mistake by making a video or underwriting a promotional tour, only to produce mixed results. Who wants to bank their company’s existance on the success or failure of one marketing plan?
Remember, Knowledge is power….so Know Your Business!
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