Demystifying the Realm of Digital Music Distribution

Over the years, music distribution has evolved from the era where music is produced and delivered as tangible products at physical stores to one where music is uploaded and purchased via digital stores - truncating the cost and hassle that the former era is known for. Re: production, shipping, storage cost etc.

Streaming platforms like Spotify, Apple Music, Deezer and the likes are primary facilitators of this evolution. According to IFPI, streaming now accounts for about 62.1% of total global recorded music revenues in 2020 - a 19.9% increase from the previous year. If anything, that shows how prevalent streaming has become in the music business.

Owing to this development, artists can now get their music to the public at minimal cost compared to the former era. This, to many, is a ‘middle finger’ to record labels and has heightened debate on whether artists still need labels especially following the ease of distribution. According to many, artists only now need an aggregator (relatively known as ‘distributor’) to help them upload music, as DSPs are structured in a way where artists can’t upload music directly themselves.

PS: Spotify attempted direct distribution but stopped less than a year in; on grounds that they wanted to learn from the experience while admitting that music distribution is best handled by distributors as it saves them the hassle from complications with substandard metadata, payout distribution et al.

As the relevance of digital music distributors have since intensified, let's touch on their core roles in today’s music business.

• Distribution of music to DSPs

• Administration of royalty to artists or rights holders

• Proffering of distribution strategy and trade marketing tactics

Distribution of Music to DSPs [Aggregation]:

This is simply getting the music out to stores. As most DSPs don’t allow interfacing with artists directly, distributors become intermediary between both parties. They ensure availability of the music across all platforms at uniform time.

Administration of Royalty to Artists or Rights Holders

This involves passing royalties and statements across to artists/rights holders. DSPs can’t afford the time and administrative costs of catering to every single artist, therefore they do so per distributor. And for artists, not many would be able to keep up getting statements from DSPs separately. The need for such consolidation buttresses the importance of distributors.

Proffering of Distribution Strategy & Marketing Tactics

Typically in distribution of products, the principle of favourable placement applies and music isn’t an exception. At physical stores, you’d see some CDs on the front shelf (which definitely guarantees more eyeballs) or the arrangement of some on a shelf based on categories like genre etc. This isn’t lost in the digital era, especially with playlisting.  When you open the Browse page of your favorite streaming platform, you’ll see what I’m talking about. Re: ‘New Music Friday’ and other banners, playlists - that has become like the holy grail of music distribution in the digital era.

Many of these playlists are formed by DSPs’ algorithm or editorial team, so now, you understand how DSPs are increasingly having more power and control over the music industry. Distributors are constantly in conversation with editorial teams on why their clients deserve certain placements. Some distributors leverage catalog strength in holding these conversations.

However, this part of the music industry is an interesting realm and might be confusing if you don’t pay enough attention. In the past years, we’ve become familiar with a couple distribution entities that many of us are either unsure of their modus operandi or how to classify them. Interestingly though, there are only about five umbrellas that these distributors probably fall under, in the grand scheme of things. Viz:

• Major Distributors

• Independent Distribution Partners

• White-label Distribution Solutions

• Open Distribution platforms

• Semi-label distribution services

Major Distributors

The following are examples of Major distributors.

• Caroline [now Virgin Music Label] (owned by UMG)

• Alternative Distribution Alliance [ADA] (owned by Warner)

• The Orchard (owned by Sony)

These are distribution companies owned/controlled by major labels. They seemingly interface with DSPs due to their major backing, of course. These distributors can afford to distribute catalog, negotiate deals and placements on behalf of independent/non-signed artists. 

Case Study: Tems’ - before RCA - last EP, For Broken Ears is distributed by The Orchard, who were probably responsible for negotiating the following placements.

While there’s no official announcement yet, from the first single off her forthcoming project, you can tell true of speculations that Tems is now with RCA - under Sony Music Entertainment (SME).

PS: Distributors would sometimes leverage the strength of their label catalog in having these conversations with DSPs.

PSS: Spotify did introduce a unified tool for submissions aimed at standardizing playlist pitching across labels and artists of all scope, which is a fair development to ensure indie rights holders are carried along. Many thanks to Merlin there but, the truth remains that it's relatively easier for artists to be visible on DSPs when signed or distributed by the major.

Independent Distribution Partners

The following Independent Distribution Partners.

• IDOL

• Believe

• Ditto [Plus]

• Stem

• Empire

• OneRPM 

Apart from the distributors controlled by major labels, there are top-tier distributors who are independent. These distributors cater to high-level independent artists. In May 2019, Stem announced that they’re dropping tens of thousands of artists distributed through its system due to the company’s decision to explore a new model called Stem Direct, where they’ll serve only a select number of artists with already established teams and track record of streaming momentum. Interesting, right? I’m not done. Also, each qualifying artist will get a dedicated account manager who can assist with playlisting, marketing strategy and general administrative tasks. Artists who are not eligible were given an ultimatum to either migrate their catalog to Tunecore or download their data and migrate to their preferred distributor. 

Also, like OneRPM, Ditto Plus is different from the Open. Ditto Plus provides an extensive suite of services ranging from PR, social media support, creative design, digital marketing, radio promotion and playlist pitching to high-level indie artists and management companies. 

You can put it like, Ditto Open leans more towards the function of an Aggregator while Plus goes in on music distribution.

White-Label Distribution Solution

• Consolidated Independent

• FUGA

• SonoSuite

• Vydia

This is top-tier for some independent labels or music/distribution companies who are not looking for distribution partners. These music companies have an in-house distribution team, so they partner with a white-label distribution service. White-label solutions target high-level independent companies with sizable catalog and help provide technical and administrative infrastructure; deliver records and metadata to DSPs, distribute royalties but they won’t handle playlisting and marketing conversations on the company’s behalf. The music company handles that themselves. Empawa has been linked with Vydia, Freeme, in the past, has been linked with FUGA; other local distribution giants also use these models. White-label solutions are not always ‘out there’ as they’re not in the business of distributing for mere people with just a handful of records.

Open Distribution Platforms/Aggregators

• CD Baby

• Distrokid

• Ditto [open]

• Tunecore

• OneRPM [open]

These are the distribution services that have become common. They’re about the most visible across the market. Conversations about distribution seem to just revolve around these names when they’re in fact just a fraction of the landscape. These services are known more for their aggregation function than distribution. Some artists/companies upload their music through these platforms while they handle playlisting and pitching themselves. 

Semi-label Distribution Services

• AWAL (acquired by Sony in May)

• Amuse

These companies distribute an artist’s music and if they see a greenlight, they upstream to a label-type deal with the artist. Like Open Distribution Platforms, they provide basic aggregation service but here, data is perused to spot artists doing well before proposing further investments - offering a better deal that would include PR, digital marketing, brand partnerships etc. Amuse, to an extent, offers basic aggregation service pro bono just for its A&R benefits with data.

Lil Nas X released Old Town Road via Amuse and when it garnered steam via Tiktok, they offered him a $1m+ deal but he settled with Sony instead.

CONCLUSION

For some of these arrangements, the distribution entities opt for a share of percentage from artists’ recording royalties. There’s also the part where distributors now offer advance to artists - that is later recouped from their cash flows. We’re witnessing that in the Nigerian music scene at the moment. Get full insights in this piece by Pulse Nigeria’s Tolani Alake which explains today's relationship between artists and distribution entities in Nigeria.