How to find and negotiate the right Music Distribution Deal

DistroKid, CD Baby, TuneCore, Symphonic, The Orchard, Believe, Downtown. The list goes on and on. This guide will help you find what’s right for you.

by Chris Huff from the Disc Maker Blog

Historically, artists have needed assistance getting their music into people’s hands. Enter the music distributor! In the old days, music distribution companies were intermediaries between record companies and retailers, delivering vinyl and CDs to brick-and-mortar stores. Their relationship with the retailers was their reason for existence; they had little or no contact with artists.

Currently, the definition of the music distributor has changed as digital music distributors are very easy for anyone to hire, and getting physical products into stores has become much less important. Here is some helpful information on the distribution deal that has arisen in recent years as a viable alternative to the major label contract.

What is a music distribution deal?

A modern distribution deal can take numerous forms. In its simplest version, it’s an agreement where you pay a fee to a digital distributor in exchange for distribution to streaming services. Some larger distributors now offer deals directly to artists that resemble record contracts; there is an advance, often recoupable by sales, and the deal includes marketing, pitching sync licensing opportunities, and other perks in addition to physical/digital distribution. 

Types of music distribution deals

A digital distribution deal sends your music to streaming services. A physical distribution deal involves sending physical products to online and in-person stores. These agreements can be local, continent-specific, or global. 

Key terms to know

• An advance is a lump sum paid out to artists before the deal begins. Usually, this is recoupable by the company through sales and other revenue. 
• Royalty rates are calculated using gross revenue from product sales, streaming, and digital downloads. The royalty rate will define the revenue split between the distributor and the artist. 
• Fees are deducted from gross revenue before royalty payment and are generally any charges the distributor incurs, like taxes and third-party fees. 

3 Benefits of a distribution deal

Increased exposure and accessibility 

While having a distribution deal does not guarantee sales or listeners, making your music available to consumers so it is easily found is putting you in the right position to succeed. One huge positive of digital distribution is that it transcends geography; your music is worldwide instantly on release day. The larger distributors will also have relationships with streaming services to assist you in getting on editorial playlists and possible feature placements. 

Professional support and services

Modern distributors offer much more to artists than the distributors of the past. Having a distribution deal from a large company like The Orchard or Create Music Group can include marketing services, video distribution, sync licensing, and access to their advanced data collection services. The last part can be extremely important for an indie artist; access to data about who is listening and where can help you cultivate fan relationships and increase your audience. 

Revenue opportunities

Revenue streams with an inclusive distribution deal would include physical and digital product sales, streaming royalties, sync licensing, and radio royalties to songwriters. A distributor offering services will take a percentage of gross revenue, usually 15-20%, but sometimes as high as 50%. Read the fine print of any deal you’re thinking of signing and have it looked over by a reputable entertainment lawyer. 

Navigating payments and royalties

Understanding royalty payments

How royalties are paid is determined by the distribution deal you sign. For straightforward digital distributors like Tunecore or CD Baby, royalties are paid quarterly in a methodical process; you’ll be able to access your statements online. If you sign with a larger distributor, make sure it is in the contract that the payments are consistent and that there is a transparent accounting process. Otherwise the potential for getting shortchanged is high, even from reputable distributors. 

Advances and recoupment

In the traditional music business model, the record company would advance an artist’s money that then would be recoupable against future sales. This means that an advance is not really a payment, but a loan; some record deals have in the past stipulated that if the advance wasn’t recouped, the artist had to pay it back. Distribution deals that offer advances work similarly, but it’s all negotiable. Make sure you are clear with your distributor about recoupment before you sign the deal! 

Negotiating your deal

As an independent artist, you won’t have much leverage in your first distribution deal negotiation. That being said, they are probably interested in you because they see you have a growing audience and some momentum, so you are not totally without standing. Do your research as to what the standard deal parameters are, and don’t be intimidated. Get absolutely everything in writing and be flexible on the small stuff, but know your worth and don’t sign any deal that feels like it’s shortchanging you excessively. 

A good entertainment lawyer has experience with distribution contracts, so it’s well worth it to hire a professional to assist with negotiations. You don’t have to hire a lawyer, but it will save you time and aggravation if you do. Make sure you vet the lawyer as thoroughly as the distribution company. 

Finding the right distribution partner

Before signing any distribution contract, make sure that the company can offer you what you want and need for your music. With the all-inclusive distributors like The Orchard, their client list is curated and exclusive, so they will approach you if they are interested. Obviously, if you are at ground level, having some distribution is better than no distribution, but don’t sell yourself short. Don’t sign anything before thoroughly understanding the deal.

If you’re purchasing distribution, compare the different benefits between the digital distributors to see what they offer. There are definite differences between the services in terms of where they distribute, how much of a fee/percentage they take, and what sorts of extras are offered. Do your research and make sure you go with an established, reputable digital distributor to avoid being ripped off.

Leveraging distribution deals for career growth

Building your brand

Marketing-speak applied to the creative arts is generally distasteful; you are an artist not a product line. Your work is so much more than content! That being said, it is helpful to think of the coordination of your presentation as your artist brand . In the old days, distributors would promote your brand through promotional cardboard cutouts that stood in record stores; they showed customers a picture of you, your logo, and the name of your latest release. These days, a distributor can offer you the strength of their relationship with different retail, streaming, or promotional outlets to advance your brand goals.

Long-term planning and development

What are your long-term goals? What do you ultimately want to accomplish with your music? When you sign a distribution deal, have at least a rough idea of answers to these questions. If you are offered a longer-term agreement, be sure the company you are signing with has the resources to shepherd your career for the long term. There needs to be room for growth, plans for future releases included, and a sense that the company will be committed to you through the ups and downs of music promotion. 

Your path to a successful distribution deal

Now that you have some awareness of what a distribution deal entails, it’s time to go get on! Whether you are planning to go with a subscription-style digital distributor or hoping to entice one of the larger distributors into working with you, you’ll have at least a cursory understanding of the concepts involved. Should you find yourself negotiating with one of the “big fish,” know your value and understand what you can and cannot ask for. If you’re still starting out and looking to attract a selective distributor, here are some things you can do to get to that point: 

• Make the best music you can make and coordinate the visual presentation of your music and social media to give yourself a brand identity. 
• Build your audience through live performances, releases, social media, and consistent follow-up. Make it easy for fans to find you and your music.
• Form your own business entity. Some distributors may not speak to you unless you are a company, so create a record or music production company legally with a name, logo, and its own presence. 
• Pitch to distributors the same way you would pitch a record label. While you don’t want to lock yourself into a bad long-term deal, any distribution is generally better than no distribution when you are just getting started.

Disc Makers: Music experts who care for artists

Navigating a distribution deal for your music in the digital era is a complex but crucial step towards achieving success as an indie artist. Understanding what to consider when choosing a digital music distributor is essential for ensuring your music reaches its fullest potential. At Disc Makers, we specialize in guiding artists through the intricacies of sales and distribution, ensuring your album not only launches but also thrives. Discover how our music promotion services can be the key to your success.

Chris Huff has been a professional singer, multi-instrumentalist, songwriter, and producer for over 25 years. He has worked as a sideman with Peter Yarrow (Peter, Paul, and Mary), Echo and the Bunnymen, Chuck Hammer (David Bowie, Lou Reed), and Tom Kitt (Broadway composer of Next To Normal). Chris also wrote liner notes for David Bowie’s Live And WellCD, and his full-length album, ’bout Time is available on iTunes.