Distribution 101 - Part 1

by David C. Coleman

In business, there's usually more than one model by which to conduct business in any given field. When it comes to physical music distribution, there are basically two distinctly different types of distribution models - "traditional" and "one-stop." Both traditional and one-stop distributors "distribute" product. They simply have a different methodology behind their business practices. And, within the traditional model, there are various types of deals which can be offered. Two additional models for music distribution which have become popular over the last decade or so include digital distribution and self-distribution. This month I’ll be discussing the differences between traditional and one-stop distribution.

A traditional distribution deal (sometimes referred to as a “standard” distribution deal) is very hard to come by for the average indie musician or label. In reality, it’s almost an impossible task unless you’ve already made a name for yourself and can clearly demonstrate substantial momentum for yourself or your band. These deals are funded by the distribution company which, in the most “traditional” of traditional deals, maintains the primary responsibility of handling the recording and manufacturing processes, as well as distribution, merchandising, publicity and promotion. As you can see, a traditional distribution deal requires considerable investment by the distribution company.

One-stop distributors are sometimes referred to as “wholesalers” or “fulfillment centers.” A one-stop assembles music content from many different sources (labels, distributors, etc.) under one roof in order to provide a “one-stop” shopping destination for music retailers. This type of deal is much easier to obtain, either directly or indirectly, primarily because the distributor is simply buying and reselling product. The risk is reduced substantially once the requirement or expectation of investment by the distributor is removed. But even a one-stop deal is not necessarily “easy” to obtain. Most of the larger one-stops have sales parameters which must be met before they’ll consider a direct relationship. In these instances, a label or artist can work through a middle-man as growth occurs in this regard.

Both types of distributors help facilitate placement in retail stores, but one-stops tend to be somewhat less pro-active in doing so. Both normally provide access to marketing opportunities with chain retailers as well. “Co-op” programs provide the opportunity to feature product in prominent locations for a pre-defined period of time. These prime locations are typically located in highly visible areas of the store where customer traffic is high. Examples might include a “New Release” wall or an “end-cap” located at the end of an aisle.

At the end of the day, the significant difference between a traditional distribution deal and a one-stop deal is most often defined by the source of the marketing funds being invested and the sense of "ownership" the company maintains in backing a project. A traditional distribution will typically assume a greater level of responsibility in ensuring proper marketing and promotion is being conducted on behalf of the project. But, as mentioned earlier, there are variances in deals which normally fall under the umbrella of the traditional deal, so not all deals offered by traditional distribution companies will be identical. Variations can include "360" deals, licensing deals, packaging and distribution deals and profit-sharing deals. The appropriate distribution deal for you will mainly depend upon your ability to create and maintain forward momentum by building an ever-expanding fan base and touring presence.

Copyright 2011 - David C. Coleman