Eps 17: What the Fuck these music video distributors cost so much money
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Randy Adams
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In a distribution-only agreement, the label would contract with stores directly, or with networks of independent distributors, or with both, selling to them at wholesale prices. Most distributor deals will call for distribution rights for your recordings, both in physical and digital formats, in an exclusive way within a defined territory. These direct license contracts are generally granted only to major labels or distributors, and not individual artists or songwriters. These contracts enable the distributor to inform YouTube that it, and not the artist, controls the rights to music from the songs used in videos on YouTube.
As one example, a distributor claims control over synchronization rights of recordings and compositions to license for television shows, movies, video games, YouTube, Vevo, and Vimeo, then charges artists for using their music in YouTube videos. Through a system of contracts and payments, distributors give record stores, online download platforms, and streaming services the rights to buy and resell the artists music. The retailers pay a record label to a music distributor. The oversight makes perfect sense; The role of a distributor is to get the recordings of the music on a stores shelves, then take the money earned by selling that music.
At a music store, an economic crossroads where art really meets commerce, an entity selling the music is either earning income by not selling music, or it may be losing money from selling a song or streaming it, but it is still making money, and the artist is making very little, or none, of it. The artist is caught between two parties--the store and the distributor--both making money with no incentives or need for the artists to sell their music, and none of them having management that has expertise or institutional memory of the industry. The new stores and distributors are left little or none of the pain if music does not sell, other than a one-time expense of getting a digital file on the hard drives of Apple, Amazon, or Spotify. Not so with digital music distributors today -- think CD Baby, IODA, InGrooves, TuneCore, ReverbNation, etc. There is virtually no loss-of-profit cost for music that does not sell.
Unless you understand the music business you will not understand just how little money the artist really gets, even though he or she is the songwriter for the stuff found on a record. Some distributors, sitting on their hands, simply take a cut of what artists have.
Spinnup is an interesting one, because even though you are an indie artist not on a label, that distributor is managed by the Universal Music Group. However, this time, there is a twist; an artist uses a distributor to get music from their YouTube videos onto the shelves of iTunes, AmazonMP3 and so forth. What artists do not know is that this distributor also has a special deal with YouTube called the Direct Licensing Contract. When an artist signs to a record label, he/she receives money, called a Advance, for making a record.
When a record is released, the label keeps all of the money until it has recovered its expenses, which includes an advance, recording costs, promotion, and legal fees. If the label goes through an aggregator, which acts as a middleman distributor for labels and artists that cannot secure direct deals with iTunes or another digital music distributor, such as The Orchard or TuneCore, the label likely pays about 15% to 20% of a middleman aggregators distribution fees for providing a middleman service. The pitch for the Blast Collective is that artists pay $0 up front for the distribution of music -- but artists waive a portion of the royalties on tracks released in its offerings.
Distrokid provides a music distribution service, charging a $19.99/year membership fee for as many songs as you wish. LANDR is a music distribution company that charges a one-time fee per year for the ability to publish as many songs as you want. By uploading your music on DistroKid, you will be able to distribute your music on digital service providers such as Spotify, Apple Music, Amazon Music, Deezer, Tidal, and others.
Some distributors charge monthly or annual fees for unlimited uploads, while others charge a one-time fee for each album/song released. When purchasing digital downloads or listening to streaming music, consumers may be required to agree with terms of licensing from the recording companies and vendors that go beyond what is intrinsic to copyright; for example, some services may permit consumers to freely share recordings, but others may limit a users ability to store the music on a specified number of hard drives or devices. In an effort to promote, the standard record contract might be added to include a clause that says an artist may sell his CDs at live shows or through his web site, with a primary caveat the distributor may have: These artists sales should not interfere with the distributors own distribution networks.