music and entertainment law Mclane and Wong - Entertainment Law

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By Ben McLane, Esq.

The key to selling records is to find a way to place them in stores. This is where the concept of distribution comes into play. Distribution can come in the form of either major or independent distribution. Since major labels have distribution down to a science, that will be the focus of this article.

Assuming that an artist signs to a major label, the major label will then distribute the finished record. Another scenario for major label distribution is for an independent label to be distributed through a major label. This usually happens only if the independent label has several acts on its roster (distributors are interested in a steady flow of product). Occasionally, a major label will sign an act off an indie and re-release the record under the major label banner.

Major labels utilize major label distribution systems to position records in stores. These are giant conglomerates known as "the big six" which consist of: BMG, CEMA, UNI, Polygram, Sony, and WEA. "The big six" in turn distribute a multitude of major and independent labels. Each of "the big six" has a regional warehouse in each major metropolitan area from which the records are distributed to local record stores and other outlets. It is the distributor's obligation to (1) wherehouse inventory, (2) solicit sales from stores, (3) fill orders, (4) process returns (unsold records), (5) bill/collect, and (6) generate sales reports.

Major label distribution has some other players that contribute to sales. One stops are middlemen who buy records from labels and then make them available to local record stores that prefer the convenience of one stop shopping. Rack jobbers are middleman that buy records from labels and then stock them in the racks that they operate within retail stores. Chain stores such as K-Mart buy records from labels and then place them in their stores. Record clubs buy from labels and then resell to their members at discount prices.

Independent distribution can put records in stores, although to a lesser extent. Some independent distributors have huge territories, while others are much more regional. Independent distributors generally distribute the product of smaller labels. Occasionally, they will distribute an unsigned artist's record if they can be convinced that there is potential for substantial airplay and sales (the artist will probably have to generate some sales first). A list of independent distributors can be found in the Yellow Pages of Rock and The Billboard International Buyer's Guide.

As the reader can now see, without distribution, the public would never have an opportunity to buy a record. Further, an artist fortunate enough to obtain a deal which has major distribution in place stands the best chance of achieving economic prosperity in the music business.

Copyright 1998, Ben McLane
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