One major hurdle that independent musicians have to overcome is the problem of distribution. It doesn't matter if you are pushing your product out of the trunk of your car, through friends, a local "street team", an online digital store or music subscription service if you are an independent artist, without it (distribution), you might as well just continue to play your songs for your close "true" friends and all your relatives at the annual family reunion.
Since so many people get confused or just totally don't have the inside knowledge on the infrastructure of the business and how it actually operates, here is food for thought. Traditionally, record labels coordinate the production, manufacture, distribution, promotion, and enforcement of copyright protection for sound recordings and music videos.
Record labels are themselves owned by a larger umbrella company called a "distributor" of which there are only 4 remaining, "The Big 4", (UMG, SONY, EMI and WMG). There formerly were 6, called "The Big 6", (UMG, SONY, EMI, WMG, BMG, and MCA). These music groups are usually partners with multi-national conglomerations that have access to non-music related resources like beverage companies, fast-food chains, movie studios, television stations, satellites, and new technologies. These distributors have invested millions of dollars in a vast distribution oligopoly that has been streamlined over the last sixty years.
Any music that isn't recorded or distributed by one of these corporations is typically considered to be independent or "indie."
80% of music is distributed by the big four music groups: Universal Music Group, Sony BMG Music Entertainment, EMI Group, and Warner Music Group. So with that being said, the truth and nothing but the whole truth so help me Music Gods, where does that leave the rest of the folks who are trying to weasel in on the remaining %20 of revenue available to share among digital upstarts that offer digital distribution like TuneCore, iTunes, CDBaby, Reverbnation, eMusic, MusicNet, and music subscription services like Spotify (which is still not available in the US), Mog, Napster, Rdio, and Rhapsody. The major distributors has a subscription service, Music Unlimited powered by Qriocity, that has launched in several countries, and will soon launch in the US, that is intended to directly compete with the aforementioned digital companies.
HERE'S A LOOK AT THE TOP RECORD LABELS, THEIR ARTISTS AND THEIR U.S. MARKET SHARE:
Top record labels: artists, market share Posted 10/10/2008 9:58 By Source: Nielsen SoundScan, company Web sites.
_ UNIVERSAL MUSIC GROUP: 35.12 percent market share in U.S.
Labels include: Geffen Records, Island Def Jam Music Group, Motown Records, Verve Music Group, Decca Music Group.
Artists include: Gwen Stefani, Elton John, Jimi Hendrix, Kanye West, Shania Twain.
_ SONY MUSIC ENTERTAINMENT INC.: 22.79 percent market share.
Labels include: Arista Records, Columbia Records, Jive Records, RCA Records.
Artists include: Alicia Keys, Usher, Chris Brown, AC/DC, Leona Lewis.
_ WARNER MUSIC GROUP CORP.: 21.12 percent market share.
Labels include: Atlantic Records, Warner Bros. Records.
Artists include Madonna, R.E.M., Green Day, Eric Clapton.
_ EMI GROUP PLC: 8.35 percent market share.
Labels include: Capitol Records, Virgin, Blue Note.
Artists include: Coldplay, Katy Perry, The Rolling Stones, Lenny Kravitz.
_ ALL OTHERS: 12.61 percent.
ONLINE MUSIC STORES CUT
Each online store takes a cut out of the initial sale. Apple will give indie artists that aren't on a label about 70 cents for each 99 cent song sold. That's not a bad deal. Recording artists on a major label get anywhere from 4 to 11 cents per song sold depending on their contract. Most major artists makes more for a CD sale than they actually do for a digital download. So this is possibly a better solution for the independent artist.
These U.S.-based services all stream within the United States. Rdio additionally offers service to Canada, and Napster has service in Canada, the UK, and Germany. (Napster offers far fewer tracks in Canada—2.5 million—than it does in the other countries.) All four services offer different levels of service and price plans, depending on whether you intend to stream only to a Web browser or hardware device (the Sonos Multi-Room Music System, various Roku boxes, or Logitech's Squeezebox products) or also to your iOS device. Mog, Napster, and Rdio offer $5-a-month plans for Web- and device-streaming. For $10 a month these services additionally offer streaming and downloads to their free iOS apps. If you’re willing to commit for an entire year, Napster also offers annual plans. For $50 a year you can have Web and device streaming; with mobile access and downloads included, the price is $96 per year. At one time Napster included five MP3 downloads per month with every subscription, but it has since discontinued that perk.
Rhapsody no longer provides a streaming-only plan. Instead, for $10 a month you get Web and device streaming plus the ability to stream and download to one iOS device. For $15 a month you can stream to up to three iOS devices.
Currently Mog streams to Roku devices. Sonos and Squeezebox devices support both Napster and Rhapsody. All of the services except Mog sell music as well as stream it. Purchased tracks from Rhapsody, Napster, and Rdio are DRM-free MP3 files encoded at 256 kbps.
If your plan on selling a lot of CD's then TuneCore's zero percent sales commission is the best option. CD Baby takes 9% for every digital sale. However, TuneCore will charge about eight bucks each year to maintain your CD on all their stores. If you don't sell a single CD then after four or five years, you'll end up paying more than CD Baby. However, you never stop paying a commission on CD Baby sales. If you sell a lot of disks, CD Baby will cost more. I guess it depends on how well you sell.
TuneCore vs. CD Baby
TuneCore CD Baby
Setup Fees $27 per disk $35
UPC Barcode free $20
Digital Stores Served ~ 10 ~ 40
Yearly Fee $7.98 none
Sales Commission none 9%
Setup Time 2 Months 2 Months
On TuneCore their so called "world wide distribution costs are as follows:
$9.99 per Single
$9.99 per Ringtone
$49.99 per Album
These are just small examples of what is out there available to independent artists besides the traditional means of delivery to the marketplace. Yet, even after all is said and done, an artist's biggest tool is the ability to understand not only the business infrastructure itself, but the marketplace and consumers as well. Without that knowledge or the understanding of it, and having a music professional by your side guiding you through the small steps you need to take, you will be setting yourself up for failure. Having a lot of "street money" isn't going to cut it, because you can't pay your way out of every situation that may present itself.
Twitter is now the #3 social network (if you count Hotmail as #2). One report finds only 15% of consumers download anything. Another study finds most Twitter tweets never get a get a response. So just e-blasting, posting on social networks and tweeting about your cd is just not enough. You still need a comprehensible promotion and marketing plan to succeed.
No matter how good your music sounds, a great promotion and marketing plan still needs to be developed in order for an artist to be as successful as they are. Branding still requires the time to create a model and plan on how to approach the marketplace, from an artist's imaging, to the music, the connections to lifestyle companies, traditional zines and e-zines, social networking site promotions, in-stores, tour support, radio ads, etc., etc. That all takes time, months if not a year of intensive planning, development and research before a product and artist even hits the market. It is just not coincidence.
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