One of the most important decisions you will have to make as a self-releasing artist and/or independent record label is which digital distributor to use to get your music online.
Obviously, this is really important because the vast majority of the revenue that is generated from music these days comes from streaming and downloads. However, the main reason this is important is that moving your recordings from one distributor to another, while keeping the crucial statistics is extremely difficult. You may end up having to stick with your first choice or sacrifice your stats in order to move, so pick well.
There are literally dozens of distributors around now, but the main players are CDBaby, Tunecore and Distrokid. CDBaby came first followed by Tunecore and Distrokid is, by comparison, the new kid on the block. However, it’s worth noting that the founders of CDBaby (Derek Sivers) and Tunecore (Jeff Price) now both recommend Distrokid.
So what sets these apart from each other, how do you decide which one to go with?
There are 3 basic payment models that the various distributors use. Some have a choice between 2 or 3 pricing structures depending on your needs and budget.
You pay a set fee, usually based on the number of tracks, and then normally keep 100% of the royalties. Some distributors require an annual renewal fee (normally less than the initial fee) to keep the recordings online, others will leave the tracks permanently online for no extra fee.
Free Distribution/Royalty Split
Some distributors will upload the tracks for free, and in return take a cut of the royalties, usually around 15%. One example of this is Routenote, they will deliver the tracks to stores for free and then take a cut of the revenue. You can even choose to switch to the paid option, to increase profits, if the release is doing well.
You pay an annual fee, and then you usually keep 100% of the royalties, sometimes it will be on a per song/release basis which means your annual fee goes up each time you put a new release out, and keeping your back catalogue online can become costly. Distrokid charges a flat annual fee and for that, you can upload as many tracks as you want and keep 100% of the royalties. The only limitation is the number of artist names that you can use. The basic subscription allows just 1 name, you can add names at any time by paying an increased annual fee.
So which of these models is best?
Which of these work best for you, financially speaking, is going to be how many sales and downloads you can achieve.
It’s a fairly simple calculation. Let’s say the distributor is charging $29 for distribution of an album. If you paid $30 in commission at 15% then you would have earned $200 gross in digital revenue. Which is about 300 individual downloads on iTunes or about 30,000 streams on Spotify. If you think you will get less than that many streams or downloads then paying $29 makes no financial sense. It makes even less sense if that fee needs to be paid every year.
Likewise, if you know you can achieve more streams/downloads than that -then giving up any percentage is unwise.
If you release your music under one name and intend release projects frequently then the annual subscription is the best option.
Don’t be blinded by the promise of “keeping all your royalties”. This is meaningless if your total royalties are less than the fees you paid to the distributor. EG. if you earned $30 in royalties and then have to pay $34.99 to the distributor then it’s costing you around 115% of your royalties
Other things to consider
How many stores does the distributor deliver to? This is probably the next most important thing to consider, after the cost. Nearly all distributors deliver to over 100+ stores and cover the most popular ones. However, some of the smaller stores may be popular in some demographics relevant to your releases. So it’s worth doing a little bit of research to make sure the distributor covers the stores you want to be in.
The distributors are working constantly to add more stores to deliver to. They will often offer to deliver your existing catalogue to the new stores as and when they add them.
Another option to ensure coverage is to upload your recordings with more than one distributor. You have to make sure you are able to opt-out of the stores that your songs are already available in to make sure there are no issues. It makes sense to pick a no-fee option for your secondary distributor and instead pay the commission on any royalties that come from the few stores you selected.