Did you know that by 2020, the music distribution services market worldwide was at $911.87 million?
With a CAGR of 6.2%, the growth is expected to reach $1683.08 million by 2030, which is why this is the best time to consider starting a music distribution company.
However, you must note that the journey won’t be easy. The competition in the music distribution industry is fierce and illegal piracy will threaten to kill your business before it can stand on its feet.
But with some insights from this article, your music distribution company will be up and running in no time.
What Is Music Distribution?
Music distribution is a process. It involves getting music directly from the artist and taking it to the store where everyone else can access and purchase it.
Music distributors are the intermediaries connecting the public with the artists. They get their income by preparing music for the public and meeting demand.
Back in the day, music distribution was a physical industry. But due to technological advancements and the availability of the internet, you can now access music through mp3, not cassettes or CDs.
Why Start a Music Distribution Business?
Music distribution is the delivery process of music to the fans. As digital distribution rises, the agreement has become more than just with the record labels or the stores.
The industry is growing fast, and there are new opportunities to explore when it comes to distribution every time.
Digital distribution has made the work easier for artists to get their music to the fans directly without the help of intermediaries. In addition, downloading and streaming have also been made easy.
Through streaming, the public can download and use music anytime they need it.
However, it does not allow the fans to keep the content permanently. This brings us to the business concept of music distribution and how you can profit from it.
What Do You Need to Start a Music Distribution Company?
Starting a music distribution business involves many things, but first, you need to have an established foundation.
You should start by studying artists, especially the ones with lots of market demand. Also, look through artists whose sounds are the hot cake in the market.
Music distribution needs work and energy. You need to search for fresh, promising talents constantly.
You need to create a good network and relationship with the people in the industry. Stay updated with the latest music trends so that you can be one step ahead of your competitors.
Ensure you invest in high-quality recording and packaging equipment.
This will help you produce and distribute MP3s of good quality. Lastly, have an efficient and reliable team to work with you.
How Does Digital Music Distribution Work?
The availability of the internet and technological advancement has made it easy to distribute songs.
It is more like uploading a file or a document on the internet to the public. While this may be a breakthrough for most artists with huge fanbases, it is not a simple task.
I know your next question: What is the use of a music distributor if the artists can DIY the whole process to get their music to the public?
Music distributors still have an essential duty to perform as part of the music recording chain, and these are their core duties:
Royalties Allocation
A music distributor must ensure the allocated royalties are returned to the rightful owners.
Back in the day, a music distributor would only distribute the CDs to stores and get their cash. Nowadays, there is a much more flexible payment system.
Consumption and purchase of music have become inseparable.
Artists can get their cash immediately after a fan presses the play button. However, the value of this streaming depends on a series of factors.
Try imagining if Apple Music, Spotify, or Amazon Music were to pay the royalties directly to the artists! You guessed right; the cost of making it happen would be massive.
So, this is where music distributors come in to ensure every dime goes to its rightful owner and also minimize the administrative cost.
Distributing Releases to DSPs
There are some direct artist platforms that do not require the services of a distributor. While these may work just fine for most artists, they only cover a fraction of the digital distribution resources.
As we are in the digital era, artists need to have a properly orchestrated pipeline to ensure that their releases are available as follows:
- On release day
- Across all the platforms and
- To all the listeners
Most DSPs do not allow direct music uploads, which is where the music distributors come in. DSPs would rather work with a distributor rather than the artist directly.
Trade Marketing and Distribution Strategy
There are no more record stores, but the same principle they used back in the day, of favorable placement, still works.
For instance, if you log in to Spotify today and search for “New Music Release” and click play, the song that will play is the number one song for that week, and it is the record that all the customers will see when they try to.
For artists to ensure their songs appear here, they need to be on a Spotify playlist. But to get on a Spotify playlist, they need to have good distribution.
How to Start a Music Distribution Company
To start a music distribution company, you will need to have a strong understanding of the music industry and how it works.
You will also need to have a large network of contacts in the industry, as well as a good amount of capital to invest in your business.
Finally, you will need to be prepared to put in a lot of hard work to make your business a success.
With many players in the market, music distribution is highly competitive. But, with the right preparation and a little research, you can start your own music distribution company and get in on the action.
Here are a few tips to get you started:
Research the Market
Before starting your music distribution company, it’s important to know who your competition is and what strategies they use to succeed.
Research the different music distribution companies in your area and find out what services they offer, how they market their business, and what type of music they distribute.
This information will help you determine what services you need to offer and how you can set your company apart from the competition.
Know What’s Expected of You As a Distributor
Music distributors carry out different roles depending on the type of music they distribute.
For example, you may be responsible for promoting and marketing music or negotiating contracts with third-party suppliers.
Others manage payments for artists and collect royalties on their behalf. As a distributor, you need to know what’s expected of you so that you can provide the services that are most beneficial to your clients.
Understanding the Legal Requirements
Your music needs a legal entity to be distributed. This is because copyrights and other legal issues need to be considered when distributing music.
Without a legal entity, you could be held liable for any copyright infringement.
As a distributor, it’s your responsibility to make sure that all the music you distribute is properly licensed and doesn’t infringe on anyone’s copyright.
Choose the Right Format
The format of your music is important for two reasons. First, different formats are better suited for different purposes. For example, MP3 files are smaller and more convenient for downloading.
Second, different formats have different levels of quality.
Lossless formats like FLAC and ALAC preserve all the information in the original recording, while lossy formats like MP3 and AAC throw away some of the information to reduce file size.
If you’re distributing music online, MP3 is the most popular format. It’s supported by almost all media players and can be played on any device.
Not many people burn music to a CD these days. However, if you have to do it, WAV is the best format. If you’re an audiophile and have storage space, FLAC is the best option for lossless audio.
