Two decades ago, Lloyd Hummel was working at Universal Music Video Distribution, mailing out CD packages and promotional materials to retail stores across the Southwest to drum up awareness for the new releases from UMG acts.
“For Sum 41’s first record, we had this kooky videocassette of them riding around and squirting people with squirt guns and just being, you know, kids,” says Hummel, now executive vp of global commercial strategy at UMG’s distribution division Ingrooves. “We bought TV/VCR combinations and put them in retail stores and ran the videotape on a loop, so people could walk into the Tower Records or an independent store and see this goofy band. Those kinds of promotions in distribution are what we did.”
These days, almost everything from Hummel’s Sum 41 experience is defunct — though the band itself is releasing its eighth studio album, Heaven And Hell, this year — and the world of music distribution has changed completely. VCRs, Tower Records and CDs on department store shelves have been relegated to the past, as first digital downloads and then streaming have transformed the music business from a sales economy into a battle for fans’ attention, changing everything from marketing strategies to how, and where, artists release music into the marketplace.
“Gone are the days where release strategies are directly tied to shelf space and physical manufacturing constraints,” says Andrea Gleeson, CEO of digital distributor TuneCore. “Today music is consumed digitally from an endless virtual aisle, and as such, successful release strategies have shifted from an EP or album per year to releasing singles more often and more regularly.”
In a sense, the job of a distributor used to be simple: deliver an album or a single from the record label to the retailer so that fans could find a copy when they went to their local record store. But as digital platforms and the data gleaned from streaming and social media have given artists more autonomy, opening different pathways to a successful career, many distribution companies have evolved from cogs in the retail machine to support systems for those looking to cut through an increasingly-crowded music market. And as venture capital money and a surge of competition pour into the space, with newcomers undercutting market norms with lower rates and new services, the established players are adapting to meet the new landscape. Here, six top executives from some of the leading distribution companies in the industry explain how the world of distribution has changed, and will continue to evolve moving forward, as technology and the influx of new competitors ramp up the pressure.
“We are much more than an order taker putting records on shelves,” says Brad Navin, CEO of Sony-owned distributor The Orchard. “We’re a business partner enabling and empowering our clients, constantly investing in the independent sector and giving our clients opportunities to choose how they grow their business.”
The Job
Cat Kreidich was at a corporate EMI Christmas party in the early 2000s when she saw “these kids in the corner with plaid shirts who looked quite different in the room than everybody else with their suits,” she says. The group was from Caroline Distribution — recently rebranded as Virgin Music Label & Artist Services — which housed the distribution services for some of her favorite indie labels at the time; shortly thereafter she began working at Caroline, starting a career in the space that led her to her current role as president of Warner Music Group’s distribution wing ADA.
“Back then, distribution as a whole — but independent distribution particularly — was really about delivering the records into stores and getting placement and visibility and delivering the creative visions of the labels themselves and the brands we were representing,” Kreidich says. “And as ADA’s first woman president, the demographics looked incredibly different than they do now.”
For companies like ADA, Virgin, Ingrooves and The Orchard — all of which are major-label owned but distribute music from outside the major-label system — the business model is to work closely with indie labels and unaffiliated artists and help them get music out as well as market and promote it with varying levels of service. (Some distributors charge monthly or yearly flat fees to get music out; others are based on a revenue share model.) That can include pitching synchs, liaising with the various digital service providers around promotions like playlist placement and marketing opportunities, and offering the back-end royalty or data support with parsing the reams of information available in an almost entirely digital marketplace.
“There’s still some core elements of helping people get to market and managing the product and making sure people get paid,” Hummel says. But it’s also about communication and understanding the needs of those label and artist partners around the world. One day in June, for example, “I met with a jazz label, a potential new Latin label, a heritage Classical/New Age label, an Australian dance music label, and then I talked with our partners in K-Pop in the evening,” he says. “So just the diversity of conversations during the day can be kind of overwhelming and crazy.”
One of the most pressing issues for clients is that sheer amount of data, and trying to figure out what to do with it. Artists, labels and management teams have access to demographic, geographic, listenership and sales data, not just from streaming services like Apple Music, Spotify and Amazon Music, but from social media platforms like TikTok, Twitter and Instagram and services like Ticketmaster and Shopify — an overwhelming firehose of raw information.
“The data is a blessing, and now it’s just become a standard convenience, but you gotta know how to use it,” says Matt Sawin, GM of Virgin Music Label & Artist Services. “It really can help guide our direction and strategies, but it can also help us manage our resources. If you do it the right way, and you’ve got signals that you react to and deliver on those signals, then if every now and again we arrive with a win for our artists and our labels, we’re doing our job. Data’s just part of the fabric.”
To that end, many of the bigger distribution companies have built their own tech platforms to help identify such signals and react to them: if a song begins taking off on TikTok in the Nordics, for example, that could mean doubling down on targeted digital advertising, or capitalizing on interest with specific, on-the-ground marketing. But they also deal with one of the most important invisible aspects of releasing music in the digital age: metadata.
“There’s all these little things you can do to elevate your chances of being seen, being heard, connecting with the AI, connecting with fans when they say, ‘Hey Alexa, play me some jazz,’ making sure that you have a chance to get in there with those algorithms — that’s a lot of what our job is,” says Josh Madell, head of artist and label strategy at indie shop Secretly Distribution. “Future-proofing your metadata is a huge part of the business now. It may not be the sexiest part of it, but it does make a difference in artists’ careers, and in revenue and in their growth. Right now, some kid in their bedroom can reach largely the same audience that a sophisticated company like ours can. You need to offer those elevated services to be of value.”
Another service that distributors can offer: physical CD and vinyl production and distribution, for which Hummel says “there’s still a consumer appetite.”
“Some of our growth in the last few years has been in working with our labels again to really encourage them to put catalog back in print, to do anniversary reissues, to really lean into the physical, and for new artists, too,” says Madell, noting that Secretly landed a top five Billboard 200 record with Mitski this year partly due to vinyl sales. “We have the infrastructure, the track record and the history to get the records to market, do a lot of in-depth retail marketing, special variants, pop-up shops, all those things pushing physical.”
Essentially, distribution has come to mean providing all the elements a label would provide, without ownership, and with a different kind of support system. “We always remind ourselves that we’re in a services business,” Sawin says. “It is never lost on us that we’re dealing with artists, creatives, entrepreneurs, people that are putting their own ass on the line. You’re not signed to a label, you are the label. This is your money. We’re here to run good business and we’re here to be partners.”
How It’s Changing
The label-owned, full-service distribution companies have invested in technology to ramp up what they can offer in a digital-first world. But there are also independent, digital-first distributors that have emerged in the past 20 years that were based on that technology, and that can offer extra support in addition to being “the pipes” that make sure music is posted to streaming services.
“Indie distributors used to be a means to an end – we distribute your music to the stores and streaming platforms and get you paid,” says Gleeson. TuneCore, along with Distrokid and CD Baby, is among the most established of the indie digital distributors on the market. “These days we provide so much more — around-the-clock artist support to help with logistics, an artist and partner relations team to help support artists and labels who are further along in their careers and need additional support, and an extensive artist education program.”
Recently, TuneCore has focused on expanding its offerings: After it was acquired by French digital music services firm Believe in 2015, the two companies began integrating more closely in 2020, with TuneCore utilizing Believe’s artist services and label and artist solutions teams to better compete with the bigger, more service-oriented distribution engines of the world, and introduced unlimited uploading and a new tool to allow anyone to upload music to social platforms like TikTok, Instagram and Facebook for no fee, which Gleeson calls “crowdsourcing at its best.”
“Since we are a self-serve platform for distribution, the mentality had been that we needed to focus on technology,” she says. “[But] if we wanted to be the distribution service that is known for being an advocate for self-releasing artists and labels, we needed to deeply understand what artists want, need and can’t live without.”
TuneCore has been in business for more than 15 years, but its model — offering, at its low end, simple uploading capabilities for small set fees — is one that has attracted dozens of competitors to the space in the past several years, as streaming has taken over and as the indie sector as a whole has grown in U.S. market share from 18.18% in 2016 to 19.70% in 2022 to date, according to Luminate.
“There’s a lot of up-and-comers that I think are finding themselves from a resource standpoint needing to be tech-driven, which is fine,” Sawin says. “But when you’re so tech-driven and you don’t have that human component, you don’t feel like you’re getting service, you feel like you’re getting a 1-800 number. As the world in the digital music space changes, with complete access for artists and managers, and complete ubiquity and access for listeners, more and more there are starting to be entrepreneurs, so we’ve really had to put ourselves in this label incubation space.”
Streaming’s obliteration of the barrier to entry in the music industry brought not just more distributors, but more artists releasing more songs at a faster pace, each trying to utilize an ever-expanding array of platforms and tools to cut through the noise and get heard. “The biggest change for us is trying to figure out and convey what is actually real and what is just a flash moment that isn’t necessarily going to lead to long-term, lifetime value for an artist,” Hummel says. “There are so many more artists and labels trying to make their way, and there are so many more ways for them to engage with what’s going on in the marketplace. If they don’t have a trusted advisor like us to help them navigate, they can spend their money and time on any number of things, and if they can’t figure out how to track that back to monetization and making a living, they could crash and burn, or waste an opportunity — or waste a great song.”
The volume has also taxed labels, and forced them to shift how they look at what a rollout and release schedule actually looks like. “Labels used to be doing six records a year and now a lot of them are doing six records a week,” says Kreidich. “And not only that, but release day used to be the end-all, be-all, and now trend data, predictive analytics, can help us sort through the noise and understand the impact. And I think for our independent labels and artists, being efficient about their business allows them to be more profitable and better business owners.”
Sorting through that noise and impact is a constantly-evolving aspect of the job — and one that is increasingly global. “Historically, we’ve only talked about format change — this is a hell of a lot more than format change,” Navin says. “Because now, as an industry, we get to know and grow audiences, we get to have transparency. Ultimately, we’re building tools because we want our clients to be constantly focused on the creative and not focused on how you turn rows of data into an accounting statement.”
The Future
The changes in distribution mirror the seismic shifts that the industry as a whole has experienced — and, moving forward, there is just as much curiosity about new technologies, platforms and methods of engagement between artists and fans in the distribution space as there is at labels and management companies across the business.
“I think right now we are at an inflection point, with everything that’s happening in web3 and the metaverse, as well as a lot of other places for fans to engage with artists — look at the things that are happening in places like Roblox and Discord,” Hummel says. “I also see the emerging markets starting to really [grow], and over the next few years we’re going to see the power of these countries that have massive populations who have not fully engaged in the streaming universe. And I think that the combination of those two things is going to make all of us who are obsessed with the same DSPs and the same markets really have to make sure we have the right teams and the right perspective on what’s happening in all those places.”
But as in the publishing catalog market — which ran white-hot for three years, only to cool as the broader financial markets and economic issues began to make investors think twice about shelling out high multiples — there could be a slowdown of new entrants in the distribution world, whether through consolidation or an inability for some companies to scale to profitability, as new entrants who tried to undercut the market with lower percentage rates find that distribution is a tougher game than they imagined.
“I do think there’s probably going to be a bit of a bounce back — there were all these tech-driven distribution companies that got in very aggressively bringing rates down, offering hyper-competitive deals and these very focused investment structures, and generally I think some of that is already starting to fade a little bit,” Madell says. “There is a general understanding that there’s a different right system for every artist and label, but some of the basics of a partner who can more holistically help you grow your business is maybe more important than just a good dashboard and a super cheap rate.”
Which is why many of the larger distribution companies have themselves scaled — globally, technologically and in the services they offer — in order to meet the ever-changing world in which artists of any size inhabit. “I don’t believe that there’s ever going to be a moment in time where artists and labels are going to want less flexibility,” Kreidich says. “We’ve built an ecosystem in which an artist can live at any point in their career, be it a creator and hobbyist up to a major label.”
And as those technologies continue to change and multiply, distribution services will have to adapt to help artists navigate them.
“There are more outlets than there ever have been and there’s more responsibility on the distribution company to have the relationships across all of those outlets from a partnership perspective, but also from a monetization aspect of getting what’s right for our artists monetarily,” Sawin says. “Now the goal is to ensure that our music is in the fabric of everything and it’s everywhere, and yes, our artists have to be everywhere as well, but we can’t expect our artists to manage all of that. So we have to come up with a different offering of how we can help our artists syndicate their voice. The music sandbox and landscape is just gonna get more noisy.”
