Those of you not familiar with the traditional music distribution model of the physical format might at some point consider it a good idea to attempt self distribution.
Many labels see growth in their direct-to-consumer sales month on month, hear about store closures, and wonder whether or not distribution could be done themselves. The thought of an extra £1 per unit on every sale is an attractive one, and the idea of being self sufficient in this day and age is certainly something that many people strive towards.
This gives you more money per unit and in turn a more sustainable self-sufficient business model.
Though what are the common problems that record labels face when attempting self distribution?
The first point to understand is just how far and wide your records are distributed. As well as in UK, major territories for record sales have been for a long time USA, Japan, & Germany. Whilst it may be not logistically impossible to get your new releases into some of the stores in your own continent, many people would find it incredibly tricky if not impossible to get decent coverage in countries on the other side of the world. For the sake of £1 per copy, many record labels are shrinking their global reach and supplying to a much smaller customer base.
One of the main problems being the freight charges. Most distributors will ship healthy orders across the world to stores on a weekly basis, selling a range of music and formats to shops. It would be uneconomical for most stores abroad to buy from a record label directly and have to pay additional shipping charges. Many stores abroad would have a minimum order quantity of up to one hundred units, just to make the shipping cost economical. Whilst this could be hard with some smaller distribution companies it would seem impossible dealing with record labels directly.
The export market has always been a lot larger than most independent record labels will realise. The healthy representation in other countries has always been such a huge factor in growing the profile of a brand and building a decent live event network. Often record stores are run by a passionate collective of artists and music lovers that are also involved in live events and other areas of the music industry.
Though many believe that the sales lost through the distribution channels will be made up from the same customers buying the releases through their direct-to-consumer platform. It’s true that some of them might be. However, many of the stores rely on regular customers, people that come into their store on a weekly basis or trawl through their new releases online. Whether your release is there or not, they spend their weekly budget on the records in stock, pay one shipping charge and return the next week. Many record buyers would think twice about buying one single record from an additional outlet, when they can buy 90% of their records from one store.
The idea of gaining an extra 25% profit through self distribution is definitely something that would entice a lot of labels, though would self distribution equate to 75% of distribution sales needed to generate the same profit from a release? No probably not. Ask yourself are hours spent packing boxes, raising invoices, chasing overdue payments really worth it? I would have to say definitely not. Not to mention matching the hours spent by the distribution company promoting the product, and scheduling releases, pricing them up, and would you really be able to find out where most of these potential sales are?
From a store’s point of view, they do not want to spend hours dealing with labels directly. They often find self distribution a turn off. The only incentive for them would be a cheaper price, which would surely eliminate the main reason for self distribution. Shipping charges would be greater from a label without huge freight discounts from courier companies. Stores have to set up additional supplier records for one label and suddenly the work-load increases for both parties on a large scale.
One of the biggest changes for record labels over the past 10 years is collecting monies from many more revenue streams than before; streaming sites, Youtube, Shazam, internet radio. Less people are buying music than ever before, though vinyl is the only format not in decline while CD sales and downloads plummet year on year. The need for the physical release is now becoming more and more important for promotional purposes and building the brand and profile. So surely this is best managed by someone that can push the product as far and wide as possible.