DISTRIBUTION
By, Wendy Day

A year has passed since my words have graced the pages of Murder Dog.  In that time, close to 1,000 new urban “independent labels” have sprung up and sold between 7 units and 125,000 units of each release, according to SoundScan.  The major labels have remained steady with their close to 300 releases this past year.  The majors, in comparison, have sold from 1,000 copies up to (how many has Nelly sold worldwide?) multi-Platinum.  Informally speaking, if you are putting out your own record, this is what you are up against.  This is the competition.  OK, so it should come as no surprise that record stores will always carry what the majors pay them to-- er, uh, I mean what the majors want them to.  But what about those other one thousand releases last year?  Retail stores are not big enough to carry that many new records.  Especially when you take into consideration that the stores exist MAINLY to supply the Top 40 records in radio rotation, and on M-TV and BET.  The stores also sell some back catalog.  [“Catalog” is past issues of an artist’s releases, and stores stock some catalog because there’s always the customer who discovers an artist on their second or third album and wants to buy all the previous stuff the artist has.  Or someone loses an old favorite album.  This happens often enough that stores keep catalog available.]

So what’s a label to do?  First of all, let’s clear this up out the gate: not every person putting out a record is a record label.  A real record label has a small staff, it has more than one release in the pipeline, and it is properly funded.  Without the proper financing, someone releasing a record is just that--someone releasing a record.  Without being a real record label, there is no “juice,” no clout, and no leverage to insure payment.  Please understand the difference between being an independent record label and being an entrepreneur trying to control one’s own destiny (and marketing).  Someone who comes to a distributor with zero experience selling records, one album with no set plan to have others follow, and asks for an advance to market that record, is deluding himself (or herself) into thinking he (or she) will get paid.  Without pipeline [“Pipeline” is the release of subsequent albums that a distributor would be able to recoup any monies from, if there were returns on a prior release therefore it is another form of leverage to insure payment from a distributor] it will be difficult to get paid.  And even worse, that person is making it harder for everyone out there who has a plan, has a roster of projects to release (pipeline), and has their own financing.  Distributors have lost so much money on poorly planned record releases that they tend to shy away from rap now.  It is harder than ever to get a distribution deal, and harder than ever to get paid.  It used to piss me off when I saw the bullshit some distributors chose to release, but then I realized that the average distributor knows NOTHING about rap music or what’s hot on the streets, other than “is it selling or not,” so when someone arrives on their doorstep with the “hottest CD in the world,” they tend to take a chance on it.  Guess what happens when they lose $50,000 on “the hottest CD” in the world, a few times in a row!  It gets harder for everyone, and the distributor stops taking such high risk on rap records.  Unfortunately, that’s where we are right now.

For someone who really wants to release a record, and I am STILL a huge proponent of this, it’s not hard to just do it right!  This is not rocket science.  It’s easier than selling most stuff on the street--and legal (although some of the records I’ve heard lately ought to be illegal).  But just understand how it works, what a distributor is supposed to do and not supposed to do, and be able to look at things from the perspective of others: the distributor, the retail store, the promoter, and the radio station.  Easy, right?

A Distributor is the person who gets a record from the pressing plant to the retail stores.  That’s it.  They sell it for $10 or $11 to the retail store, and in a perfect world they keep 20% and give you $8 or so.  They distribute the record.  Involved with that is warehousing the CDs and cassettes that have not shipped yet, keeping track of the money by invoicing stores and recording the payments (and chasing money that’s due), having their sales staff talk to retail stores about it (hopefully), and collecting the returns which is the left over product the stores were unable to sell.  Returns are the scourge of distributors.  Not only do returns cost them money in shipping, but also they take up valuable space and staffing in the warehouse, and fuck up their books financially.  So if a release has a lot of returns (or even the threat of a lot of returns), that label will lose their distribution deal and it will be next to impossible to get paid.  Retail stores remember the labels whose product gets returned, and it makes it that much harder for the label to sell more records to the retail store next time, no matter who the distributor is.  I’m going to repeat myself here: a Distributor is the person who gets a record from the pressing plant to the retail stores.  It is YOUR responsibility to get customers into the store to buy your record.  How you do that is your problem, NOT the distributor’s problem.  You are responsible for making the album, marketing the release, promoting the album, building awareness of your artist and the release, and increasing sales.  YOU are responsible for the cost of that, NOT the distributor.  The distributor doesn’t bill you for the cost of their relationship with the retail store, nor should you depend upon the distributor to pay for your costs to market the record.  If you need an advance from the distributor be prepared to give up most of your control, all of your leverage, and a bigger part of the profits (provided you get paid at all--if the distributor is funding your release, it’s not rocket science for them to figure out you can’t afford an attorney to sue).

I do not hear many good stories about distributors in urban music, maybe a handful in the past ten years.  Most distributors lack the necessary relationships with urban retail stores and chain stores to be effective, and very few pay when they are supposed to.  I have yet to do business with a distributor that I would call reputable.  I have seen distributors ship product early (way before the release date), bootleg records, renege on advances, stop working records due to convoluted threat of lawsuit (and then do a side deal with the person threatening to sue), lie, ship records overseas where they can not be tracked by SoundScan, freeze payments for no reason, declare bankruptcy, not liquidate reserves [“reserves” are usually about one-third of the money from units sold that’s kept to offset any returns.  They are liquidated according to the terms of what has been negotiated in the deal, but usually in about nine months], etc.  The only way to guarantee that a distributor will not operate solely on their own self-interest, IN MY EXPERIENCE, is to move enough units to control the situation.  This is how labels are able to get paid enough from one release to put out another.  This is how labels control their situation instead of being ruled by their distributors.  This is how Cash Money was able to grow into the powerhouse that allowed me to get them an outstanding major distribution deal.  This is how you can, too.  Although I must admit that I do distinctly remember a few times when they were unable to get their money from their regional distributor when they were supposed to, which is the same pattern I experienced later with that same distributor for three different labels I worked with.  I had been warned by a few local labels and a handful of retail stores in the same city as the distributor, and I chose not to heed their advice because I genuinely liked the man I was dealing with at the distribution company (not a good sole basis to do business with anyone).  I no longer do any business with that distributor, and I understand that one of the labels has just filed suit against that small distributor for non-payment, but most small labels can’t afford to take this route.

Although there are such things as pressing and distribution deals (P&D deal), a distributor should NEVER be allowed to control the pressing of the albums until you have a life long relationship with the distributor.  By arranging for pressing yourself, you can control the payment of previously sold records (“I’m not shipping you another 15,000 units until you pay me for the 30,000 sold last month according to SoundScan”).  This is the leverage the distributor uses at retail stores to get paid, so use the same leverage to get your money.  By pressing the record yourself, the bootlegging possibility of your record is reduced.  When I was shopping the Cash Money distribution deal, the guys were in NY with me and we had some time to kill between meetings.  Bryan, Ronald, and I stumbled upon a street vendor at the corner of 23^rd St and Sixth Avenue selling copies of a B.G. cassette and a Big Tymers cassette that had just come out within the previous few months.  How did a street vendor in NY get cassettes sold only in the South?  It wasn’t hard to figure out.  Control your own pressing.  The distributor will want to control the pressing obviously, because it guarantees they’ll get the product when they need it (they may be afraid you’ll run out of money before subsequent pressings), and because it’s another way to make a few extra dollars profit.  If they pay 60 cents a CD, they can charge you 90 cents a CD and make an extra 30 cents per each unit pressed.

About 4 to 8 weeks before the release date, the distributor sends a copy of the album to all the retail stores they have accounts with (this doesn’t mean all the retail stores in your market, so find out who they do not sell to, and sell them directly or through a “one stop”.  When selling directly, get as much money upfront as possible; it may be the last money  seen from that store unless the release is super hot and they need to pay to get more in stock).  The distributor solicits “pre-orders” which tells them how much demand exists in the marketplace for the release.  This tells everyone immediately whether or not you’ve done a good job setting up the release.  This is the moment where the distributor gets excited about the record or banishes it to the bottom of the sales list.  If they are excited about the release, they will set up sales programs (discounts that actually force the sale of more records--for example, a 20% discount isn’t actually a reduction in price, but the shipping of one free unit for every 5 ordered), and/or price and positioning (where you pay for a premium location in each key store for the release to be displayed).  A good amount of pre-orders will make the release a priority for the distributor, which means the sales person will mention the record on their weekly calls within the top ten releases or so.  With unimpressive pre-orders, the release gets regulated to the bottom of the list, which the sales person may never get to mention depending on the length of each weekly call.  This position can get turned around if sales miraculously pick up, but obviously avoid this position at all cost, even if it means pushing the release date back until a stronger buzz is built.  This reinforces the importance of your own staff calling retail stores to sell the release in tandem with the distributor’s sales efforts.

Once the distributor gets your record into retail, the goal is to have it sell as quickly as possible off the shelves.  One way to ignite retail is to ram the song down the throats of radio listeners so that they fall in love with the song. The way to ignite radio (and subsequently retail) is to have, what I call, an "oh shit" song (a song that makes people grab their heads and exclaim, “Oh shit!!”).  It's a song that's catchy with a memorable hook that people keep in their heads all day, whether they want to or not. "Where my dogs at...”; "I'm down with OPP..."; "It's a hardknock life for us..."; "It's all about the benjamins, baaaabeee..."; "Snooooop Doggy Doooooggg..."; "It's like... Whoa!!"  Nelly made a song that had the sensibility and catchiness of a nursery rhyme.  People couldn't run to the store and buy his album fast enough.

Almost every album Def Jam puts out, sells. Some labels have the opposite track record where almost every release guarantees a return.  Why would a retail store stock it!?!  Let's look at this logically: if you owned a record store and every unit I sent you had to be shipped back eventually, would you continue to take a risk?  Consider how small the average retail store (or the urban section of a chain store) is, and that every record that sits on a rack is taking space away from a Ruff Ryder or Cash Money or Def Jam record that will most likely sell. If you made a living from selling records, what would you choose to have in your store: Jay Z or an unknown rapper from a label or distributor that has every record returned?  This stigma also exists with distributors.  There are some distributors, just like there are some record labels, that retail stores will not do business with because they’ve been burned too many times.  You do not want to be that label, nor do you want to be coming to a retailer through that distributor, so do the research before choosing a distributor.  Call retail stores in the local and eventual regional area where you want to do business and ask who the best distributors are for the type of music you want to sell.  And set up the release properly.  A good set up takes anywhere from six weeks to four months to build a strong buzz.  Not to dwell on Nelly, but the Country Grammar single shipped to mixshow radio in December, reshipped in February when it began to catch on, and the album came out in June or July.  That’s a six-month set up.

So, in order to be successful at retail, start by promoting a hot, hot, hot song on the streets.  The release needs to have a buzz.  Consumers need to be talking about it.  The number one thing that sells records is word of mouth.   If the single is a radio friendly song, radio play is mandatory.  If it doesn’t, don’t waste time trying to get radio play for something that never will get more than 5 spins.  Since we live in a radio driven world, extra hard work will be necessary to sell a street oriented record.  Know the product, understand the market, and be realistic.  It’ll save a lot of money in the long run.  Either way, the single needs to be playing in the clubs and hot on the streets. The way I learned it was this: build from the underground up-- streets first, clubs second, mix show and college radio, then urban radio rotation, and then pop radio. That's how to build a hit. If the record stalls at the street and club level, rethink the single. If BDS [Broadcast Data Systems is the company that monitors radio play and charts a daily list of how many times records play at certain stations] is not strong at the mixshow level, don't even think about spending all that money on a video or urban adds.  Start locally, spread regionally, and then go national.  No one can afford, as a small label, to blitz the entire country at once.  There isn’t the money or the staff.  If the goal is to get picked up by a bigger label (like a major label) with this release, it’s important to NOT reach most of country with the release or the major label will think your album has already reached saturation (meaning there are no more sales for them to pick up by re-releasing the album).  Make sure the distributor is strong in the areas for expansion.  It seems silly to build a buzz in an area where the distributor doesn’t reach.  Either add a distributor or expand within the territory they reach.  Have someone on your staff calling retail, but be careful not to thwart the distributor’s retail staff.  Your label should be working in conjunction with the distributor’s staff not bumping heads.  It is important to know what’s going on with the record at the retail level both from the distributor and from retail directly.

Consumers will go and ask for your CD when there's a reason for them to--like they really like the single or their friends told them about the record.  Although it’s important to work a single (or two) to sell full-length albums, there’s no money in selling singles.  It costs just as much for a distributor to ship a single, or for a retailer to stock a single, as a full length CD or cassette, yet everyone makes more money selling a full length.  Sometimes the consumer has to hear it over and over to like it. Think about your own listening habits. Also, the urban music market is a “follower market.”  Most people don't like to support stuff that isn't seen as the "next big thing." This actually goes past music. How many folks were wearing Hilfiger, Polo, Phat Farm, Pelle Pelle, Sean John, or Fubu in your area today?  Don’t under estimate this power of “hype.”  One reason for Cash Money's huge success is that my job was to build them to be “the next big thing” while I was shopping their distribution deal.  They had hype engulfing them 9 months before a record even came out nationally.  Fortunately, the artists could back up that hype with songs like "Back That Ass Up" and "Ha."  Scarily, I hear the phrase "bling, bling" in everyday life now which I first heard in a Cash Money song.  That's a tremendous success-- a word that crosses from an expression, to a song, into mainstream society.  A snowball rolling down a hill that can't be stopped.  

Next month: The ins and outs of getting radio play