Why is distribution still needed today in the world of streaming?
The role of distribution is pretty straightforward as the name goes: distributing or sending music to stores to get in front of consumers.
While it was as simple as that, with the age of streaming, things are a little bit more complicated today.
As of 2023, subscription streaming grew by 11.2% meaning that subscription streaming now makes up 48.9% of the global market and streaming as a whole makes up 67.3%, making distribution to digital streaming platforms (DSPs) ever important. However, even as sales of physical revenues have decreased since the 2000s, 2023 still saw a growth rate of 13.4% and makes up the second-highest percentage of the global music market at 17.8% This increase in physical sales is primarily due to Asian markets are responsible for 49.2% of physical format sales, also largely due to increasing popularity of K-Pop.
Regardless of physical sales increase, it still makes up less than a quarter of the entire global music market, meaning that streaming is where music needs to get to. But how?
A simple version is just uploading a song to a streaming platform. But like most things in the music industry, it’s not as simple as it sounds. Distribution companies are still a necessity within the industry and this often has to do with the sheer amount of songs being uploaded. Let’s break down the roles of the distribution branch.
First, as mentioned, distributors release music to DSPs. Yes, there are platforms where artists can directly release music to streaming services, such as SoundCloud, however, that is just the tip of the iceberg. Platforms like Spotify, Pandora, Apple Music, and Google Play Music to social media platforms like Instagram and TikTok. This means that a distributor needs to make sure that a release is available to every listener on all platforms to be released at the same exact time around the world.
Aside from the innumerable moving parts of distribution, most streaming platforms don’t have the option or allow artists to directly upload their music and would rather have a distribution partner do it for them instead. This has to do with ensuring that the correct metadata is uploaded and payout distribution. Metadata has to do with the categorization of a song that allows for platforms to queue songs or play songs on a mix or radio that are within a similar genre, for example.
The second role distributors fulfill is royalties allocation. While once upon a time it was as easy as sending albums to a store and getting paid, now it has a more flexible payout system. Artists make money as soon as you hit play on a song if you are streaming. The value and how much money an artist makes per stream depends on several factors, to be covered in a later post. But in general, Spotify pays its artists $0.0032 per stream, but I digress. With royalty allocation and payouts being so complicated, streaming services do not want to deal with that for every individual song and artist there is on their platform, and that is exactly where distributors find their role. They collect all the royalties and payouts that come their way and then send that money to its rightful owners and back into the recording industry.
While sending music to DSPs and sending royalties back to artists and the recording industry are two primary roles of distributors, some go beyond by including trade marketing and distribution strategy.
So what does that even mean? Getting your song onto the curated playlists by the DSPs editorial team. This is the 'premium shelf’ that everyone sees in the modern day and age; if you want your song to be seen, this is where it needs to be. And to get one of these spots is precisely when distributors make their entrance. By being ‘bulk representatives,’ they are able to negotiate with streaming platforms and editorial teams.
Those are the main roles, but who are they? Let’s break it down:
There are 35 major players and 5 different categories that distributors can fall into:
The Major Players
Independent
White-Label
Open Distributor Platform
Semi-label Distribution Services
Per usual, I am not (yet) an expert in the music industry and am learning as I write and research!
Sources:
Anara Publishing. (2019, May 23). All you need to know about music distribution. https://www.anarapublishing.com/all-you-need-to-know-about-music-distribution/#:~:text=A%20music%20publisher%20collects%20royalties,are%20collected%20and%20accounted%20for
IFPI Global Music Report 2024. IFPI GLOBAL MUSIC REPORT 2024. (2024). https://globalmusicreport.ifpi.org/
Soundcharts Team. (2023). Market intelligence for the music industry. The Mechanics of Music Distribution: How it Works, Types of Music Distribution Companies + 35 Top Distributors. https://soundcharts.com/blog/music-distribution
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