Music distribution is as old as the music industry itself. Even when the sheet music publishing companies ran the business, they needed someone to print out the scores and deliver them to the stores. That was (and still is) the role of the distributors: getting the music into the stores. Simple as that. 

However, while the core role of music distributors stayed the same for over a century, their workflow and business models have been a subject to constant change. Those changes had a massive effect on the music industry as a whole. From the pre-2000s “era of CD” to “the era of streaming” that we enjoy (or suffer) today — we still use the dominant distribution medium to define the stages of the industry's development. 

In 2001, the recording industry was almost exclusively “physical”. Seventeen years later, physical sales made up less than 1⁄4 of all global recording revenues — with the share going down to 10% when it comes to the more developed digital markets. The rule is not without exception — the Japanese recorded music market, for example, is still dominated by CD sales. Still though, in the grand scheme of things the music industry has embraced the digital environment.

Accordingly, most of the music distributors turned from supply chain managers into providers of digital infrastructure and rights administrators. That's why, for clarity's sake, we will leave the nuance of physical distribution out of scope (for now) and focus on the digital market instead.

How Does Digital Music Distribution Work?

Today, making a song available to listeners all over the world is as easy as uploading a file on the internet. So, why is there still a need for the distribution intermediary: can’t the artist just, you know, “Do It Yourself”? Well, not really. The distributors are still an integral part of the recording chain, taking upon themselves three core roles:  

1. Distributing Releases to DSPs

Sure, there are genuinely "direct artist platforms" out there like Bandcamp or SoundCloud. They don't require a distributor: set up the artist page, upload your music — and you’re good to go. However, they are just a fraction of the plethora of digital distribution resources, from streaming services of Spotify, Apple Music, Deezer, Google Play Music, Pandora and Tidal to social media platforms like Instagram, TikTok, Facebook, and everything in between. In today's digital environment, a well-oiled tech pipeline is a must to make sure that the release will be available to (1) all your listeners, (2) across all platforms, and (3) on the day of the release. 

In fact, most of the DSPs out there don’t allow for direct music upload at all, forcing the artist to go through distributors/aggregators. Even Spotify has recently closed off its direct upload program after about a year of beta-testing, stating that “music distribution is best handled by partners”. The truth is that DSPs would rather work with distributors than with artist’s directly to save themselves the headache of dealing with unstandardized metadata and payout distribution. 

Sure, the artists can (technically) upload their music on iTunes themselves. However, even Apple will suggest that you go with the distributor to ensure that the release metadata fits the platform’s requirements. Now, some of the broadest digital distribution networks claim to source more than 600 online stores — and all those different DSPs are likely to have different metadata standards. That makes it virtually impossible to handle the digital music distribution manually. 

2. Royalties Allocation 

The second core role of a distributor is allocating the royalties due back to the rights owners. As the music market turned digital, straightforward “deliver a batch of CDs to the store and get paid” deals were replaced by a flexible payout system. In the world of streaming, music consumption and purchase are inseparable — and the right owners now earn money the very moment the user press play. The value of that stream will depend on dozens of factors, so we’ve covered them in a separate article on how streaming services pay the artists — check it out if you want to know more. 

Either way, the royalty calculation is complicated as is — now, imagine if Spotify, Amazon Music or Apple had to pay out those royalties directly to every single artist on the platforms. Even if they’d managed to get all the metadata and banking details correctly, the administrative costs would go through the roof. Besides, the right owners themselves wouldn’t be all too excited about getting their pay separately from each of the digital platforms.

So, the distributors fill that gap, serving as a sorting plant for royalties floating from DSPs to rights owners, and making sure that every “master” dollar finds its way back into the recording industry (while the composition/publishing royalties go through a separate pipeline of CMOs, PROs, and publishers). 

Those are the two core roles of the distributors — getting the artist’s music out there and passing down recording royalties back to rights owners. However, that doesn’t mean that all of the distributors stop there. On the contrary, most players on the market have expanded their offer far beyond these basic aggregation services.

3. Distribution Strategy and Trade Marketing

Flashback to the physical age. A customer walks into the record store and they are presented with hundreds of options. The departments are organized by genre to help them get around, the “stuff selections” section offers an eclectic mix of new releases, the Point of Sale stand promotes the latest blockbuster release and, finally, there is a premium shelf at the entrance of the store. Every single customer will see the records on that shelf. Working with the record stores to get on that shelf was a big part of the artist promotion back in the day, generally referred to as trade marketing.

Back to reality, we don’t have record stores anymore, but the same principle of favorable placement still applies. A person pulls up Spotify, navigates to the browse section, clicks on “New Music Friday” and presses play. The track that plays is the #1 song of the week and this it is the “record that every customer will see” — the 21st-century twin of the premium record store shelf. This spot is the end goal of any modern distribution strategy.

Now, how do you get there? Streaming has made the fragmented music market of record stores much more centralized. A handful of DSPs dominates the digital market — and, even though some of the streaming giants are putting their algorithms forward as mediators of music discovery on the platform, the most popular playlists and the “feature spots” are still curated by service’s editorial team.

So, to get that desired distribution push, the artist needs to go through them. However, the editorial team can’t speak to thousands of artist managers and indie labels every week — just like streaming services can’t distribute royalties directly to rights owners. The scope of their operation simply doesn’t allow it. Pitching to DSPs to ensure beneficial placement on the platform is challenging even for the biggest independent labels — simply because they lack the scope of the catalog.