The music industry is a multi-billion dollar industry that anyone can enter. The industry is such that everyone can make money. One opportunity that anyone can use to make money is to become a music label distributor. You can force a distributor to become the sole distributor of an album or label.
Most people confuse a music distribution agreement with a license agreement. As part of the distribution agreement, the distributor is required to deliver the album or CD to record stores across the country. Distributors receive a commission for every sale they make, and the label is responsible for making the CDs and promoting them.
Whereas a licensing agreement, on the other hand, assumes that the licensee buys back the rights to produce, promote, and distribute music in the quality they want. He keeps all the profits he makes from selling the CD to himself. There are several advantages to entering into an agreement with a distributor.
One of them is the money the distributor earns. For example; if the price of a CD is $ 10, the distributor can be paid $ 2.50 for each CD sold through it, and if the label has mass-marketed the music, the distributor can easily earn money.
If you have a fondness for this type of business, you may want to consider entering into a music distribution agreement. Here are the basic steps that you might consider following these steps.
Receive a distribution proposal for a sample music business plan template
1. Establishment of a commercial structure
In order for record companies to give you a music distribution agreement, you will need to register your business with a well-defined corporate structure. This will include registering your business as a legal entity. Therefore, the first step is to register the company name with the registration office of the company.
2. Obtaining a business license
The next step is to obtain a business license or license to operate your business. The municipal district can provide you with the conditions for obtaining a business license. Remember to get a tax ID number for the IRS department because your business is a profitable business. Style
3. Network with music stores
After fulfilling all the legal requirements to officially run your business, you have created a network with the main music stores in the country; You can get their contacts on their website or in various state phone books. You need to contact each of them to make a deal with them.
You can decide to split your profits with them equally for each CD sold in their stores; Keep contacts of those who agree with the agreement and remove those who do not agree. You can draft a legal agreement and email it for them to sign as part of the process.
4. Contact the record companies
At this point, everything is ready to start a business. You should contact the major record companies in the region to organize the distribution of their music. Include the fact that you have a network of store owners across the country who are willing to display CDs in their store for better demonstration. If the label agrees; You may need to negotiate your commission for each CD sold through your channel and the other terms of the deal.
If possible, you can ask a lawyer to draft an agreement between you and the label to make it legally binding. Before deciding to sign a distribution agreement with a music label, you should consider the efforts that the label is making to promote the business; Signing a deal with a label that makes no effort to promote its music is just a waste of time that won’t make any profit.
5. Send products
Once the deal is done, you may be offered a distribution deal almost immediately. You need to partner with some shipping companies like DHL to make sure CDs are shipped to various destinations where store owners can display them at the show. Your bottom line should be able to cover shipping costs and provide you with enough cash to run other aspects of the business.
This distribution activity requires a certain level of trust between the label and the distributor. The CDs are given in good faith to the distribution company, as they will take into account each disc sold well. You must maintain commercial integrity in order to gain the trust of other record companies and avoid legal problems.
A good way to stay accountable is to have an up-to-date accounting record showing the CD units received from each customer, as well as recording the exact unit you sent to each store you did business with. Provide a means of payment so that music store owners can make regular sales. to ensure balance with the label. If you do it this way, the business will grow smoothly.
Remember, you won’t just be working with record companies; You can also enter into distribution agreements with independent artists who perform their own production, promotion and sale. Getting distribution deals from major labels is a good way to earn regular and consistent income. In conclusion, these steps listed above seem like a basic guide for anyone looking to make money with distribution deals for major labels and independent artists.