There are many distribution companies out there that can get your product in shops of all levels (Underground record shops, commercial shops such as HMV, international and online shops etc). Although they take a small amount of your profit (The price for using their service), going through a distribution company can often be better then going round and trying to sell to shops yourself.
This is due to the fact the distribution company will often already have a connection with the shops, and it’ll be easier for them to persuade the shop to sell the product. Also the distribution company sells straight to the shop so you can get your money straight away,. If you take it to shop yourself, unless you’re already a big artist with a lot of bargaining power, they’ll most likely offer you a ‘sale or return’ (SOR) deal. This is when they’ll take your product and only pay you for units that they sell (They’ll usually pay you after three months of your product being in the shops). Any units that don’t sell after a set period of time they’ll give it back to you.
If you want just online distribution however (E.G. To get your music on ITunes, Amazon etc), you may want to sign up to for a free Songcast account. They can distribute your music to the best online download shops and handle your commission from sales etc. Songcast also give you your own barcode.
Another reason distribution companies can be useful is because the amount of time they can save you. Instead of you having to go round to shops all over the country yourself (This can be time consuming if you have a car, impossible if you don’t [Baring in mind you could be carrying heavy boxes of stock]) they do all the leg work for you.
The best strategy I’ve found for up and coming artists is to initially go through a distribution company. Once they’ve sold as many units they can, try and go through another one to see if they can sell any additional units.
After the second one, bring your product to any shops that weren’t willing to buy your product outright, and get them to stock in on a SOR deal. This way you have the best chance of selling as many units as you can.
The way many of these distribution companies work for individuals or smaller labels is:
The distribution company takes your product. You’ll agree a how much you want to make from each CD and the distribution company adds a ‘mark up’ price. You can also give a recommended retail price (RRP) to the shop, but ultimately it’s up to them how much they sell it for. An example of this is as follows:
You decide you want to make £2.50 for each unit of your CD you sell. The distribution company adds it’s mark up (say £1, so that’s the money they keep for providing you with their service) so the total cost is £3.50. This is the price the shops will have to pay for your product.
This is a genuine example of a CD a shop may sell at £6.
BE WARNED however, many distribution companies only accept you product on ‘Sale Or Return’ (SOR). This means you give a certain amount of units to the distributor (Say 100 for this example). They’ll bring it round to shops to see if any shops want to take them in, and bring back all the copies shops didn’t buy off them.
If they managed to sell 60 units to the shops, you’ll get paid for the these 60 units (60 x £2.50 = £1.50). The other 40 units they’ll give back to you as they couldn’t sell them. Hence the saying sale or return.