Distribution Models

A common question that many potential clients pose is "How can I get my music out there and make a few bucks in the process."

As a publishing company for independent musicians, a major part of S&E Entertainment's job is distributing our clients' music through various channels to maximize exposure and income. The music industry refers to each of these channels as a "revenue stream." Notably, a "revenue stream" is not just limited to the distribution of music but can also include merchandising, licensing, and sponorshops.

The current distribution models:

Legacy Sales. This distribution channel consists of physical goods such as CDs, cassette tapes, and vinyl records. It is slightly strange to refer to CD sales as "legacy," but some reports put online music sales at 95% of the market share. Although most independent artists still sell mos tof their music face-to-face, it is a very small amount of total sales. Notably, in terms of dollars, CD sales still exceed digital downloads. The Beatles recent physical release shows the ability of the CD to still bring in money.

Digital Sales. Without a doubt, online sales of digital singles accounts for the majority of music today. Apple and iTunes own 2/3 of the market, with Amazon, eMusic, and a few other services offering MP3 sales to fans. The bottom-line: if you are not on iTunes, you are missing out on 2/3 of the people who might have bought a track.

On Demand Straming. Several websites offer this service to its visitors, wherein the website buys a license from the artists and then allows the visitors to listen to the music. Importantly, people cannot download the tracks, but it is free to listen or involves a small fee for premium services. Spotify is one of the main players in this type of distribution channel.

Paid Subscription. Through services like Rhapsody and Napster, consumers can pay a monthly subscription and either stream or download as much music as they want. In exchange, the service pays the artists a fraction of the consumer's subscription fee. Interestingly, Spotify has started a freemium business model in this distribution channel, but little information is available yet as to its success.

Internet Radio. A new royalty rate agreement set the standards for internet radio stations in the summer of 2009. Basically, the radio stations pay a licensing fee for each song and/or catalog that they play online and visitors tune in for free. Artists recoup a fraction of the licensing fee, usually through their performing rights association affiliation.