How To

How To Start Your Own Music Distribution Company

Photograph of the blog post author, Carla Johnson

Carla Johnson

10.12.2020

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It might sound silly, but you’d be surprised how difficult it can be to start your own music distribution company. Music distribution is the process of getting music from the artist to the store. And also making it available to the public for purchase.

music distribution

In essence, music distributors get their money by creating demand and making music readily available to fans. Illegal piracy and a competitive market full of struggling record labels cut into profits. Larger distributors will put loads of money into advertising to be competitive. But. there are ways which allow you to be a player in the music distribution sector without becoming broke!

In this article, we will be running through how to start a music distribution company, we hope that you find it useful! 

If you would like a more indepth read into what Music Distribution actually is, be sure to check out our article The Best Music Distribution Services For 2020!

Why Start A Music Distribution Company?

music distribution in a shop

Music distribution is the way music is delivered to the listener. And with the rise in digital distribution, it is no longer just an agreement with record labels and stores. 

The music industry is evolving and exciting new opportunities are arriving. Especially in the way music is being distributed.  

Online distribution enables artists to distribute music directly. While keeping 100% of the royalties.

Album sales started declining in the early 90s with the growth of digitalisation in music production. Which subsequently increased the number of independent label distributors.

With the progression of network bandwidth abilities, online distribution has become more prominent. 

Content can be distributed online and may be streamed or downloaded. Sometimes it is made up of books, films and TV, music, software, and video games.

Streaming is made up of downloading and using content at a user’s request, or “on-demand”. Rather than allowing a user to store it permanently.

Which brings us to Music Distribution as a business idea. And how you can begin in this profitable business.

What Is Needed to Start A Music Distribution Company?

music lights

Firstly, you need to establish a foundation. Study local artists with lots of scrutiny. And pass on artists who sound like what’s hot on the market. 

You’ll want to discover fresh sounds and talent so approach artists with commission-based agreements. Act as a music promoter to enable the artists to work on their sound. And in return, you’ll take a commission from the sales. 

Think about eliminating printing/packaging costs by going completely digital. This reduces the overheads and allows artists and record labels to distribute their work instantly.

Online Distribution Models

Consider researching other online digital music distribution models like Tunecore and CD Baby to get some inspiration for website design. You’ll want a website that is user friendly and lets users download music directly from your website. 

Ensure you have a shopping cart feature available on the site. And also look into a free PayPal business account.

You’ll also want to encourage the sale of usage rights for TV, Movies, Commercials and Video Game companies. Don’t be a one trick pony and provide alternative services to the artists. You can sign them up to BMI who will collect royalties from radio stations and other entities. Which uses artist’s music for public use.

Check out our article on The Best Music Distribution Services For 2020 to help find the perfect online music distributor for you!

Music Publisher

Undertake the role as a music publisher. Look at the credits on movies and TV shows. Take notes of company names and producer names, visit the company websites, and find contact details.

Send them an initial email explaining how your library of songs could enhance their next production. (Note, only the copyright owner can actually sell rights to use a song.

Networking

The obvious, crucial first step before you can do anything else is to build relationships with streaming platforms. As well as the manufacturers that you’ll be able to distribute your music to.

Building relationships is the key when starting out your music distribution company.

You need to also consider marketing to consumers. So get on social media and add as many friends as possible.

Think about giving daily tips and write reviews for the albums of the artists in your distribution. Create newsletters and get in touch with nightclubs that are consistent with the music genre in your library.

When thinking about how to create a music distribution company you’ll also want to look at partnering with retailers. Create a media brochure to make you stand out!

Team up with iTunes and Amazon and gain partnerships with digital music kiosk manufacturers. 

The Pros and Cons of Starting A Music Distribution Company

music distribution shop

The music industry is a wonderful place to work. Music distribution requires lots of enthusiasm and determination along with a love for songs.

The industry is fiercely competitive. However, once you make it, it is one of the most fulfilling and financially rewarding industries.

Here are some key points you need to consider.

Legal Matters

When launching a business, understand that your main job will be to make sure the artistic products of your clients get to where they need to be. 

Many companies prefer to sign business deals with legal entities, not just private individuals. 

Your business legal entity will go a long way to describe how good and eager you are to be successful, and the more contracts you get.

Do your research, as the best legal entity for you may vary according to the location you intend to start-up the business.

The fun part is you can get creative as you’ll want to have a catchy name so you can be sure to attract a good number of fans to your music distribution business.

Insurance Policies

It is very important to have the correct insurance. The general music industry and insurance tend to go hand in hand. So, as a determined entrepreneur, you will be required to be insured at all times due to any unforeseen circumstances.

Here are some of the insurance policies that an average music distribution company will need:

  • General insurance
  • Health insurance
  • Liability insurance
  • Workers Compensation
  • Overhead expense disability insurance
  • Business owner’s policy group insurance

Intellectual Property Protection

The industry is incredibly profitable. But, you should be prepared to protect your intellectual property if you plan on starting a music distribution business. If all music released is not protected by the law, then you should be prepared to get your artist’s songs pirated in the market.

Music tends to be pirated immediately as it drops. However, when pirates know that music under your music distribution business is protected by the law, they will be more cautious of getting themselves into trouble. This is a huge benefit of having your intellectual property protection.

You’ll also want to make sure your logo is secured and legally recognised under the company property by law. It is necessary to trademark the company logo and get copyright protection for each new song that is being produced by your artist. This is in order to protect the brand and the artists you work with.

Financing a Music Distribution Business

Starting any business takes time and money. You will need to source capital for your startup. Truth be told if your business idea is highly workable and offers some promise, you will not need to fight too hard to secure your initial finance.

You will need a detailed business plan in order to pitch to investors.

There are a couple of options when it comes to gaining finance for your music distribution business:

  • Get money from personal savings and sale of personal stocks
  • Pitch for money from investors or business partners
  • Apply for a bank loan
  • Apply for business grants and seed funding from donor organisations
  • Consider a soft loan from family members and friends

|cta-link type=’music-promotion’|

Location For Your Music Distribution Business

One of the things you should keep in mind when thinking about how to make a music distribution company is that location is a very important issue. You don’t want to break the bank in order to pay rent.

A music distribution business can flow in any location. As long as there is a good pool of ambitious artists. Here are some of the factors you should bear in mind when considering a location for a music distribution company:

  • Know that your location should have a considerable amount of talented musicians
  • It should be close to the hub of music in your city
  • Easily accessible and secure
  • The location should be notable for producing some of the finest musical artists
  • The location should be free from noise

Technical Requirements

Trust is a major factor when it comes to music distribution. So you will want to build trust between your company and record labels. CDs are usually given to distribution companies in good faith. And that the distributor will make a good account of every CD purchased. Maintain integrity and gain trust in order to succeed.

Maintain accountability by having an up to date bookkeeping record to demonstrate units of CDs received by each client. And keep a record of the exact unit shipped to each store you are partnered with. 

Ensure you have an understanding and secure a means of payment so the music stores can transfer sales made regularly. This enables you to balance up with the record label. If done correctly, the business will run smoothly!

Keep in mind you won’t just be working with record labels. But also independent artists who handle their own production, promotion, and sales. Obtaining distribution deals from major labels is a great way to earn essential income.

Another positive is that you can always set up the business from the comfort of your home. This is an indication of how little manpower is actually needed. Your employees can mostly be contract staff!

Service Process

It is very significant to consider that the primary characteristic of online distribution is its direct nature. To produce commercially successful work, artists will enter the industry’s publishing chain. It will be your job to help artists advertise, fund, and distribute their work to retail outlets.

In the video games industry, artists may find themselves obliged to create content for publishers. Even if it’s not what they want to as the publisher might not think it will profit well. This leads to the standardisation of the content and limiting the new, riskier ideas. 

With online distribution, an artist can get their work into the public domain easily with limited overheads. This will often lead to inexpensive goods for the consumer, increased profits for the artists, as well as better artistic freedom. 

Note that online distribution platforms frequently act as a form of digital rights management.

There is a growing number of ‘Internet labels’ that offer distribution to unsigned or independent artists directly to online music stores. And in some cases offer marketing and promotion services. 

Many bands are able to avoid this completely by offering their music for sale with their own independently controlled artist/band websites. The issue is mainly the large number of incompatible formats in which content is delivered. Restricting the devices that may be used, or making data conversion necessary.

Who Are the Main Music Distribution Companies?

music gateway logo

Music Gateway

There are plenty of music distribution services available. But many artists will want to keep 100% of their royalties. 

We may be biased, but we believe we offer the best distribution service for music!

Our incredible music distribution service here at Music Gateway gets your music onto all major streaming services such as Spotify, Apple Music, and Amazon Music. What’s more, you keep 100% of your sales and we don’t get a penny from you.

We also master your music for free to make sure that you sound the best you can before your release. With a free account, you get 2 free songs to start with and you get more based on your plan.

In addition, we offer exclusive sync licensing opportunities and free sync representation. As well as free press, blog and music promotion

Hopefully, you’ll love what we can do for your career and will want to use some of these other amazing services! 

Music Distribution Alternatives

It is important to educate yourself on all the fees competitors offer and what you’re getting into before you decide to set up a music distribution company.

We have written various articles about some of the best music distribution companies, such as CD Baby, TuneCore, Ditto Music, and AWAL. Each company offers different things, so be sure to check them out for all of your music distribution needs!

Should You Buy A Franchise or Start from Scratch?

music player

Regardless of whether you are in the industry. You can easily determine that the music industry is a multi-billion-pound world. 

Many people make millions from the industry and they are not even artists or singers. This is why it is clear that the music industry usually has many components that work hand in hand to make it successful. Which provides multiple chances for any career focused entrepreneur willing to leverage on the industry.

If you decide to start your own music distribution business, we advise you to start from scratch. 

This is because recently in the industry, it is unlikely you will find any music distribution franchise being sold. So, by building your own business it is a great way to break into distribution. And you will gain some real, invaluable experience.

Checklist on How to Start A Music Distribution Company

music collection

To sum all of this up, we have put it all together in a helpful checklist! It includes everything you will need to consider when starting a music distribution company.

Market Feasibility and Research

  • Demographics and Psychographics
  • List of Niche ideas within the Music Distribution Business
  • Level of Competition in the Music Distribution Business
  • Economic Analysis

Legal Matters

  • Best legal entity for a Music Distribution Business
  • Catchy business name ideas for a Music Distribution Company
  • Insurance Policies
  • Intellectual Property Protection
  • Legal Documents needed to run a Music Distribution Company
  • Financing a Music Distribution Business
  • Technical and Manpower Requirements
  • The Service Process involved in the Music Distribution Business

 The Marketing Plan

  • Marketing ideas and Strategy
  • Make use of Live Events and Concerts
  • Leverage on websites
  • Try to make use of Social Media platforms
  • Know how important online videos are
  • Strategies to boost your Music Distribution brand awareness and create a Corporate Identity

The Academy – Music Gateway

Want to learn more about distribution companies?

The Academy is a video-led platform that compliments all of Music Gateway’s other services – by supporting the professional growth of artists. All our courses are created by industry professionals, with a wealth of knowledge and expertise.

Our courses are designed to give you skills that are valuable to you as an artist. Whether you’re looking to learn a new instrument or more about the industry we’ve got a course for you! Check it out today!

That Was Our Guide On How To Start Your Own Music Distribution Company

There you have it! All you need to know when starting a music distribution company.

It is not an easy task but if done correctly it is incredibly rewarding! We hope that you found this article helpful!

While you’re here, why not check out some of recent articles such as, Lossless Audio Formats vs Lossy Audio Formats, A Guide To The Oscars or How To Set Up A Drum Set.

We’re also here to offer you opportunities to get your music in film, TV and more! On top of that, get cloud storage for all of your tracks and access to a global music industry community for collaboration. Try all of this and much more for free!

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