Music Distribution
The Basics of Music Distribution, Distributors, Distribution Agreements, Common Mistakes, and How to Prepare
***The following content is for general informational purposes only and is not intended as legal advice. While it provides insights into legal issues, it does not create an attorney-client relationship. For legal advice, please consult a licensed attorney.***
(TL;DR at the bottom)
Opening Statement
What exactly does “distribution” mean in the music industry? And what is a “distributor”? What does the process actually look like? Is it free? Are there legal or financial considerations? How can you get screwed?
The purpose of this article is to help readers understand what distribution is, the various types of distributions deals out there, how to prepare for seamless distribution, and what to be aware of before entering into a legally binding distribution agreement.
First, we’ll briefly remind you of some related concepts we’ve gone over in the past that are relevant to this article. Second, we’ll define the core terminology. Third, we’ll run through a (very) brief history of distribution; it’s changed significantly in this digital era, but it’s helpful to understand where it started. Fourth, we’ll list all the ducks that you need to have in a row to ensure smooth distribution. Fifth, we’ll explain the various types of distribution agreements. We’ll finish up with some cautions, tips for reviewing a distribution agreement before you sign, and a list of some common mistakes and their consequences.
As always, underlined terms are links that will shoot you to specific sections of prior relevant articles or external websites.
Rewind
Before going further, be sure you have an adequate understanding of these concepts:
1. One Song, Two Rights
A recorded song consists of two distinct legal rights, each of which can have different owners and generate separate streams of revenue:
The “composition copyright” - the song itself (the melody, lyrics, chords, structure, etc.) (aka: “song copyright”). Certain royalties are paid to those with rights in the composition.
The “master copyright” - the actual recording of the song (aka: “sound recording copyright”). Other types of royalties are paid to those with rights in the sound recording.
See our article explaining this concept, One Song, Two Rights: Breaking Down Composition and Master Copyrights.
2. Song Credits
Song credits refers to the official acknowledgments of everyone who contributed to the creation, performance, production, and distribution of a song. These credits are essential for ensuring proper recognition and royalty payments to all parties involved. Check out our earlier article, Song Credits Made Simple: A Guide For Artists.
3. Royalties
Royalties are payments made to rights holders whenever a song is used (i.e., played, reproduced, distributed, sold, downloaded, performed, streamed, licensed, etc.). The type of royalty generated, the way it’s collected, and to whom it’s paid depends on how the song is used. Check out our last article on royalties, Music Royalties 101: The Basics Every Band Should Know.
Understanding the Terminology
Distribution - How music gets to listeners. Distribution is the process of making your music available on streaming platforms and digital and physical stores so that consumers can listen, buy, or stream.
Distributor - A company or service that gets you music onto streaming platforms and into stores. Distributors make sure everything is properly formatted and identified, and some even help with royalty collection, playlist pitching, licensing, promotion, and marketing.
Distribution System - Refers to the network of processes, platforms, and companies that get your music from you to your listeners.
Distribution Agreement - A legally binding contract between the artist (or a label) and the distributor.
Distributor Statement - A financial report provided by a distributor that breaks down your revenue streams, the distributor’s fees and costs, the amount the artist will be paid, etc. Usually provided on a monthly or quarterly basis.
Exclusive - Signing an exclusive distribution agreement means you cannot release that same music through another distributor.
ISRC (International Standard Recording Code) - a 12-character alphanumerical code that identifies a digital sound recording (different ISRC for every version of a track). Used to track streams, downloads, radio play, and sales. Think of it as a song’s fingerprint.
UPC (Universal Product Code) - a barcode (12-digit number) used to identify an album, single, or box set. Used to track actual sales (as opposed to streams).
Agreement/Contract - when discussing distribution, “agreement” and “contract” are used interchangeably. They both mean the same thing - a legally binding agreement between two or more parties, where each agrees to give up something in exchange for something else. Contracts/agreements identify the parties, their obligations, and their rights.
A (Very) Brief History
During the Vinyl Era, it was difficult to distribute music without being on a label. Paying in advance to press thousands of records and getting big stores to agree to carry an album was something only big labels could do. Of course there has always been a DIY scene, for example, Black Flag and Minor Threat self-released vinyl by working directly with pressing plants and selling records at shows. However, they could only press and sell so many records and reach so many listeners with those methods. During this period, most labels owned and operated their own distribution systems and there weren’t many independent distributors.
Cassette tapes and CDs took center stage in the ‘70s, ‘80s, and ‘90s. Having a more portable form of music increased consumer demand, and, as a result, independent distributors began popping up to meet demand.
Everything changed with the internet in the late ‘90s/early-2000s. Demand for physical music was replaced by an unquenchable thirst for digital downloads. A label was no longer the only way to get your music to the masses, Napster was giving away digital music for free, and here we see the birth of digital distributors.
Another notable evolution occurred when streaming became available around 2008. Listeners were now able to listen to a wider variety and greater number of tracks, “streaming royalties” became a thing, and digital distributors began offering additional services like playlist pitching, analytics, and royalty collection.
How to Prepare for Distribution
Before selecting a distributor and entering into a distribution agreement, there are a few things you need to have in order first. Failing to take these steps can delay or halt the distribution process, cause revenue loss, result in your tracks getting taken down or straight up rejected, and even expose you to potential lawsuits.
In summary, you’ll want to establish ownership, obtain (or at least consider obtaining) ISRCs and UPCs, ensure accurate metadata, meet technical requirements, and consider some business and financial things. Each is explained in more detail below.
1. Establish Ownership and Rights
Before distributing your music, you’ll want to clearly establish ownership, secure your rights, and, if applicable, obtain permission to use others’ work.
Copyrights - register your original creative works with the US Copyright Office (not required, but strongly suggested). See our article, Intellectual Property: Copyright vs. Trademark, for more info.
Split Sheets - if collaborating with other artists, complete and sign a split sheet agreement (not required, but strongly suggested).
Sample Clearance - if using any samples, be sure you have documented permission from the owner to use it. This is an absolute requirement. Your track will be taken down or rejected, and you may face legal action if you don’t have permission.
Licensing Agreements - if doing a cover, be sure you obtain a license to do so. This is an absolute requirement. Your track will be taken down or rejected, and you may face legal action if you don’t have a license to cover a song.
2. Obtain (or Consider Obtaining) Codes
Your songs and releases will need ISRCs (international sound recording codes) and UPCs (universal product codes). You can obtain your own in advance, otherwise they will be assigned to you by the distributor. It’s cool that the distributor will take care of this for you, but problems arise if you want to switch distributors. If these codes aren’t properly migrated to the new distributor (and sometimes distributors don’t allow you to migrate the codes), all of the streaming data is re-set to zero, your tracks might be removed from playlists, and royalty tracking errors can occur.
ISRC - these are required for digital distribution. They are used for tracking royalties, plays, and for licensing and sync deals. Think of an ISRC as a song’s fingerprint. You may obtain your own ISRC from the RIAA (Recording Industry Association of America) for a one-time fee, otherwise you will be assigned one by the distributor. If you obtain your own ISRC, you own it forever and don’t need to get a new one when you change distributors. If you’ve already put your tracks up on streaming platforms, then, surprise (!), your distributor assigned you an ISRC at the time. Check your distributor dashboard or contact them to obtain it.
UPC - these are not necessarily required for digital streaming (they are often assigned by the distributor anyway, but they are required if you plan to sell releases in physical or digital stores, or if you want your release to be eligible for charts, like Billboard. You may obtain your own UPC, otherwise you will be assigned one by the distributor. If you obtain your own UPC, you own it forever and don’t need to get a new one when you change distributors. You can get your own UPC from GS1, or from UPC re-sellers (usually cheaper), like Barcodes Mania or Nationwide Barcode.
3. Prepare Accurate Metadata
Metadata is the information attached to a digital song file, and it must be 100% accurate and consistent. Use an Excel spreadsheet to carefully track the information of each song, including the artist name, song title, album title, all song credits, producer, genre, release date, ISRC, and UPC. Double- and triple-check for any mistakes, typos, or inconsistencies when submitting metadata to the distributor. Inaccuracies, typos, and other easily overlooked mistakes can cause enormous headaches.
4. Be Aware of Technical Requirements for Artwork and Sound Files
Technical requirements for digital cover artwork - Every platform has its own guidelines, so be sure to look closely to ensure your digital cover artwork meets the guidelines. The general requirements are as follows:
Size: At least 3000 x 3000 pixels (recommended).
Format: JPG or PNG (high-quality, RGB color mode).
Resolution: 300 DPI (for best clarity on all devices).
Aspect Ratio: 1:1 (square format).
Technical requirements for sound files - Each streaming platform has its own specific requirements, so look closely. The general requirements are as follows:
File Type: WAV (Preferred) or FLAC.
Bit Depth: 16-bit or 24-bit.
Sample Rate: 44.1 kHz or higher.
Channels: Stereo (2-channel), NOT mono.
Compression: Lossless (No MP3, unless specifically required).
Loudness Recommendation: -14 LUFS (Integrated).
True Peak Level: No higher than -1 dBTP (decibels true peak).
Track Length: no less than 30 seconds, no more than 10-15 minutes.
Gapless playback for live albums.
5. Business and Financial Considerations
We will dive deep into some of these areas in future articles, but here are some basic pointers on things you should do or at least consider before distributing your music
Release Date: Pick a release date.
Marketing Strategy: Devise a marketing strategy and budget for promotion in advance of the release date.
Agreement Type: Decide on the type of distribution agreement that’s best for you (see the next section below).
Get Organized: Get ready to track your income and expenses. Research and understand when you need to report revenue to the IRS.
Bank Account: Consider opening a separate bank account to receive your earnings. This will make it way easier to track your income and expenses. Get ready to link the bank account to your distributor for direct payments.
Business Entity: If you reasonably expect to generate significant revenue from your music, you might want to consider setting up a business entity (an LLC, for example) to receive the income generated by your music. If done correctly, a business entity can have tax benefits and provide liability protection. If done incorrectly, it can cause quite a mess, so definitely do your research.
Royalty Collection Organizations: Your distributor will likely only collect streaming and download revenue, so register with royalty collection societies and sign up with SoundExchange to make sure you collect all possible royalties.
Types of Distribution Agreements
A distribution agreement is a legal contract between an artist (or a label) and a distributor. The agreement outlines both the artist’s and the distributor’s rights and obligations, and what happens if either breaches/violates the terms of the agreement.
There are several types of distribution agreements. They vary based on control, exclusivity, involvement, and payment structures. They each have their pros and cons. Not all types of distribution agreements are available to all artists, but it’s important to know they exist. The common types include DIY (non-exclusive), revenue-sharing, exclusive, label, physical, licensing, and one-off. Each type is explained in more detail below.
1. DIY (Non-Exclusive) Distribution Agreement
As the name implies, these types of agreements are non-exclusive, which means you can switch distributors whenever you want and release music through multiple distributors at the same time. The major platforms for DIY distribution include DistroKid, TuneCore, CD Baby, Amuse, and LANDR. The biggest perk of DIY distribution is that you retain complete control and ownership over your music. Some DIY distributors charge an annual flat fee (DistroKid, TuneCore), while others take a percent of the earnings (CD Baby). The drawbacks of DIY distribution is the “DIY” part; the distributors do not help you with marketing or getting you on playlists unless you pay extra for those services (and not all offer them).
2. Revenue-Sharing Distribution Agreement
Distributors take a cut (10%-30%) of revenue instead of an upfront fee. Revenue-sharing agreements are generally non-exclusive as well, but some distributors may require a notice period before you switch, and some do insist on exclusivity. The major platforms for revenue-sharing agreements include CD Baby, AWAL, UnitedMasters, and Symphonic Distribution. Distributors will provide marketing and playlist pitching services in exchange for additional fees or a higher cut of revenue.
3. Exclusive Distribution Agreement
If you agree to distribute your music solely through one distributor for a certain period of time (1-5 years), the distributor will provide label-like support in terms of marketing, playlist pitching, and some will even give you advances (money that the distributor gives you up front and then recoups from the revenue generated by your music). The major platforms for exclusive distribution include The Orchard (Sony), Empire, and Vydia. The cons are obvious - you can be legally bound to a certain distributor for years, and run into a lot of problems if you violate the exclusivity agreement. But, on the other hand, you get increased marketing and promotional support, industry connections, stability, faster payouts, and usually better royalty splits. These distributors are more selective, however, and exclusive distribution agreements are typically reserved for artists or labels with significant traction, a growing fanbase, and strong earning potential.
4. Label Distribution Agreement
These agreements are made between labels (rather than artists) and distributors. Labels select this type of agreement when they need a distributor to handle releases for multiple artists on the label. As always, there are pros (marketing and promotional support) and cons (less flexibility for the label and long-term contracts). The major players for this type of distribution agreement include The Orchard, ADA (Warner), and Virgin Music (Universal).
5. Physical Distribution Agreement
Meant for labels or artists selling CDs, tapes, or vinyl in physical and online stores. Under physical distribution agreements, the distributor warehouses and ships the physical copies, and usually manages the inventory and deals with returns.
6. Licensing and Distribution Agreement
More of a flavor than a type, which means that some of the types listed above can also have this flavor added to them. This flavor of agreement differs from plain vanilla distribution agreements because it also permits the distributor to license out your music, typically in exchange for a cut of the licensing revenue. These can be exclusive or non-exclusive, and the methods and penalties for termination differ. You may or may not have control of where your music is used or to whom it’s licensed. But, on the flip side, the distributor should be out there trying to get your song synced and played.
7. One-Off Distribution Agreement
Also more of a flavor than a type. A one-off distribution agreement is a short-term, single-release contract between an artist (or label) and a distributor, allowing the distribution of one specific album, single, or project without requiring a long-term commitment.
Unlike traditional distribution agreements that cover multiple releases over a set period, a one-off deal applies only to a specific project and typically ends once the distributor has fulfilled its obligations.
These can be exclusive or non-exclusive, have varying lengths and payment structures, and include different levels of promotional services.
What to Be Aware of
Whether you’re registering on your own with a DIY digital distributor or you’ve been presented with an exclusive distribution agreement from a major distributor… it’s exciting. So exciting, in fact, that you may be tempted to skip over all the fine print and just sign or click whatever to get the thing going, like most of us do when presented with Terms of Service. However, your music deserves your attention to the details. Even if you have zero room to negotiate, you still need to read and understand the terms so that (a) you don’t accidentally violate them, and (b) you know exactly what rights you do and do not have. Please (*I’m begging you*), at least read through all the headers and bolded/capitalized words of the agreement or terms, and be aware of the following:
Exclusivity - is this deal exclusive, or can you use other distributors at the same time?
Term and Termination - how long does this deal last? Does it automatically renew at the end of each term? How can you get out of it? Do you have to give advance notice to terminate? Are there penalties for early termination?
Royalty Splits, Revenue Sharing, and Fees - does the distributor just charge you a single flat fee, or do they take a percent of the royalties forever? Are there hidden fees, like “administrative fees” or bank transfer fees? If the distributor gives you an advance, do you not see a single penny until the advance is paid back in full?
Extra Services - are marketing and promotional support included in the flat fee or the percentage of royalties, or does that cost extra? If so, how much extra? Are these extra fees deducted from your streaming revenue? Does the distributor expect to be reimbursed for all costs associated with their promotional efforts?
Payment Schedule - how often will you receive payments? Monthly, annually?
Minimum Payout Threshold - how much revenue does your music need to generate before the distributor will cut you a check?
Rights & Ownership of Masters - does the agreement clearly state that you retain 100% ownership of your music? Or is the distributor trying to claim partial ownership? If so, for how long?
Release Dates - do you get to select your own release dates, or does the distributor make those decisions?
Sync Licensing - does the distributor offer assistance with promoting your song for sync licensing opportunities, and do they take a cut of revenue for doing so? If they don’t participate in getting you sync deals, are they still trying to take a cut of royalties generated by any sync deal?
Breach of Contract - what constitutes a breach or violation of the distribution agreement?
Takedown Fees - if you want to remove your music from streaming platforms or want to switch distributors, will you be charged additional fees?
Dispute Resolution and Legal Remedies - what happens if either you or the distributor breaches the contract? Does the agreement say whether a dispute needs to be handled in a specific state or county? Is there an arbitration clause? Does the language of the agreement prohibit you from suing the distributor in a court of law? What legal rights are you waiving?
Common Mistakes to Avoid
Below is a list of common mistakes and potential consequences:
Not realizing when you’ve actually entered into a legally binding contract. You don’t have to physically sign on a dotted line to enter a legally binding contract. Merely clicking that “I agree” button to a digital distributor’s Terms of Service during the sign-up process legally binds you to a contact with the distributor.
Not reading the distributor's Terms of Service. Yeah, it’s tedious and perhaps boring, but wouldn’t it be silly to agree to obligations and duties that you aren’t aware of? That doesn’t sound very punk rock.
Registering/signing with a distributor, but failing to register your songs with royalty collection organizations and SoundExchange. Merely putting your song on Spotify through DistroKid, for example, does not guarantee that you’ll receive all possible royalties.
Sampling or covering another artist’s song without their permission. This may result in lawsuits, removal of the track, and even suspension or termination of your distributor account.
Submitting incomplete or incorrect metadata. Even small typos can cause chaos.
Releasing collaborative music without a split sheet agreement. This may result in lawsuits, removal of the track, and even suspension or termination of your distributor account.
Switching distributors without properly transferring every song’s ISRC. Leaving behind ISRCs can result in loss of streaming data, removal from playlists, and royalty tracking errors.
Not routinely reviewing the Distributor Statement. Regularly reviewing the Distributor Statement will allow you to spot missed revenue, accounting errors, delayed or inaccurate payments, errors in revenue splits, hidden fees that you didn’t agree to, inaccurate reporting or credits, etc.
Thinking, “oh, there won’t be any problems.” Just ask Crass, Bad Religion, The Misfits, NOFX or Dead Kennedys - they all experienced legal issues surrounding distribution.
Closing Remarks
Music distribution is a crucial part of getting your music heard, but it comes with legal, financial, and technical considerations that artists must understand before entering an agreement. Choosing the right type of distribution (whether DIY, revenue-sharing, exclusive, or physical) depends on your goals, and careful preparation is essential to avoid common pitfalls like metadata errors, missing ISRCs, or signing unfair contracts. Understanding your rights, tracking your earnings, and regularly reviewing your distributor’s terms can prevent costly mistakes and ensure you maximize your revenue. While distribution gives artists more opportunities than ever to reach audiences, it’s still a business, so reading the fine print and staying informed is the best way to protect your work. Be proactive, ask questions, and talk to other artists.
As always, the topics covered here contain more twists, turns, and caveats than can possibly be addressed in a single article, and attorneys are constantly wrestling with the gray areas of the relevant laws. This article is merely a broad stroke of the fundamentals and should not be considered as a complete explanation of distribution in any way.
Let us know what other topics you’d like to know more about.
***The above content is for general informational purposes only and is not intended as legal advice. While it provides insights into legal issues, it does not create an attorney-client relationship. For legal advice, please consult a licensed attorney.***
TL;DR
Distribution is how your music gets to listeners (on streaming platforms and into stores). Artists enter into distribution agreements (legally binding contracts) with distributors to make this possible. There are various types of distribution agreements (they can be exclusive, non-exclusive, last for certain amounts of time, include various promotional services, and have different payment structures). There are some things you need to have set up in advance, such as establishing ownership, registering with royalty collection organizations, gathering accurate metadata, meeting technical requirements, opening a bank account, etc. Be cautious of common mistakes and make sure you fully understand the contract you’re agreeing to before you do so.