What Every Musician Should Know About Digital Distribution, Part III

Part III: The Myth of Marketing and Promotion

Aggregators take a percentage of your earnings, forever, with no ceiling—why? Because they can, but it’s hardly good public relations to say so. They control the only path a small label or band can take to reach the big digital retailers like iTunes, so they can set up any terms they want. In Part II, I showed why distributors might have been entitled to a limitless cut in the past, when physical product had to be placed into brick-and-mortar stores, with all the risk and overhead and managing required. But in the digital world, it’s almost indefensible. A new reason has to be claimed for taking a percentage: marketing and promotion.

Distributors aren’t traditionally marketers or promoters, that’s part of the label’s job. In addition to getting you gigs and making CDs and setting up deals with distributors and such, the label would market and promote you, because the label had signed you, and you worked for them now. It was in their interest to make you as big as possible, because they got the reward and paid you some very small percentage (whatever terms were dictated in the contract you originally signed with them). So labels would shell out lots of cash for posters, stickers, t-shirts and hats; they hired publicists for $5000 a month and crafted press releases and schedules, fought for news space in print, broadcast and radio; they purchased ads on your behalf, TV spots and billboards. Labels can sink millions of dollars into marketing and promoting a band, hoping it’ll pay off in sales, in licensing deals, even selling the contract to bigger labels for a wad of cash.

Distributors in the old days, especially the good ones, did help a bit with marketing and promotion. In a record store, if your CD was at eye level, it sold better. CDs on the end of the aisle (“end cap”) or by the register, it would sell better. Certainly if it was up on the release day, when your hype was timed to peak, it helped! If you give your distributor a percentage, you encourage them to take these steps, to leverage the stores (who, after all, rely on the distributors for content to sell) to push your music in these ways—even get the staff of the record store to wear a big shiny pin with your band’s name on it. Given that kind of effort, distributors deserved a percentage.

I showed that digital aggregators don’t have to do this or take risks to put your music into digital stores, so why are they still taking a percentage? They claim to be marketing and promoting you, but traditional brick-and-mortar tricks don’t apply: there’s no such thing as “eye level,” there’s no register, and no staff to wear a shiny pin. There are feature pages and genre pages on iTunes and AmazonMP3 and other stores, yes, but as I’ll talk about later, it’s not up to the aggregator to put your releases there. Some stores accept ads, but no aggregator is going to pay to put your ad up at their own expense.

Anyone who does claim to be marketing and promoting you requires very careful investigation. They’ll all say they are doing something, and it’s up to you to decide if it’s viable, reasonable, and worth the cost. This is sound advice for anything you buy, but there’s a special wrinkle when it comes to digital distribution. Aggregators make their money by putting many, many artists and small labels into digital stores: it’s a volume game. The big aggregators have 50,000+ clients. How, exactly, are they going to market and promote them all? They’re taking a percentage from all, but they couldn’t possibly treat everyone the same. No matter what their plan is, this central fact remains.

TIP #2: Check the Marketing and Promotion Plan

When choosing a digital distributor who says they’re going to market and promote you, ask:

• How, precisely? Get very specific.
• How will you know if it’s working and who decides if it is? What tracking/feedback is there?
• Can you “opt out” of their marketing efforts and reclaim your percentage?
• If they claim to market you at the expense of some other person, what guarantees do you have they won’t do that to you later?
• What are they going to do to make you stand out from their own customers, let alone all the content in the stores, and what guarantee do you have they’ll do it for a reasonable return of value commensurate with the percentage they’re taking?

The single most important thing to keep in mind is this: are you getting what you’re paying for, and is it worth it? Let’s say an aggregator offers to put your name on a list that goes to college DJs and indie radio program directors. Fine, but if they have 10,000 names on that list, how does that help you? Who gets to be at the top of that list? Does anyone read those? Is there space on that list for you to sell yourself (describe your music, or say anything that might get you noticed)? And finally, that percentage comes down to real money: could you get better value out of that money by spending it yourself on your own marketing and promotion?

That’s key: if I were in a band and wanted to get publicized, I’d hire a publicist. They’d get a flat fee, and I’d be able to monitor exactly what they’re doing. If a publicist told me they only wanted a percentage, but took it forever, with no cap, and I had no way of telling what they were doing or if it benefited me, I’d call them crazy!

In Part IV, telling good marketing from bad, and how to measure your money’s worth!

Comments

[XSGT]

Once again you have offered invaluable information pertaining to marketing and promation of your clints music. As well as current additional information on digital music stores. Keep up the good work!!!

[Trey Rick-pending entertainment attorney]

Great piece! I couldn't agree with you more. I'm not a lawyer yet, I'm in my last year of law school, and I work for an entertainment lawyer.

I was working on analyzing a content representation agreement for a client from an aggregator that will go unnamed. The client wanted to know what her agreement said, "in English." She was already with CD Baby, but she had been turned onto changing to a new aggregator. The client's main focus was digital sales. We told the client that CD Baby was only taking 9% of net digital sales, and the new content representation agreement called for 25% of net. Seems like a no-brainer! But the client had been sucked in with the words, "we'll help promote you." Turns out, all there was NOTHING in the contract that gave them ANY obligation to "promote" in the sense that the client was hoping for. In fact, the aggregator said they'd show the client how to promote their music with the affiliate link.

To put it simply, the aggregator was going to give her instructions on how to copy and paste the html code that could be pasted on the band's website that would allow the user to click the button to be linked to iTunes or Amazon. For 25%, with NO cap, "promote?"

Pat yourself on the back, TuneCore. Your system is fair!

Sincerely,
Trey Rick
Pending Entertainment Attorney

[connie b.]

that was wonderful. tell us more!

[surfer brad]

excellent explanation, enjoying this thread...
as you mentioned, is the new 'eye level' having editorial placement on sites? and due to the 'eternal' nature of the net, could it be that having your music on as many blogs, radio, magazines, social networking sites as possible (ala IODA) gives more of a permanent blanket marketing and promotion akin to owning internet 'real estate'?