Manage Distribution Of Music And Associated Products
MUM Says: Every person and poodle has a digital store and a piece of plastic for sale. A savvy manager will know the distribution of product can (and should) be tailored to markets and events - Pop single goes to every digital streaming service worldwide, released instantly at the same time; An Industrial-Techno double A-side gets bundled into a cassette, T-Shirt and digital download from Bandcamp and shipped from Riley’s (CEO of Rekt Records) place in Brisbane. Am I making myself clear?
Distribution entails making a product available for purchase by dispersing it through the market. It involves transportation, packaging, and delivery. Distribution is fundamental to a company’s sales.
A distributor is defined as someone who purchases products, stores them, and then sells them through a distribution channel. They are in between manufacturers and retailers or consumers, working on behalf of a particular company as opposed to representing themselves. Usually, distributors partake in collaborative relationships with clients and manufacturers.
The right distributor enhances a company’s exposure in the product market and can give an edge in terms of speed and efficiency.
The Three Types of Distribution
Distribution strategies depend on the type of product being sold. The trick is knowing what type of distribution you will need to achieve your growth goals. There are three methods of distribution that outline how manufacturers choose how they want their goods to be dispersed in the market.
1) Intensive Distribution: As many outlets as possible. The goal of intensive distribution is to penetrate as much of the market as possible.
2) Selective Distribution: Select outlets in specific locations. This is often based on a particular good and its fit within a store. Doing this allows manufacturers to pick a price point that targets a specific market of consumer, therefore providing a more customized shopping experience. Selective distribution caps the number of locations in a particular area.
3) Exclusive Distribution: Limited outlets. This can mean anything from luxury brands that are exclusive to special collections available only in particular locations or stores. This method helps maintain a brand’s image and product exclusivity. Some examples of companies that enact exclusive distribution would be high-end designers like Chanel or even an automotive company like Ferrari.
Distributors:
A distributor is a wholesaler who assumes extra responsibility. In addition to fulfilling retailer orders, they actively sell products on behalf of the producers. From managing orders and returns to acting as a sales representative, they go beyond being the middleman between retailers and producers. They perform market analysis and are constantly searching for new opportunities to achieve peak sales performance. A distributor focuses on a particular area and market which allows them to cultivate strong relationships with manufacturers. Unlike a wholesaler, they most likely have a stronger affiliation with particular companies. Distributors have a direct responsibility to making sure products are flying off retail shelves.
For example, one distributor may work out an agreement with a popular beverage company who works with them regularly, whereas wholesalers are used on a need-by-need basis. They have the option to sell to retailers and other sellers, or directly to consumers and businesses.
Wholesalers:
A wholesaler fulfills orders of retailers, by reselling goods, often in large quantities for manufacturers. Wholesalers purchase in bulk, typically, which lowers the price, from either distributors or manufacturers. This allows wholesalers to make a profit because they are able to sell to retailers in smaller packages that yield higher prices. Unlike distributors, wholesalers only deal with the storage and delivery of goods. But, in certain cases, you have to go through a wholesaler to get to a distributor.
Retailers:
Retailers are the outlets where consumers can purchase products. This is your local grocery store or Walmart down the street. They can sell through storefront locations or through online channels. Retailers purchase products from distributors or wholesalers.
Distribute physical products
What are the physical products in music distribution?
Vinyl
CD
Merch: Stickers, T-Shirt, caps, clothing, sunglasses etc.
Posters
Photos
Books
Other associated products
How are physical products produced and distributed / sold?
In distribution there are multiple phases:
Develop / Design the product
Create the product
Distribute the products to sellers
Market the product
Promote the product
Manage the product sales
Evaluate the distribution strategy
Other key areas may include
Market research
Testing the market with prototypes
Methods:
Direct - You take the product to the seller / store
Via a service provider - A 3rd party company distribute/market/promote the product for you
What are the main costs involved in the distribution of physical products?
Production cost
Distribution service costs
Marketing costs
Product sales
Surplus stock
Commissions (of parties involved)
Any other financial outlays
What are the crucial elements of distributing physical products?
Production Capabilities
Make sure there is a market for the product
In the music business, you take a risk on whether the market will receive your product.
Music business model is more now about - ACQUISITION not Artist Development
Companies will buy into existing brands.
The bigger the brand's brand, the more money it will cost the company.
Bands can build their brands and then leverage this collateral in business agreements.
Designing a product and distributing it to the market is a developing process. In music, the commercial and artistic understanding did somewhat dictate the market expectancy. Side note: The film business has higher stakes with bigger risks.
Summary Points:
The history of music distribution started out all physical (Sheet music, Vinyl, Tape, CD, Digital Download / Digital Streaming)
In 2018, digital sales overtake physical sales.
Physical distribution is becoming less relevant and more niche’
Evaluate distribution strategies
Traditional Model - VInyl, Cassette, CD
New Model - Streaming, SM, marketing, PR, digital, DATA collection
What technologies affect live shows?
Selling tickets faster
Promotional avenues
The power of database collection
How did technology affect merchandise sales?
Websites / Purchase portals
Differing distribution models / businesses operating this space.
Choice of model / artist / label to Major label.
DIY - Use of an aggregator
Independent - Forming partnerships / joint ventures (JV)
Major Label - 100% internal business with all branches of the music industry sectors
Human Patterns - Consumer behaviour
Data collection and the importance of data collection in the marketing process.
MetaData - Track-based information
Products:
Digital Music and Associated Products
Physical Music and Associated Products
Company servicing a product:
Own channels
Partner
Strategy or plan to make a product or service available to target consumers through the supply chain. Business practices involved in the ongoing distribution of music and associated products.
What are the key practices that help businesses and artists refine their strategies?
Data collection
Branding / strategy
Marketing strategy
Promotion strategy
Develop commercial and artistic understanding
Up-to-date technological implementation
Up-to-date industry trends