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Running Your Own Record Label: Part 6

On The Record
By Richard Leon

Last month we explained how a label can create its own distribution channels by selling merchandise on the Internet. This month we examine dedicated distribution companies, and how the smaller companies can serve niche record labels.

On The Record

Although the major record companies have a stranglehold on mainstream pop and big-name rock, there's a thriving and vibrant market for other kinds of music that work on a much smaller scale. Starting your own label to capitalise on this may not make you millions, but you can, with a bit of effort, make yourself a living. The trick is not to spend the unthinkable sums on getting a record into the hands of the public that a major label would, but, at the same time, to maximise your chances of making it available to as many people as possible — which, if you're a one- or two-man operation, can be very tough. One possible way to pull off this seemingly impossible feat is to sign yourself, or your record label, to a third-party distribution company. Your sales will almost certainly be smaller than than they would if you were signing with a 'proper' record label, but since you'll be getting a much bigger slice of any income, you can sometimes make more money this way.

Distribution's What You Need

Exactly what distributors can do for you will depend on what kind of music you make. Let's start with electronica, which is not the biggest of markets, but has some well established approaches to going pro, or semi-pro. Ian Boddy, one of the country's foremost independent 'electronic music' composers, has been able to take his music further than most, and his experience is not untypical of that of writers and composers who don't necessarily expect to make it into the Elton or Madonna league. Like a lot of people he started small, releasing and selling his first couple of CDs himself, playing live and attracting an audience, and developing his potential market gradually. His label, DiN, now distributes its releases to the public in a number of ways, some directly, some less so. "After a few years, distributors started coming to me, because they'd seen or heard about me, or I'd been playing at a festival and they wanted to get involved. C&D CD Services, for example, are a specialist mail-order company that retails to the public — it's like selling to a really big shop. They sell a lot of similar music including traditional electronica and prog rock. It's a bit of a cult thing, which they maintain with a mailing list and some catalogues. I get CDs pressed, then I sell them to C&D at a wholesale rate.

Electronica artist Ian Boddy at a rare live performance.Electronica artist Ian Boddy at a rare live performance.

"Then there's Shellshock, a UK distributor who sell to stores. I give them CDs on a consignment basis — maybe 1500 discs — and they get them out to record shops. I also sell via the Internet. I have my own web site, and all my CDs and those of everyone else on my label are on there for $18 each. A third-party on-line sales company called CDStreet deals with that side of it; I put all the details of CDs on my site, and then when someone clicks the 'Buy' button it links to CDStreet, who handle the rest of the transaction. I get an email from them telling me where to send the CDs, and when I tell them I've sent them out, they transfer the payment to my account. CDStreet take 15 percent, which is more than a credit-card company would, but then they handle all of that side of it for me, and I don't need to worry about starting a merchant account, so I reckon it's worth it for the simplicity. Even though I lose that 15 percent, I prefer on-line sales, because I get more money that way! We sell about 20 to 30 CDs a month that way. Finally there's selling at gigs. If you do that, you can charge the full rate and you get everything, but I don't do many gigs now, so it's not a major part of the equation for me any more.

On The Record"My advice to anyone starting out trying to find a distributor would be to go to the local library, find a copy of the Showcase International Publications Guide or the Music Week music business services directory and go through the list of distributors. Call a few until you find someone with whom you feel you can develop a relationship. Or you can look at people who are making similar music, and find out who distributes them. My kind of music is out of the mainstream, and there's only a handful of distributors who specialise in it. If you're in the same position, you want the ones that do mailouts and other promotions, maybe getting music into the big stores like HMV."

Putting Into Practice

Using a combination of distribution companies, a web site, and sales at gigs, you will certainly be in a good position for selling your CDs, but the biggest problem is the time it takes for your material to sell. If you gig just a few times a year and sell maybe five CDs a time, you'll be dead and pushing up MIDI leads before you've broken even, never mind made a profit. Likewise, with Internet and distribution deals, if no one knows who you are, you can't expect your music to sell. The good news is that the smaller electronica distributors do their best to push newcomers they like. The market is relatively small, so it's best to set your sights internationally: electronica is much bigger in Europe, and there's more than token interest in the US.

There are no easy shortcuts, but you can give yourself the best shot by doing some research. Make a list of all the relevant distributors you can find. Get hold of their mailings — if they do them — and get a feel for what is and isn't popular, and what kind of approach your music should take. Distributor web sites will sometimes mention who they handle, and likewise artist sites will sometimes detail who handles them — don't be afraid to email for more details. Keep an eye out for festivals, and maybe push for a performance slot. Doing all of these will give you an idea of the best places to get more exposure, and perhaps sell some music in the process.

Festivals are often underrated. While most people in the UK will be familiar with Glastonbury and Womad, there are also hundreds of much smaller festivals that happen all over the UK and the rest of the world every year. Apart from gigging opportunities, they also provide sales opportunities. Some distributors focus on these more than others, and it never hurts to build a relationship with them.

Changing World Distribution are based in Somerset, and will be familiar to anyone on the Glastonbury, world, ethnic and new-age circuit. Owner Dave Hatfield explains what they do. "We're a small distribution company specialising in ambient, trance, D&B, dub, and anything with a similar feel. We have a unique network we've pretty much created ourselves in the UK — not so much record shops as bookshops, organic cafés, health food stores, new-age shops, and so on. That's the area we tend to specialise in. And festivals too — Womad, Glastonbury, the Leicester World Music Weekend, the Big Chill.

"We're not a big distributor, which means we don't ask for exclusive deals. We take music on consignment with a modest amount of stock. An unknown act won't get many sales, so we try to build interest by sending out a few trial CDs to the shops where we think it might sell. If it sticks, we see an order. If not, we get the return. We tend to know what we want, and we mostly deal with labels that we already have a relationship with. Out of the things that people sell us, we might consider taking one in 20. It helps to know the style that we're into.

"The financial details vary. We might take around 20 percent of wholesale, but it depends on who we're dealing with. Payment is usually bi-monthly, although we can also arrange that to some extent depending on how things are going.

"We find that the festivals are big sellers. We tend to operate on selling the acts that have been booked, plus whatever else we think might get some interest. We don't do direct mailouts at the moment."

DIY Distribution

Back in SOS September 2001, the subject of our Readerzone feature was Bob Prance (aka Bob Staunch). You may recall Bob explaining that he had briefly started his own record label to distribute a collaborative ambient/jazz album project called Luna Lazuli. Bob released the Luna Lazuli CD in 1997 and for a year or so, he distributed the album on his own, before deciding he didn't have the resources or time to pursue the business further. Only a few years later, the Internet has introduced an entirely new way of selling niche records, but Bob's story highlights many of the difficulties that are faced by DIY distributors trying to get their material into music shops.

Bob Staunch.Bob Staunch."When my recording was in demo form, I was posting about five jiffy bags to record companies every day and they were all being rejected. The music was quite minimalist and some of the labels told me it had no audience because they couldn't categorise it, so I started the label to get my own stuff out there.

"I wanted to get the albums properly pressed, so I contacted a company who were advertising in the back of Sound On Sound. They told me I would have to get the release licensed by the MCPS first, so I got the forms and filled in all the track details as instructed. I didn't realise there were quite a few months to wait before my licence came back; I had assumed it would practically happen overnight! You learn about timing more than anything else the first time you do it.

"The printing was more difficult, because I didn't know anything about graphics and graphic formats. I will often buy a CD if the cover suggests a certain type of music, so I wanted mine to be in the right style, and I designed the cover along those lines. I paid a photographer to do the cover shot, designed the sleeve layout on my Macintosh, and got a friend who knew more about graphics than me to run through some of the things I needed to do before sending it to the manufacturers on a floppy disk. Unfortunately, they still sent it back telling me that the Pantone colours had to be correct. I was thinking 'What is a Pantone colour?' They offered the services of their graphics designer for an extra £500 just to alter the Pantone colours. I could have messed around with the colours for months, but I wanted to get things underway, so I just paid for their designer to sort it out. That took a couple of weeks because they were quite busy, but eventually, I was sent a proof copy together with a Pantone colour chart for me to check before printing.

"I had such a tight budget that I wanted the CD orders to pay for the manufacturing. I also wanted to gauge how much interest there was before I committed myself to the print run, so I jumped the gun by putting adverts in magazines before production. I was aiming for the new-age, ambient and meditation markets, and there are magazines that deal in that stuff. I sent in the adverts with colour photographs, and luckily they didn't seem to want Pantone colours for that! The ads cost me quite a bit, but I soon started getting orders.

"The big problems was that when the CDs finally arrived, I discovered that there was no audio on some of them. In the meantime the orders were piling up, and I couldn't take the money and tell people it would be three months for their CD, so I had to send the cheques back — it was a ridiculous situation. The worst thing was that I had paid extra to get the CDs cellophane-wrapped, and only certain batches didn't have audio, so I had to open and play them one by one to find out which ones had audio. I had 1000 to check, and I then had the expense of returning all the blank ones.

"If I was doing it now I'd save some money, press the bare minimum to start with and only place adverts afterwards, but I was doing it all on a shoestring, and I needed to get the orders to pay for the manufacturing. Now there are more companies that will do a small run of CDs and I also know a guy who can get them done at trade price through his business, but these are people I met afterwards. Once you get started, people do come out of the woodwork to help.

"A friend had given me a CD containing a list of music retailers around the country. I don't know how he got it, but it was very useful! I went through the list systematically calling the shops to see if they would take some CDs. I also found that when I turned up at a record shop, they were quite happy to listen to the CD, take so many copies and sell them on a sale-and-return basis. It was just the small-time little indie shops I was targeting, because the big chains like Virgin will only take records from a proper distributor.

"I was driving about the country with a car-load of CDs and every time I went on holiday anywhere, I took some with me. The best shops were the new-age or crystal shops that sell bongs and joss sticks. The CDs sold brilliantly in those shops, because they would play them to the customers. There are some awful new-age CDs you see on sale called things like Merlin, and I didn't really want to be in with that lot, but I have some friends who own some more off-beat shops in Liverpool, and they were selling about 10 of my CDs in the first week. They provided me with direct feedback about what type of people were buying the music.

"I had started by supplying 20 shops, but I soon realised how much work was involved. For example, I would find a shop that would say 'Give us five and we'll see how we go,' so I would log that five and then keep ringing them every week to see if they had any money for me or if they wanted any more CDs. The manager was not necessarily in when I rang and I'd often get advised to call back in half an hour. After half an hour I would have been in contact with some other shops, so I had to log every call and situation so that I could keep track of things — and that's when it gets complicated. You have to be an organised secretarial type to make it work.

"Some shop owners weren't particularly nice people. After six months I still hadn't got any money or any returns from a few of them, and they'd stopped returning my phone calls, so I began to realise what they were like. I didn't know if I could do anything legally, and the shops were too far away for me to go back and check. In the end, you have to take the attitude that at least your music is getting out to people. If I did it today I would put my web site address on the back so people could follow up on their purchase. A few of the shops closed down, and I know there are still people out there who owe me money.

"I only did the one print run, and a lot of those went out as promotional copies. I sent them to library music companies, to every radio station in the country and many in Europe, and I still have about 200 CDs left. I definitely didn't recover my losses, but it was worth having a go." Tom Flint

Folk Stories

Richard Goodwin.Richard Goodwin.It's a similar experience in other genres. Richard Goodwin is a member of a ceilidh dance band, Florida. He explains how his band's material reaches the public. 'We use ADA Distribution, who do a lot of stuff in the folk world. I don't think we actually sell much through them though, although sometimes our CDs do seem to turn up in the big shops. The majority of our stuff is sold at gigs and festivals.

"At most festivals, you need a franchise to sell records, so we approach whoever that is. We'll give them a box or two when we turn up, then we find once people have heard us they want something to take home with them. It's all CDs now, by the way. We tried cassettes a few years back, but they didn't shift at all. In money terms, it varies between about £7 to a retailer and £11.99 direct. Given what I've spent on equipment and the time we've all put in, not just on recording but also on artwork and distribution, there's no way you could say we're making money. But it's a good hobby. We've never tried to go for the big labels. This kind of music is very much a niche market. There might be a couple of thousand people in the whole country who like us — but those that do, love what we do. And yes, we do have a web site [see right] which gets a steady stream of visitors. But it's no substitute for getting real-life interest."

Dance, Dance, Dance

The website of ceilidh dance band, Florida.The website of ceilidh dance band, Florida.So far we've been looking at the market for niche genres, but what about something more mainstream, like modern dance music? It turns out that the dance subculture is potentially a huge earner, and assuming you have some basic talent, it's easier to break into it than just about any other genre. The reason for this is that dance distributors are more like fledgling record labels, and are often prepared to put both time and money into promoting your music and getting it into stores — providing they think it will sell for them. This means that you take fewer risks; there's usually no need to put money up front (although showing your distributor that you're willing to spend something on promotion always helps), and all of the hard work involved in getting vinyl out to potential customers is sometimes handled for you.

There are other advantages compared to other genres, too. Firstly, you need less music. Creating a complete CD is a huge undertaking, especially if you're doing a day job at the same time. For a 12-inch dance release, you need only two six-to-seven-minute tracks. And dance, unlike, say folk, is a huge, potentially international market. A release that does very well can, if you're very lucky, earn you five-figure sums in a few months.

So, how does dance-music distribution work in practice? Chris Gilbert of distributors Alphamagic explains: "People come to us with their music, and if we like it, we take it on. That's strictly a commercial assessment. We're not interested in the aesthetics of it — we don't take on arty things because they're clever, unless we also happen to think they'll sell. We do get bucketloads of stuff, but frankly, a lot of it is crap, so we are quite picky. And we are very genre-specific; we're not interested in anything that isn't dance.

"The other thing we look for is some consistency of output. A track every 18 months does not a record label make. For a newcomer, we'd be looking at around a release at least every month or two. That's an A-side of around six minutes, and a B-side of the same sort of length, which could be a remix, preferably done by someone else. Once you're established as a label you can start doing more than that, but with more than three or four releases a month, you're in danger of saturating your own market.

"Once we decide on a relationship, we agree the terms of the contract — we usually want two years, plus exclusivity — and we'll also sit down and discuss promotion. We do some of it by sending out promo pressings to the lead DJs, maybe getting pirate airplay if it's a garage track, and also via our mailing lists. But the label also has some responsibility for moving it on a bit. When it comes to dealing with the press, either we can do that, or the label can. We do like to see some effort from the label.

"Beyond that, we take most of the risk. We put up the initial money for pressings, and we handle the hard work of getting them out to the shops. Shops take ages to pay us, so we can be out of pocket during that period. What that means in practice is that we usually pay the artist 45-60 days after release, and monthly after that. There can be quite a bit of interest in our back catalogue. People will find a track on the web and then ask us for it months or years after it was first released.

"As for what happens after that — well, this is an industry cliché, but it's true that the majors sometimes use us as a nursery for new talent. We're basically part of the underground independent scene, and they're not. And we don't take on new labels because we think one day they might be huge — we take them on because we believe their music will sell for us right now."

Sleeve Design

Elsewhere in this article, Bob Prance talks about the potential difficulties of achieving good sleeve designs for your releases. Good design can impress a potential customer, whether they're a distributor or a member of the public, and amongst a sea of product, can sometimes tip the balance in favour of your releases. But as Bob found out, good designers can be heinously expensive, costing anywhere up to £500, and if you get the default designer supplied by most pressing houses, the results will probably not be all that special — so, in addition to running your label yourself, can you also turn your hand to your own sleeve and CD designs?

Many SOS readers will have dabbled with Adobe Photoshop or one of its cheaper variants at some point, but creating good designs takes some care. Find some record and CD covers and magazines whose look you like, and examine the artwork closely. Check out the font, the positioning, and the images used, and use these as a reference for your own work. Too many amateur designs don't place text so it looks professional — centre-justifying isn't enough. You need a memorable logo, a definite 'look' — which means that fonts, designs and layout stay consistent across your releases — and you need to understand exactly what format and resolution the graphics should be supplied in. Your distributor and pressing plant will be able to help you here.

For inspiration read some graphic-design magazines, especially the sort that include free Photoshop plug-ins and hints and examples of other kinds of digital design. You'll be able to find some great books on design techniques in any big bookshop. And do a search on 'photo library' and 'stock photography' on the web. Stock photo companies provide the high-quality images that are used by professional designers. They can be expensive, but for a slick professional look they really can't be beaten. Even if you can't afford them, they might provide you with inspiration to create your own.

For more hints on kick-starting your graphical inspiration, take a look at Debbie Poyser's excellent SOS article on the subject in the May 2000 issue.

Financial Details

So, what can you expect from sales of a dance 12-inch? At the bottom end, a complete newcomer who's managed to persuade a distributor to sign them can expect to sell around 1000 copies of a new track — any less and the distributors start to lose money, so they're not likely to have taken it on in the first place. Much less than that and it turns into a disaster for them. Much more and everyone is happy.

The wholesale price on a 12-inch single is around £3, so the total income in this example would work out at about £3000. The distributors will take between 25 percent and 30 percent. Add to this fixed overheads such as mastering and pressing costs, and MCPS registration, and the artist/label will be lucky to see £1000.

On higher volume sales, however, things improve. Once a label is known, sales can be anywhere from 2000 copies upwards, and in extreme cases a single can sell more than 10,000 copies — although that's very rare. The fixed costs remain fixed, and most distribution contracts include better artist/label rates for top sellers. For a single that sells 2000 copies, you might, at a pinch, get just over £2000. For 10,000 copies you'd be looking at between £20,000 and £25,000 depending on the details of your contract. If you spend around a fortnight on each track, that's better than a proper job by a long way, although by the time you add some admin and promotion, it's not necessarily an easy way to earn a living. And you do have to keep coming up with the goods on a regular basis — something that won't suit everyone.

If things start to go well and offers start to roll in, don't get carried away. You don't have to sign with the first distributor that takes an interest. As with a record deal, getting a contract is just the start of a long relationship. You want to be sure that the distributor you have in mind is offering you the best rates, has the best contacts for your kind of music, and is willing to push your music further than the others are. There's no harm at all in shopping around, and plenty of good reasons to do so.

Part 7

We've now covered all the main subjects directly relevant to musicians intending to start their own record label. Next month, we will be summing up the topics discussed thus far, linking them together, and making sure that the last few large stones are turned. Until then...

Useful Contacts

ADA (FOLK)
+44 (0)1773 850000.
http://members.aol.com/adamailorder/

ALPHAMAGIC (HARD DANCE)
+44 (0)20 8960 4777.

C&D COMPACT DISC SERVICES (ELECTRONICA & PROG ROCK)
+44 (0)1382 776595.
www.cd-services.com

CHANGING WORLD (TRANCE/WORLD/NEW AGE)
+44 (0)1458 253838.

SHELLSHOCK (VARIOUS)
+44 (0)20 8800 8110.
www.shellshock.co.uk

ON-LINE DISTRIBUTOR LISTINGS
www.crucial-systems.com/dmbr/Distributors_UK
www.moremusic.co.uk/links/labels.htm

Published February 2003