Words by Clayton Durant and Alex Jeffrey.
Music distribution is nothing new.
Even since the earliest days of music, distribution has been a critical component for driving the recorded and publishing business. However, the function of the music distributor has changed over the past few years as technology, consolidation, and the emergence of new, well financed companies has forced many to ask: "What is the role of the music distributor in 2022?"
Today’s music business has found the convergence of independent artists and distribution to be one of the most important areas of growth. According to MiDIA, independent labels and artists increased their combined streaming market share to 31.5% in 2021. This growth comes alongside RIAA’s annual year-end data, which noted that the recorded music business grew by 23% to $14.99 billion from 2020 to 2021.
With independent artists earning a greater piece of the recorded revenue pie, it is no wonder the war for independent distribution has become increasingly intensified over the past few months alone. Consider the fact that TikTok, the fastest-growing social media platform of the past two years, launched SoundOn, a music distribution platform wherein artists can upload their music directly to the app and distribute it to various music streaming services without any distribution or transaction fees.
Even major labels are getting in on the independent distribution action. Warner Music Group announced its acquisition of Qanawat Music, a music distribution company focused heavily in the Middle East and North Africa region. Earlier this past year, Sony acquired AWAL for $430 million, a purchase which was recently approved by the U.K.’s Competition and Markets Authority.
One thing is clear: distribution is one of the most competitive sectors of the music business. To discuss the changing role of music distribution, EDM.com spoke with Kevin Breuner, SVP of Artist Engagement and Education at CD Baby and host of the DIY Musician podcast, to discuss the role a music distribution company plays in today's music industry.
EDM.com: From CD Baby's perspective, what are some of the advantages of an artist going with a distribution platform like yours compared to signing with—let's say—one of the three major labels?
Kevin Breuner: There is a huge difference between working with a platform like CD Baby and working with a major label.
First of all, you're going to be giving away most of your rights when you sign with a label. With CD Baby, artists retain all their rights. Their music is theirs for the keeping, and they make all the money from it. In today’s music climate, if an artist has their sights set on a major label deal, they’re going to have to work at building up their fan base and career before that would become a reality. Meaning, an indie distributor will still need to be a part of their plan.
EDM.com: With a plethora of options for artists to choose a DIY distribution platform, what separates CD Baby from the other options out in the marketplace?
Kevin Breuner: CD Baby has been a trusted ally for indie artists for over 20 years. The reason is because we not only offer them a suite of services at one price, but we’ve paid artists every week without fail in that time. Pushing files to the various platforms is the easy part—getting artists paid properly for every single stream and usage of their music is the hard part.
We take a 9% cut of the backend, which means our interests are aligned with the artist. We’re incentivized to go out and collect every single revenue stream and bit of money owed to them, because we make money as well.
EDM.com: The growth of platforms like CD Baby are happening in markets outside of the United States such as in Africa, Latin America, and Asia. What is the role of a music distributor in emerging markets like these? How may it differ from the role a distributor has in say a market like the United States?
Kevin Breuner: Our focus has always been a global focus. It’s been our mission to make sure an artist’s music is available on every platform around the world, and streaming has really accelerated this.
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Many developing markets had adopted streaming before it was popular in the U.S. This not only brought more revenue streams in from new territories, but it also helped explode the creator class in those regions. This has built a more global indie artist community. Our distribution is available around the world and our website is currently localized in 3 languages—English, Spanish and Portuguese—with more on the way.
EDM.com: From your viewpoint, did the COVID-19 pandemic impact the music distribution market?
Kevin Breuner: Yes. COVID impacted all aspects of life, so it definitely had an impact on the artist community and their habits.
Initially, when it was just the beginning of the pandemic, artists went into “hyper release mode” and started releasing as much content as possible. This was partly because everything was disrupted, especially touring. As the pandemic went on, I think artists started adopting a “wait and see” type mode. Meaning, it seemed like there were a couple false starts on getting back out on the road.
I think the heaviness of the state of the world has also impacted creativity. It appears we’ve turned a corner in this aspect, and I expect to see another surge in releases and artist activity as we approach Summer 2022.
EDM.com: What about emerging technologies like NFTs? How are they impacting the music distribution marketplace?
Kevin Breuner: NFTs are still completely unproven for the average artist, so it hasn’t impacted the distribution market yet. There is a lot of work to be done before that is a standard part of an artist’s promotion plan and revenue streams. I think developments that are more interesting to artists right now are developments like TIDAL’s artist-centric royalties, which tries to make streaming more profitable for all artists.
EDM.com: According to a report by Allied Market Research, the global music distribution services industry generated $911.87 million in 2020, and is expected to reach $1.68 billion by 2030. What are some of the factors driving this growth into the future?
Kevin Breuner: The barrier to music creation has basically been eliminated. There are so many tools and apps that help artists start making and recording music from day one.
It’s also easier and cheaper to record than ever before. That’s not only true here in the U.S., but worldwide, so the amount of artists entering the market has exploded. Another factor is that the adoption of streaming in new markets has driven a lot of music consumption, especially for independent artists.
EDM.com: For artists to achieve superstar status like the Justin Biebers and The Weeknds of the world, do artists at some point need to enter the major label ecosystem and work through that machine? In other words, can distributors like CD Baby and others can build superstars just as effectively as major labels due to the emergence of platforms like TikTok?
Kevin Breuner: Yes, it is possible for a superstar to be built from an independent distributor. However, at the superstar level—whether you stay independent or not—you're going to need a team to help manage all the opportunities as that artist just can't do it on their own.
The most important thing is that artists understand the tradeoffs they might be asked to make. Especially when a label is involved, they may have to give up things like not owning their masters or giving up a cut of their merch money. The benefit of the current climate, where artists typically have a decent following before a label is involved, is that usually they have more leverage when negotiating a deal. In years past before artists had the ability to build audiences online, the label or management typically had all the leverage. Artists need to understand the value they bring to the table and work with people that share the same vision for their career.
EDM.com: TikTok just announced that it is also getting into the music distribution business. For many artists, TikTok has become the most important platform for them to market their music on. How does a platform like this getting into music distribution potentially disrupt the market for CD Baby and other distribution companies if at all?"
Kevin Breuner: Ultimately, we continue to be the best we can, but distribution is more than a tech problem to be solved. The CD Baby difference is that we are fully invested in the success of artists and growing the independent music community, not just pushing files. We want artists to feel supported and valued.
As an artist myself, I believe it's important to work with companies that have the artist's best interests in mind. I'm not sure that relationship would be there if you're handing off distribution to a social media platform whose focus is elsewhere.