How does digital distribution work?

Reading time: 5 mins

For everyone involved in the music industry – from artists to their labels and their fans – digital distribution plays an essential role these days.  

Nonetheless, it is still a relatively new way to distribute your tracks: world sales figures from digital distribution actually only overtook physical distribution (CDs and vinyl) sales in 2015.

Put on your AirPods and let us take you over to the other side of the matrix, where we will help you to master digital distribution, its short history, its main principles and how to use it to your advantage.

When did the music business go digital?  

We’ve all heard – and even spoken – the words: ‘the digital wave that decimated the music industry between the 1990s and 2000s.’  

Behind these words lies the invention and spread of MP3, an audio compression format whose quality/size ratio meant music fans no longer needed to go out to buy their favorite tracks from a record shop; they could access them directly at home. The impact of this was enormous: it is estimated that physical sales revenues dropped by half between 1999 and 2009.

In 1999 Napster was born. This online library of downloadable MP3 files was built on the peer-to-peer free exchange of audio files – including some rare tracks. At its peak, it had 80 million users, but then intellectual property lawyers representing big names like Dre and Metallica closed in on it for breach of copyright rules. Napster was forced to close down in 2001.  

Other players, such as CD Baby (1998), appeared that enabled artists to digitize and monetize their works on various streaming and downloading sites, more or less on the right side of the law, until the arrival of iTunes in 2001 (today Apple Music). This was the first streaming and downloading store (legal and paying) where copyrights were respected. The major labels were its first partners, and iTunes became the biggest music seller in the US in 2008. Indie-oriented players such as CD Baby also transmitted the catalogues of the artists they represented to iTunes.

In the following years, platforms rivaling iTunes multiplied – Deezer in 2007, Spotify in 2008, etc – as did intermediary services between them and the artists. Some of these, like Believe Digital, born in 2005, initially offered a service digitizing tapes and other rarities before extending their operations to digitized original recordings. Other platforms, like TuneCore, which appeared the same year, iMusician in 2007, Zimbalam in 2009 and DistroKid in 2013, also offered digitized recordings. These new players are digital distributors and we’ll talk about how they work next.

Following the invention of the MP3 format and the ensuing online and peer-to-peer exchange of music, it is estimated that physical sales revenues dropped by half between 1999 and 2009. It wasn’t until 2001, with the arrival of the iTunes streaming and download site, that a legal framework emerged which respected copyright and paid artists. In the meantime, services that allow artists to digitize their music for online distribution – the digital distributors – have appeared.

How does digital distribution work?  

The market players

The digital distribution market comprises four different sets of players:

  • The people present at the recording of the distributed work (artists);
  • Those who finance this recording (a label or producer in the studio, the artist in his garage);
  • The digital service providers (DSPs) who distribute the music online (Spotify, Apple Music, Deezer, Amazon Music, etc);
  • Distributors to whom artists or labels entrust their recordings, and who will then pass these recordings on to DSPs (DistroKid, TuneCore, CD Baby, Amuse, etc).

Why do digital distributors exist?

As mentioned above, digital distributors are services that enable artists or labels to easily digitize and distribute their music online (it was previously distributed only on CDs or vinyl).

They are now indispensable to artists who want to be broadcast on streaming platforms and you simply cannot manage without their services if you want to be on Spotify, Deezer or Apple Music, for example.  

Four reasons to engage the expertise and value of a digital distributor:

  • Your distributor can help you meet the quality standards required by streaming. Filling in the boxes on your data, broadcasting only quality audio files and having the right size album cover increases your legitimacy and your chances of going up in the algorithms. They also provide you with the indispensable ISRC and UPC codes – a sort of musical identity card for your recording.
  • Distributors provide you with dashboards that centralise useful information: the income generated by the broadcasting of your tracks and your listening statistics per DSP. This content is usually accompanied by online marketing tips.  
  • The distributor broadcasts your content on all the DSPs at once; it manages dozens of profiles for you and acts as a piggy bank for your royalties – and having all those pennies in one place saves you a lot of time!
  • The distributor also takes care of improving its distribution offer by listening to the market. For example, many digital distributors now allow you to make your music available legally on TikTok, which has become a key player in the industry. Distributors are therefore a simple way to ensure that your music is always available on all the trendy new platforms.

How do I choose my digital distributor?

There is no absolute answer to this question, as all distributors have different advantages and disadvantages depending on your career situation, resources and needs. That said, we can offer you a little advice to help make you aware of the things to bear in mind when making your choice.

Some distributors are dedicated to self-produced artists (TuneCore and ex-Zimbalam, DistroKid) while others work only with labels. We suggest you save yourself time by making this the first criterion of your research!

Identify your resources in time and money. The pricing policies of distributors vary: you sign up for an annual fee ($19.99 for an artist or a group at DistroKid for example), or a cost per audio product (like $9.99 for a single and $29.99 for the first album at TuneCore) and in exchange, they take care of sending your music to the DSPs and collecting your master rights on these downloads.  

Sometimes, these prices are accompanied by a commission on your master rights, your income. But some DSPs, like Spinnup, do not take any commission, and keeping 100% of your royalties can be an attractive option! If you haven’t seen it yet, here is our article on the legal context of the distributor-artist relationship.

Focus on the services that are bound to be useful: being aware of the number of streams by DSP, country/city and date, as well as the revenue generated by these streams. This level of detail tells you which actions work best for your content. The distributions that offer the most DSP partnerships are the ones that save you the most time, but they are also the most expensive. So don’t let the numbers fool you: you don’t necessarily need a service that plays your first EP on 150 DSPs!

The digital distribution market is made up of four main roles: the artists and all the people involved in the recording + those who finance the recording (producer, label, artist) + the digital service providers (DSPs) who distribute the music online + the distributors to whom the artists or their labels entrust the recording, and the distribution of this to the DSPs. The latter are now essential for artists who want to be broadcast on DSPs, and they have some advantages: saving time and ensuring legitimacy, sharing expertise and – if you choose well – transparency on your listening statistics and the revenues generated. Before choosing your distribution, you should consider your financial resources, the time you have available, and your career needs.  

To help you choose your distributor, we’re starting a series of articles about the different actors, but if you want to know more about them right now, don’t hesitate to join our Discord server or to send us a note at hello@rightsbridger.com!

What do I need to remember?

Digital distribution is based on exchanges between four roles: artists; producers; digital service providers; distributors. The latter are essential to artists who wish to be distributed on streaming platforms. They also offer the following advantages: saving time and ensuring legitimacy, sharing expertise, and – if you choose well – transparency on your listening statistics and the revenues generated.

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