Here are a few Things You Need To Know about digital distribution.
You can understand digital distribution by comparing and contrasting it to physical distribution. With physical distribution, someone prints and presses your physical CDs and then distributes them to retailers like HMV or your local CD store. Physical distribution is limited by the number of physical CDs you produce and the shelf space of the CD stores where your CDs are sent. A digital distributor on the other hand encodes your music and packages it up digitally before sending it to the outlets like iTunes and Amazon mp3. Unlike physical distribution, you can have unlimited copies of your digital album.
Digital Distribution is simpler and much less expensive than physical distribution. It will cost you potentially thousands of dollars to manufacture and produce just a few hundred CDs for local distribution. Compare that to the cost of unlimited, worldwide digital distribution which, with the right distributor, will cost you less than $100 and allow you to retain all your rights to the music and the lion’s share of each song or album sold.
You can sell your music without a digital distributor. You can build a website and reasonably simply set up a system for people to purchase your album. But it’ll cost you and you’ll have to manage every single sale yourself. And you will run into the same old problem of people not knowing about you and not knowing if they can trust your ad-hoc payment system. You can even go a step further and contact each of the outlets yourself. Most will send you back an email referring you to a digital distributor. Those who don’t might give you a distribution contract and some instructions for delivering files via FTP (if they ever get back to you). But that will take months of effort and administration. Here’s a better way. Use a digital distributor. And make the most of it by getting yourself the best deal.
There are three main business models used by digital distributors.
1. The fee for service model where the artist retains 100% of royalties and then pays an annual renewal or storage fee.
2. The subscription model where the artist pays a monthly fee and a variable percentage of royalties.
3. The upload fee and royalty percentage model where the artist pays an upload fee but no renewal or storage fee and the distributor takes a cut of royalties.