Industry sector: Business services

Record label: Customer profile

Who will you be selling your records to?

Ultimately, your label's records will be bought by individuals for the most part, so you need to decide how they will end up in their hands. There are a number of ways of achieving this, including:

Dealing directly with record shops

Dealing directly with record shops may be the only way that you can supply to a wider audience if you are unable to secure a distribution deal. In almost all cases, the record shop will operate on a sale-or-return basis, meaning they won't pay anything up front for the records you supply. The benefits of dealing directly with a record shop are that you may have a better chance than anyone else of persuading the shop to take your records as you are likely to be very passionate about your artists. Also, you do not need to pay anyone a percentage to do your distribution for you. The downside is that it will be time consuming and you are unlikely to be able to cover as much ground as a specialist distributor. Bear in mind though that there is not a great number of independent record shops so you may find it difficult to find a large enough local market for your records

Using a distributor

If you use a distributor, you will enter into an agreement to pay them a percentage of the income from every record that you sell. However, a skilled distributor is likely to be able to get your products placed in more shops than you could hope to achieve yourself and your relationship with the distributor is likely to be beneficial to your business. The distributor does not buy your records from you but will get record shops to stock them, generally on a sale-or-return basis. At the end of the agreed sale-or-return period, the record shop pays the distributor for all the records that they have sold and the distributor, after deducting their percentage, passes the balance on to you.

Selling direct

You may choose to make some direct sales of physical format music as well as selling through record shops by:

  • selling through your website
  • operating a mail order scheme
  • selling records at gigs and club nights

Make sure that your prices do not significantly undercut the prices charged by the record shops that carry your stock or you run the risk of souring relationships.

Selling digital music

If you're planning to sell your music in digital format, you'll need to give some thought to how you'll achieve this. The options include:

  • selling through your own website or digital shop
  • setting up a direct deal with digital service providers like iTunes or a streaming service like Spotify. While this will mean that you don't have to pay anyone else to distribute your digital music for you, managing your relationships with these providers can be difficult and time consuming and you'll be required to meet all the content delivery requirements. (Spotify doesn't actually deal directly with new labels but instead directs those that manage their own digital business and have the capability to deliver via a digital feed to join the Merlin network.) A more practical alternative may be to sell through a distributor or aggregator
  • using the services of digital distributors and aggregators. These provide a similar service to distributors of physical format music and will take responsibility for converting your music to the required format and dealing with digital service providers and streaming services in return for a percentage of your profits

Cash or cheque

Your customers may pay you:

  • in cash
  • by cheque, debit or credit card
  • by electronic payment (distributors and aggregators may prefer this option)