Writers 
Victony has a contract with Encore Recordings.
BNXN has a contract with EMPIRE.
Asake has a contract with EMPIRE.
Llona has a contract with Encore Recordings.
Zlatan and Chiké have contracts with ONErpm.
Burna Boy and Flavour have contracts with Warner Music through Africori and Atlantic Records, respectively.
Even Wizkid and Davido are signed to Sony Music through its subsidiaries, RCA and Columbia Records, respectively. Technically, Wizkid and Davido are signed to the same major record company.
All the artists I listed above are perceived as independent artists because, on the surface, it looks like they roll out their releases at their own pace and will, instead of being influenced by a record label's release timeline.
While this is true to some extent, these respective deals can actually affect how they release songs and albums and, most importantly, their percentage earnings from digital platforms.
An artist can be classified as independent without being completely free from record-company agreements.
This is what we're going to discuss today: Distribution Deals.
So, what is a Distribution Deal?
A distribution deal is an agreement where a record company helps an artist distribute their music to a much larger audience while the artist retains the master rights to the music.
Before the streaming era, distribution deals were usually done between artists and marketers, where the artist would sell or license the master copy of the recording for an agreed fee. The marketer would then exploit the recording and make more copies of the album in whatever format was relevant to the music technology of the time, such as CDs, cassettes, vinyl records, etc.
Nowadays, it is largely about giving a record company the right to distribute your music to platforms such as Spotify, Apple Music, YouTube and other digital services.
Depending on the agreement, the distributor may also provide marketing, playlist pitching, advances and other forms of support.
In most distribution agreements, the artist receives an advance from the record company and gives the company an exclusive right to distribute their songs for an agreed period. The company recoups its investment and earns its agreed share of the revenue, while the artist retains ownership of the master and the right to exploit the recording, subject to the terms of the agreement.
The advance and other terms of the deal depend on the artist's brand value at the time the contract is signed.
A good distribution deal can also have clauses that trigger a restructuring of the deal when the artist or their music reaches certain benchmarks.
The advance fee is not free money.
While the artist generally has discretion over how to use the money, the purpose of the advance is to help fund the artist's career, recordings and marketing. It is not money to dey show off on social media.
Advantages of Distribution Deals to Artists
1. Premium Access to DSPs
Distributors are usually companies with strong relationships and infrastructure within the digital music ecosystem.
For an independent artist using regular self-service distributors such as DistroKid, TuneCore, Mayvibe or Amuse, there may be certain services and industry-level support that aren't readily available to them.
Depending on the distributor and agreement, this can include things such as Dolby Atmos and spatial audio delivery, Apple Music motion artwork, Apple Music pre-adds, Spotify and Apple Music video delivery, playlist pitching and other DSP-related services.
2. Lower Financial Burden
Depending on the deal, the distributor may provide an advance or contribute to marketing.
This allows the artist to release music without personally funding every aspect of the project.
The artist and their team are also relieved of some of the financial burden involved in planning and executing a release campaign.
3. Marketing and Playlist Support
Many distribution deals provide some level of playlist pitching, marketing campaigns, DSP relationships and other promotional support.
This can give the artist access to opportunities that may be difficult to secure independently.
4. Artist Retains More Ownership
In many distribution deals, the artist retains ownership of the master instead of permanently transferring it to the record company.
This can become extremely valuable if the music becomes successful.
5. Greater Creative Control
The artist can generally maintain more control over their music, sound and release strategy than they would under a traditional artist deal.
That doesn't mean there are no restrictions.
An exclusive distribution agreement can still influence where, when and how an artist releases music.
6. Access to Industry Infrastructure
The artist can benefit from the distributor's relationships with streaming platforms, international teams, marketing companies and other industry players.
7. Potentially Better Revenue Share
Because the distributor may not be taking the same level of ownership or control as a traditional label, the artist can potentially retain a larger percentage of their music revenue.
But again, the contract determines the actual percentage.
Advantages of Distribution Deals to Record Companies
A distribution deal isn't necessarily charity from the label. The distributor also expects to make money.
1. Revenue From an Artist's Catalogue
The company earns an agreed percentage of the revenue generated by the recordings it distributes.
If there is an advance, the agreement will usually give the company the right to recoup its investment from the applicable revenues.
Depending on the contract, recoupment can continue even after the active term of the deal.
2. Lower Artist-Development Risk
Distribution deals are usually more attractive when an artist already has some leverage.
Instead of discovering an unknown artist and spending heavily to develop them from scratch, a distributor can partner with an artist who already has an audience, catalogue or proven demand.
The risk is therefore significantly lower.
3. Access to Successful Catalogues
A strong artist can bring an existing catalogue and future releases into the distributor's ecosystem.
For example, Flavour's deal with Africori brought his existing catalogue and future releases into the relationship while he retained his master rights.
The distributor is literally reaping from where they didn't sow.
Well, they sowed the advance fee.
4. Potential Upside From Breakout Records
If an artist releases a major hit, the distributor participates in the resulting revenue according to the agreement.
For example, ONErpm benefited significantly from "Egwu" by Chiké and Mohbad, to the extent that the company sponsored the music video. Mohbad was signed to ONErpm at the time of his death.
5. Long-Term Commercial Relationships
A successful distribution arrangement can lead to renewals, larger deals, licensing arrangements and other business opportunities.
6. Less Traditional Label Overhead
In some distribution structures, the company doesn't have to assume every responsibility associated with a traditional record deal, such as fully financing an artist's entire career.
If you've ever run a record label before, you will understand why this is a big advantage.
A distribution company can participate in the success of an artist without necessarily carrying the same level of risk and responsibility that comes with developing an artist from scratch.
So, Who Wins?
A distribution deal can be a win-win situation for both parties.
If the deal births hits, the distributor recoups its investment faster, while the artist gains more ground and can further expand their career, even after the distribution deal expires, depending on the terms of the agreement.
But don't be deceived by the name of the deal.
A distribution deal doesn't automatically mean a good deal.
Ownership, exclusivity, term, territory, advance, recoupment, revenue split, marketing commitments, release obligations and termination rights can completely change the economics of the arrangement.
The real deal is always in the contract and how you negotiated it.
You can ask me questions about this topic. I'm open to answering and giving you more insight.
You can also book a music business consultation with me.