Entertainment Industry:
Professional Practice

An essay written comparing R*E*P*E*A*T Records with Sony BMG (!) by Mark Taylor

I have been looking into the area of distribution of the final media (CD albums) in the music industry. I researched the standard deals record labels have with distribution companies, and acquired all the details I needed to know from 'All You Need To Know About The Music Business' by Donald Passman, giving me enough knowledge to carry out interviews with the owners of the independent record label and distribution company. MusicBizAcademy.com has been very useful in the research of major record labels and how their relationship with the big distribution companies work.
I have interviewed my cousin, the owner of REPEAT records, an independent record label, who has bands approach them with their CDs, and it is REPEAT's job to sell them to a distribution company called Backs. Backs, in turn, sell them onto the retail outlets and online shops. A member of Backs was also questioned on how they run their part of the process and the details of the deal they have with REPEAT. Both interviews were done by telephone as REPEAT is based in Cambridge, and Backs is in East Anglia, making it a little difficult to spend a typical day shadowing them in search of what services they provide, and how they deal in the music industry.
The whole distribution area in the industry is the final stage a band's music goes through before it appears on the shop shelves for the general public to buy and enjoy. The distribution company can come in many shapes or forms. Wholesale Distribution Entities are the main way of distributing records. They buy from the main labels, and meet with the retail stores to present their purchases and discuss prices to make a profit on what they paid the labels for the bulk media in the first place.

"REPEAT has something of an indie-tution over the past decade, championing the best local talent while giving a stage to upcoming national acts and a voice to genuine leftwing politics through it's releases, gigs, fanzines and websites" AdHoc Magazine

That review comes from AdHoc, a local Cambridge magazine praising the efforts of the record label. One of many reviews that have appeared in such major music magazines as NME magazine and on national radio.
REPEAT was set up as a fanzine for music lovers of the "post Oasis era", and originally was just a few pages made up of photocopied, cut and paste pages of articles, cartoons and interview with local bands. As it grew, and the name spread through the industry, they were sent CDs to review, which now totals 50 CDs received per week. Bands like Towers of London, Goldie Lookin' Chain, Razorlight, Libertines and Stereophonics have been interviewed by the creators of the fanzine since it began.

But what turned this fanzine into a record label? The simple fact that they thought the CDs sent to them to review were rubbish, and they could do better! REPEAT started scouting bands by setting up local gigs in their home town of Cambridge, and on August 24 1998, 4 years after the fanzine was born, the first record available nationwide in the shops was released under the name REPEAT Records from the band The Saffs and their single Supercharger, and made it onto shop shelves. Radio 1, in the form of Steve Lamacq and John Peel, two years prior to this, did start playing REPEAT's bands, and advertising the fanzine, but it was not until The Saffs that REPEAT knew they had made it. Now, with 5000 fanzines sold, 12,000 records released, 100 bands promoted at 200 gigs, and 20,000 badges made and handed out, REPEAT are still growing, and only recently boast being able to say they have their first album on the HMV shelves. Miss Black America (MBA), with their album Terminal, can be seen nationwide in all the major music stores. All this, and the label is still running off the owners own money. The total spending spree totals over £25,000, and having recouped hardly any of that back, they describe themselves as the 'worst capitalists ever'.
But all this would not be possible without REPEAT's partner, Backs records. Backs are a distribution company, and act as the middleman to help the bands like Miss Black America get their albums on HMV's shelves. It all started in 1979 with 6 companies that formed a network and sold albums to each other. This network was known as Roughtrade, but soon went bust. Backs, the only remaining link in this chain, wanted to stay afloat and went independent. The name 'Backs' actually refers to the export area of the company. Shellshock is the area that deals with the distribution, and they use Pinnacle to physically distribute the CDs, but overall, the company is known as Backs. They are based in Norwich, and have another office in London. 7 people work in each of their branches, each with their own job, and own style of music to support. One person looks after label management, one works with Pinnacle on the export, one takes stock control, and so on.
Backs are sent a press release by Repeat before they choose whether or not to distribute the album. In the music business, the press release (or news release) is a common tool used to bring an artist "free" publicity. Basically, a press release is a simple, neat-looking sheet that provides news to reporters, editors, and other media people. Any publicity you get from your press release will be free, so it's easy to see why writing a good press release is a valuable skill. Hopefully Backs will be impressed by the release, buy the albums in bulk and attempt to convince the retail outlets to sell these to members of the public.

Let's take the journey MBA's album made from the pressing plant to the spot in the major music outlets. The deal made between REPEAT and Backs is known as a M+D deal, Marketing and Distribution deal (sometimes called Pressing and Distribution if the company presses the CDs for the label as well) This deal is only made when the levels of distribution are high, and Backs knows the albums will sell. An M+D deal works with the label selling the albums in bulk at a dealer price, minus a negotiated distribution fee. In MBA's case, each album was sold for £3.40 each. The distribution fee is normally 20 - 25%, which the distribution company keeps, after selling on (i.e. the remaining money made from HMV goes all the way back to the label). This percentage covers companies' overheads, operations, and helps them make a profit.
The deal is a risk to the distribution company more than the record label and the deal is a 'sold on returnable basis' deal. This means the distributing people must take an educated guess at how many will sell in the shops, and therefore, how many to buy from the record label. If the retail outlets do not purchase the albums, then they are returned to the label, but the distributors do not recoup any of their money. This is even more of a risk due to the company not offering services like marketing, promotion and accounting, so if the album is not a hit, then Backs, and other companies can do nothing about it but return it to REPEAT and lose cash.
Once the records have been bought, Backs have weekly meeting with specialist buyers at the chain store head offices. They have to convince them that the albums will sell, and then the stores buy as many as they want. The stores will pay more than Backs paid REPEAT, due to the simple fact they have more money. It is normally around £10 per CD, and a little less on online stores like Amazon, as they sell cheaper, but still want to make profit.
At the end of all that, with everything agreed, the Miss Black America album has its own section on the high street shelves for all to enjoy. A simple but effective chain at the tail end of the music industry.
The major record labels go about it in a much more round-about way. Sony BMG, with their ownership split 50/50 with Bertelsmann A.G. and Sony Corporation of America, have a part of their business, known as Sony Independent Network Europe (SINE) that was setup just to deal with distribution agreements and to sign marketing contracts with acts and other labels.
The major companies like Sony can easily spend thousands on pounds on wining and dining artists to get them to sign up. They have many different departments just in the distribution section.
The sales representative oversees retail activities and builds relationships with the key chain stores, and the staff in this section coordinate their efforts with the label liaison officer who is in direct contact with the physical distribution company, and who also approves the release date, otherwise known as the street date of the record.
These major distributors will not normally work with the record label unless they have been in business for 3 years or more and have had at least 3 previous releases selling thousands of copies each. Unlike the independent M+D deal, major distribution companies will buy the albums for 50% of the retail price, making it all the more mouth-watering for a band to be signed to a major label. Another comparison to indie companies is that the major distributors do help with promotional activities, even though the artists have to fork out the cash to set these up.

Obviously the majors, with tens of thousands of pounds to pay hundreds of people to concentrate full time one area of promoting a release means that the job is done much more thoroughly; however indie labels like Repeat, considering their constraints in terms of both time and money (they are usually run as a spare time occupation and from the owner's own money), carry out the job remarkable efficiently and effectively - perhaps this is because the big labels are keen for the small labels to carry on nurturing the 'next big thing' ready for them to buy them up.
It has taken 12 years to get Repeat's first album into the big stores, but now, as the market's nature is changing, new problems arise. Many Indie record shops are closing. These were the only shops that were willing to take part in stocking the small label releases. Now, all that is left are the major chain stores like HMV and Virgin. These companies are much more cautious and do not want to risk their money and shelf space on these small releases. REPEAT even insisted they sell them for a low deal price, but the stores still sell them on a high mark-up. Backs have stepped in to help REPEAT, but do find it difficult to persuade the buyers every time. The internet has helped overcome this difficulty. Not only with the beginning of internet shopping like Amazon, where many consumers will begin their search for a product once they can not find it in the high street, but REPEAT have setup two of their own websites.
The REPEAT records site gives the opportunity to customers to buy the albums and pay by Paypal. The Miss Black America album, even after all the postage and Paypal costs, helped REPEAT make back £1000 of the costs of producing and promoting the album.

The second and newest site, Bigbagerrecordingco.co.uk is another mail order site, but also gives the facilities of downloading the tracks for free. The albums ordered are pressed and sleeved by REPEAT themselves, therefore cutting out huge pressing plant costs. The downloads will perhaps be available at a cost in the near future, bringing in more money for the label to cover the costs of increased bandwidth on the website. But with internet sales on the rise, where does this leave shop releases? Without those, companies like Backs will not be needed anymore.
Backs do not see themselves with any major problems heading their way in the near future. They have added digital distribution to their services, and help artists who set up and use their own websites for mail order products.
The only way to survive in the music industry is to jump on the band wagon and change with the times. Every hurdle may be difficult, but if it is what the members of the public want, then success will come their way.

Mark Taylor

Richard Rose, REPEAT Records
Derek Chapman, Backs distribution company

All you need to know about the music industry. Passman, Donald. Penguin Books. 2004