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
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
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
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
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
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
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
Richard Rose, REPEAT Records
Derek Chapman, Backs distribution company
All you need to know about the music industry. Passman, Donald. Penguin