Music Distribution: Digitally Speaking

by Hassan F. Johnson

Before getting into the Hip Hop business, you have a lot of decisions to make. You have to decide if you’re a mainstream or underground artist, whether you want a deal or to be independent, if you want to buy studio time or build one, and then there is the question of distribution and marketing.  They are probably the two most important assets of the record industry.

While record companies have a lot of power through their marketing resources, digital distribution is another story entirely. Let’s talk about some of the major changes that have occurred over the last decade in the world of Hip Hop and the music industry as a whole.

The “digital revolution” (i.e. peer-to-peer networks, social media, Web 2.0, etc.) has completely changed what was once a simple serial value-chain, into an extremely complex and dynamically linked supply chain network.  Before the change, the major record labels only had to concern themselves with distributing their product to retail stores (like Tower Music) and radio stations, and could pretty much dictate what listeners liked by simply pushing out all the little guys who didn’t have the resources and clout to compete effectively, then push down whatever music they decided would be a hit to listeners.

Now, peer-to-peer networks (like Napster in its early days) have completely changed this once easy-to-manage model into a complete nightmare for the record industry, and with consumers having lots of online options for listening to new music (streaming radio, video games, iTunesand more), it’s impossible for them to control all of the sources.  Napster (in its original form) didn’t sit down with Edgar Bronfman, Jr. to obtain a license agreement to play Warner’s music, and Limewire didn’t initially care what the record industry thought of anything they did. As illegal as it may have been, consumers opted to choose these mediums to consume new music because they provided something that the record industry didn’t: CHOICE, that little free-market tool we so love and cherish.

Unfortunately, instead of record labels taking the lead in developing these new ways to engage its all important end-consumer (which they just now seem to realize they need), they have allowed the innovation to come from the hands of others.  Innovators like Apple, Pandora, Spotify, Nokia and many others have developed brands and earned millions (in the case of iTunes, billions) giving listeners new ways to experience their beloved music.

While the RIAA was busy building its case against piracy, Apple was busy building its content and took iTunes to the number one music retailer spot in the US, surpassing the all-mighty Wal-Mart.  Companies like CDbaby and TuneCore further extended the blow to the industry by creating gateways for independent artists to get into iTunes for only $20-$50.

What has this disruption done for independent artists?  It has created a double-edged opportunity such that with the right digital marketing campaign and good music, an artist can build their brand without the help of any label (just ask Drake, Kid Cudi and Wale), but at the same time creating a world where the uninitiated will be left in the proverbial dust.