Two different jobs
| Distributor | Record label | |
|---|---|---|
| Main job | Delivers releases to stores and collects what they earn | Chooses, funds and promotes releases |
| Who owns the masters | You do | Usually the label, or it licenses them from you for a period |
| Money up front | You pay a fee, give a share, or both | May pay an advance and recording costs |
| Your share of income | Most or all of the store royalties, depending on the plan | A royalty or a split set by the contract |
| Creative decisions | Yours | Shared with the label, as the contract sets out |
| How long it lasts | Usually for as long as you use the service | Usually a number of releases or years |
What a music distributor does
Streaming services take releases only from labels and distributors; Spotify closed its upload tool for artists in 2019. A distributor delivers your audio, artwork and details to the stores, gives each track an ISRC and each release a UPC, collects what the stores pay and passes your share on.
You license your music to the distributor to deliver it and collect for it; you keep the rights. Many distributors add more on top. TempoDigital includes YouTube Content ID, analytics, a landing page for every release and royalty splits on every plan, and offers publishing administration alongside.
What a record label does
A label makes a bet on an artist. It may pay for recording, mixing, mastering, videos and promotion, plan the release, work with press and radio, and handle the business side. In return it usually owns the recordings, or licenses them for a long period, and keeps most of the income until its costs are earned back.
A label still needs a distributor to reach the stores. The major labels have distribution of their own; independent labels use distributors the way artists do, only with more releases and more artists.
Advances, recoupment and who gets paid
An advance is money a label pays up front, against your future royalties. It is not a gift. The label keeps your share of the income until the advance, and often other agreed costs, have been earned back. This is called recoupment, and until it happens you receive statements but no money.
Usually an advance that never recoups does not have to be repaid from your own pocket, but that depends on the contract. Watch for cross-collateralisation, where costs on one release are recovered from the income of another.
With a distributor there is normally no advance to earn back. You pay for the service with a fee, a share or both, and your royalties come to you from the first statement.
Distributor or label: when you need which
A distributor is enough when
- You can pay for recording and artwork yourself
- You want to keep your masters and the final say
- You are building an audience and want the income it brings
- You are ready to do your own promotion, or to pay someone for it
A label makes sense when
- You need money for recording, videos or a campaign that you cannot fund yourself
- The label brings what you cannot buy: a team, contacts, press and radio reach
- You are willing to share ownership or income in return for that help
Many artists start with a distributor, build a following and then talk to labels from a stronger position. A record that already earns is easier to negotiate over.
Questions to ask before you sign anything
Whether it is a label contract or a distributor's terms, get clear answers to these first:
- Who owns the recordings, and for how long?
- What share of the income do I keep, and which costs come off before it is split?
- Is there an advance, and how is it earned back?
- Which territories and which stores does the deal cover?
- How often will I get statements, and can I check them?
- What happens to my music if the deal ends or I stop paying?
If a label contract is involved, have a music lawyer read it before you sign.
How record labels use distributors
For an independent label, the distributor is the supply chain. The label signs and promotes; the distributor delivers, collects and reports. A label needs different things from it than an artist does: many artists in one account, figures per artist, splits and clear statements.
On TempoDigital the Label plan is $149 a year for up to ten artists, with 100% of store royalties, a login for each artist to see their own releases and money, and analytics across the roster. Larger catalogues can agree a Label Partner deal with no fee, where we keep 15%. See distribution for labels.
Starting your own label
You do not need a label deal to release under a label name. On TempoDigital the label name is free text on every release, at no extra cost, so you can put out your own music under your own imprint from the first release.
Once you start signing other artists, you take on a label's responsibilities: contracts, splits and statements. Our guide on how to start a record label takes you through it step by step.