Distributing music independently online

From Klaus Heymann for CNN

"What is a viable business model for distributing music independently via the Internet?"

Independent labels have several options when it comes to distributing their recordings online.

Regardless of what option they choose, a label should create its own digital files (WAV files that can be converted into other formats) and its own meta data -- it's not rocket science and a label knows its own content better than any third party.

Nowadays, it is very important to coordinate digital and physical marketing and advertising. Therefore, if a label has good physical distribution internationally, it should first try to work through its own network of distributors, provided they have the necessary experience and the right connections with their national digital service providers.

National distributors can create meta data in their local language, which is essential in markets such as Japan, South Korea, France, Germany and Spain/Latin America. Their distributors also know which albums to promote, or they can create special digital compilations aimed at their market.

If a label does not have good physical distribution, or if its distributors are not active in digital distribution, it must determine whether or not to use one or more aggregators (digital distributors).

Before making that decision, it is important to analyze which digital service providers (download sites) can actually sell the label's recordings. While aggregators can push content to a large number of digital service providers (DSPs), only relatively few may be able to actually sell the label's recordings, and the label may actually be able to deliver its content to these DSPs itself.

Otherwise, the label should look for specialized aggregators, which either specialize in the kind of music the label is selling or which cover specific territories. It might make sense, for example, to use one aggregator for North America and other English-speaking markets; another for French-speaking markets; another for Spain and Spanish Latin America; etc.

Some international aggregators are now setting up offices in overseas markets to establish better relations with local DSPs, but that's still very rare.

Working with different aggregators or supplying content directly to 10 or 20 DSPs may not be easy, but a label should only give its catalog to a single worldwide aggregator as a last resort -- it's like handing your worldwide physical distribution to a single exporter.

And even if a label works through an aggregator, it should still involve its national distributors so that they can benefit from or contribute to the digital marketing.