RAPCOINTELPRO
(Rap Coalition’s Intelligence Program)

By, Wendy Day of Rap Coalition

"It’s been a long time, I shouldn’t have left you…" (Rakim)

DISTRIBUTION

A year has passed since my words have graced the pages of Murder Dog. In that time, close to 1,000 new urban "independent labels" have sprung up and sold between 7 units and 125,000 units of each release, according to SoundScan. If you are putting out your own record, this is your competition. It’s not hard to sell records, but a plan is necessary. It takes months to set up a record and to build a buzz for it. Retail space is limited and there’s a lot of competition, but if worked properly, your record can sell well and make you a nice living. For example, at $10 a CD wholesale (the distributor gets $2, you get $8), 25,000 units sold is $200,000. To sell units, your release must stand out from the crowd, stores need to be able to stock it, and consumers must want to buy it.

How can an independent label compete? First of all, let’s clear two things up out the gate: 1) an indie label makes between $7 and $8 for every CD sold, and an artist signed to a major label makes about 80 cents to $1.20 for every CD sold, AFTER recouping much of the labels’ expenditures, and 2) not every person putting out a record is a record label. A real independent record label has a small staff, it has more than one release in the pipeline, and it is properly funded. Without the proper financing, someone releasing a record is just that--someone releasing a record. An independent label has more clout with a distributor because there are future projects to guarantee payments and money. This is called "pipeline." ["Pipeline" is the release of subsequent albums that a distributor would be able to recoup any monies from, if there were returns on a prior release]. The most attractive person to a distributor has some experience selling records, one album with a set plan to have others follow, and has financing in place to properly work that record. Distributors have lost so much money on poorly planned record releases that they tend to be more careful in choosing which records to distribute.

For someone who really wants to release a record, and I am STILL a huge proponent of this, it’s not hard to just do it right! This is not rocket science but does take some research. It’s easier than selling most stuff on the street--and legal. But just understand how it works, what a distributor is supposed to do and not supposed to do, and be able to look at things from the perspective of others: the distributor, the retail store, the promoter, and the radio station. Easy, right? It is not uncommon for someone to sell records locally before going to a distributor. This is a good way to raise the proper financing to market to a larger local or regional area. This also makes your project more attractive to a distributor by having a track record with some retail stores.

A Distributor is the person who gets a record from the pressing plant to the retail stores. That’s it. They sell it for $10 or $11 to the retail store, and in a perfect world they keep 20% and give you $8 or so. They distribute the record. Involved with that is warehousing the CDs and cassettes that have not shipped yet, keeping track of the money by invoicing stores and recording the payments (and chasing money that’s due), having their sales staff talk to retail stores about it, and collecting the returns which is the left over product the stores were unable to sell. Returns are the scourge of distributors. Not only do returns cost them money in shipping, but also they take up valuable space and staffing in the warehouse, and fuck up their books financially. So if a release has a lot of returns (or even the threat of a lot of returns), that label will lose their distribution deal and it will be next to impossible to get paid. Retail stores remember the labels whose product gets returned, and it makes it that much harder for the label to sell more records to the retail store next time, no matter who the distributor is. I’m going to repeat myself here: a Distributor is the person who gets a record from the pressing plant to the retail stores. It is YOUR responsibility to get customers into the store to buy your record. You are responsible for making the album, marketing the release, promoting the album, building awareness of your artist and the release, and increasing sales. YOU are responsible for the cost of that, NOT the distributor. Some distributors will advance funds for marketing, and then take more than the standard 20% distribution fee (like 25%). If you need an advance from the distributor be prepared to give up some of your control because they have now increased their risk. The point of going to a distributor instead of a major label is to control your own project and make more of the money. This also means you will have to do the work of a record label.

There are a few cities throughout the US that have their own independent rap music scenes that are bustling, such as Houston, Memphis, northern California, Atlanta, New Orleans, etc. These areas all have something in common: access to distribution. Some areas are additionally supported by clubs and radio shows that also support local music. Although these outlets are not mandatory for success, they are helpful. There are reputable distributors out there, but understand that some distributors may have their own financial issues which might delay or affect the timeliness of their payments. Although there are such things as pressing and distribution deals (P&D deal), if a distributor controls the pressing of the albums you will lose some leverage to guarantee payment, should that become an issue. By arranging for pressing yourself, you control the payment for previously sold records by gaining the ability to say "I’m not shipping you another 15,000 units until you pay me for the 30,000 sold last month according to SoundScan". This is the leverage the distributor uses at retail stores to get paid. The distributor will want to control the pressing obviously, because it guarantees they’ll get the product when they need it (they may be afraid you’ll run out of money before subsequent pressings), and because it’s another way to make a few extra dollars profit. If they pay 60 cents a CD, they could charge you 90 cents a CD and make an extra 30 cents per each unit pressed. Ask around to find out the reputation of a distributor. Ask others who have released through them (recently and in the past) and ask local retailers in the area or region.

About 4 to 8 weeks before the release date, the distributor sends a copy of the album to all the retail stores they have accounts with (this doesn’t mean all the retail stores in your market, so find out whom they do not sell to, and sell them directly or through a "one stop". When selling directly, try to get as much money upfront as possible; it may be the last money seen from that store unless the release is super hot and they need to pay to get more in stock). The distributor solicits "pre-orders" which tells them how much demand exists in the marketplace for the release. This tells everyone immediately whether or not you’ve done a good job setting up the release. This is the moment where the distributor gets excited about the record or banishes it to the bottom of the sales list. If they are excited about the release, they will set up sales programs (discounts that actually force the sale of more records--for example, a 20% discount isn’t actually a reduction in price, but the shipping of one free unit for every 5 ordered), and/or price and positioning (where you pay for a premium location in each key store for the release to be displayed). A good amount of pre-orders will make the release a priority for the distributor, which means the sales person will mention the record on their weekly calls within the top ten releases or so. With unimpressive pre-orders, the release gets regulated to the bottom of the list, which the sales person may never get to mention depending on the length of each weekly call. This position can get turned around if sales miraculously pick up, but obviously avoid this position at all cost, even if it means pushing the release date back until a stronger buzz is built. This reinforces the importance of your own staff calling retail stores to sell the release in tandem with the distributor’s sales efforts.

Once the distributor gets your record into retail, the goal is to have it sell as quickly as possible off the shelves. Work the streets and clubs to build a buzz. Areas that don’t get support from clubs will need to work the streets harder. Some areas that do get support from local radio (like Dallas, Atlanta, Jackson, etc) can ignite retail by ramming the song down the throats of radio listeners so that they fall in love with the song. The way to ignite radio (and subsequently retail) is to have, what I call, an "oh shit" song (a song that makes people grab their heads and exclaim, "Oh shit!!"). It's a song that's catchy with a memorable hook that people keep in their heads all day, whether they want to or not. "Where my dogs at..."; "I'm down with OPP..."; "It's a hardknock life for us..."; "It's all about the benjamins, baaaabeee..."; "Snooooop Doggy Doooooggg..."; "It's like... Whoa!!" Nelly made a song that had the sensibility and catchiness of a nursery rhyme. People couldn't run to the store and buy his album fast enough. Indies can learn from the success of these records.

Retail stores don’t want to stock records that don’t sell. Make sure you promote your releases at the street level. Fans need to go to the stores and ask for your record. Retail stores don’t want to carry records that don’t sell--there just isn’t the space. Let's look at this logically: if you owned a record store and every unit I sent you had to be shipped back eventually, would you continue to take a risk on me? Consider how small the average retail store (or the urban section of a chain store) is, and that every record that sits on a rack is taking space away from another record that will most likely sell. This stigma also exists with distributors. There are some distributors, just like there are some record labels, that retail stores will not do business with because they’ve been burned too many times. You do not want to be that label, nor do you want to be coming to a retailer through that distributor, so do careful research before choosing a distributor. Call retail stores in the local and eventual regional area where you want to do business and ask who the best distributors are for the type of music you want to sell. And set up the release properly. A good set up takes anywhere from six weeks to four months to build a strong buzz.

So, in order to be successful at retail, start by promoting a hot, hot, hot song on the streets. The release needs to have a buzz. Consumers need to be talking about it. The number one thing that sells records is word of mouth. If the single is a radio friendly song, radio play is helpful. If it doesn’t, don’t waste time trying to get radio play for something that never will get played. Know the product, understand the market, and be realistic. It’ll save a lot of money in the long run. Either way, the single needs to be playing in the clubs and hot on the streets. Kevin Black at Interscope taught me this: build from the underground up-- streets first, clubs second, mix show and college radio, then urban radio rotation, and then pop radio. You use the method that’s right for your record--if you don’t have a radio record, skip radio. If the record stalls at the street and club level, rethink the single. If BDS [Broadcast Data Systems is the company that monitors radio play and charts a daily list of how many times records play at certain stations] is not strong at the mixshow level, don't even think about spending all that money on a video or urban adds. Start locally, spread regionally, and then go national. No one can afford, as a small label, to blitz the entire country at once. There isn’t the money or the staff. If the goal is to get picked up by a bigger label (like a major label) with this release, it’s important to NOT reach most of country with the release or the major label will think your album has already reached saturation (meaning there are no more sales for them to pick up by re-releasing the album). Make sure the distributor is strong in the areas for expansion. It seems silly to build a buzz in an area where the distributor doesn’t reach. Either add a distributor or expand within the territory they reach. Have someone on your staff calling retail, but be careful not to thwart the distributor’s retail staff. Your label should be working in conjunction with the distributor’s staff not bumping heads. It is important to know what’s going on with the record at the retail level both from the distributor and from retail directly.

Consumers will go and ask for your CD when there's a reason for them to--like they really like the single or their friends told them about the record. Although it’s important to work (focus on) a single (or two) to sell full-length albums, there’s no money in selling singles. It costs just as much for a distributor to ship a single, or for a retailer to stock a single, as a full length CD or cassette, yet everyone makes more money selling a full length. Also, the urban music market seems to be a "follower market." Most people don't like to support stuff that isn't seen as the "next big thing." This actually goes past music. How many folks were wearing Hilfiger, Polo, Phat Farm, Pelle Pelle, Sean John, or Fubu in your area today? Don’t under estimate this power of "hype." One reason for Cash Money's huge success is that my job was to build them to be "the next big thing" while I was shopping their distribution deal. They had hype engulfing them 9 months before a record even came out nationally. Fortunately, the artists could back up that hype with songs like "Back That Ass Up" and "Ha." Scarily, I hear the phrase "bling, bling" in everyday life now which I first heard in a Cash Money song. That's a tremendous success-- a word that crosses from an expression, to a song, into mainstream society. A snowball rolling down a hill that can't be stopped.

Next month: The ins and outs of getting radio play