HOW TO PUT OUT YOUR OWN RECORD

by Wendy Day from Rap Coalition

In the past two issues we've discussed the importance of having great music that will sell outside of your circle of friends, choosing the single based reaction from the local DJs and retailers, focusing on two or three markets in which to first release and work your record, and timing as the most important element in the success of your project (after good music that it).Then in the last issue we talked about the importance of bar codes for Soundscan (retail sales tracking system), having enough money to work your project so you don't run out of financing with and experienced street team, and if have a radio record: the importance of BDS (radio tracking). In order for the consumer or the fan to own you record, they have to be able to get it from somewhere. You could sell it one by one to people on the streets, or at shows, but the best way to reach large amounts of people at once is to sell your record at record stores. Therefore, a very important aspect of selling your own record is getting it into stores, There's no shortcut here; hard work is the only way to do this unless you have famous artists all over you record, an incredible buzz, a recent track record that proves your records sell (like Esham), or a fool proof guarantee of records sales to retailers. The important aspect in this equation is leverage. For example, in Chicago right now Twista is releasing his own compilation record called Legit Ballin' It may be easier for him to get his record into stores than for Newsense to get her album, Newsense, into stores because Twista has a national track record sales and his name is more recognizable nationally to retailers and fans even though Newsence is a local star and has sold records regionally in the past with her group Psycho Drama. The fact that both albums are excellent is not enough.

Let's go back a step: There are three things a distribution company looks at when deciding whether or not to distribute a record label. The quality of the product (music), the flow of the product into the pipeline (does the label have enough money music to release something every few months), and the economics of (does the label have enough financing to be a real record label and cause "push" and "pull" through the retail stores). "Push" is getting the retail stores excited about carrying the record so they'll order it for their stores, and "pull" is getting the consumers into the store to buy the record. Retailers are in business to sell records, be informed about artists and their releases, create store loyalty, provide a local service (sort of a music industry center in their local area), and make a nice profit. I find that if you treat them as such, and with respect, they are happy. They don't owe you anything as a new label - bear in mind they've seen many, many labels come and go. It's your job to convince them you are serious as a label; understand their strengths and difficulties (competition in local markets, credit concerns, etc.), and support them financially through price and positioning and through co-op advertising (not always financially easy to do as a small label - it's tough to get a better position in the store than Sony or UNI, unless there is some incentive for a local store to hook you up -- liking you is good motivation, bringing the artist through on promotional tour to sign autographs is another good motivator). In a perfect world, retailers want to carry product that will fly off the shelves at breakneck speed regardless of the price they are charging. Read that again, it's important -- retailers want to carry a product that will fly off the shelves at breakneck speed regardless of the price they are charging! Proper set up, a strong buzz on the streets, strong awareness of the project, radio play (if applicable), a healthy budget spent properly and efficiently, added to good music does insure this. Bear in mind that when a record sells at a discounted price, the retailer is not absorbing this loss, the label is. The label reduces the wholesale price by a percentage often by offering more units for a fixed price to make the difference -- for example a 10% discount might be offset by offering one record free for every ten ordered instead of lowering the invoice

by 10%. By the way, this free "11th" album is considered promotional ("free goods") and the label is NOT responsible paying artist royalties on that unit (which is a very good rationale for artists to limit their "free goods" in their recording contracts). Sorry labels, gotta look out for the artists!

Because most new labels don't have a track record or the proper financing to have flow of product yet, getting distribution is difficult (even locally). The goal is to have enough leverage to negotiate from a position of strength instead of when you need something. And waiting until you no longer need distribution is hard as hell. That means you have to go to each retail store, convince them to carry your record (often on consignment), and then convince them to pay you for it (even after they've already sold it). Once the record is selling sufficiently, it's no longer a struggle, but it's still time consuming to go to each store to pick up your money and deliver more records. In a larger city there can be over 200 retailers. Even in a smaller market like Tulsa/Oklahoma City (they are 45 minutes apart) I found over 25 stores that sell rap music and another 10 or 15 that could sell music because they attract a rap consumer (hip gear stores, etc.) So every few days you're visiting those stores, servicing them. It's a lot of work.

Once the record starts selling, the distributors will become interested and you just need to ask what they can do for you that you can't do for yourself. Is what you'll gain worth giving up 20%. or 25% of the money? Sometimes yes, sometimes no. A regional director (like Southwest Wholesale or Select O Hits) can expand your coverage area (provided you can afford to expand your promotions) and get your record into the chain stores. But you must weigh the cost of that service. (If you have to sign exclusively it isn't worth it because then if a national distributor comes along you won't be able to leave without buying out your contract from the smaller distributor. If your goal is to stay regional for awhile until you can strengthen your track record like Cash Money did (they remained a regional label churning out records every six weeks for a few years growing more and more successful with each release), then a regional director can be most helpful. In some case they'll even advance funds to help defray costs. This was helpful top Cash Money because they were able to start buying regional cable advertising which tripled their sales.

When a distributor looks at your company, preferably through a business plan so they can see where you've been and where you've been going, they are looking to see how feasible and realistic it is for you to last over the long haul. Do you have proper staff in key positions: retail sales, radio promotion, video promotion, marketing, publicity, street promotions, finance (very key position), etc. These positions can be outsourced as necessary, but the distributor needs to know your company has the potential to last in an industry where most have zero staying power. Do the principals have experience and connections in the industry? Have you ever sold a record before? How have you done it? What is the likelihood you'll be able to do it again? Do you understand how the industry works? Will you still be in the business down the road or will you fold quickly if things don't go as planned? Are you properly financed or are you in over your head? What artists are signed to the label? Do they all have potential to make music that sells. Properly financed means enough money to press, create and fill demand, and repeat this process for a few records in a row without depending on immediate income to sustain the company. It takes a company like Priority Records or Atlantic Records anywhere from $800,000 to $2 Million per artist to properly market and promote a rap record nationally, and it takes conceivably 90 to 120 days after the consumer buys the record, less reserves (the amount of money the distributor keeps to offset returns from the retail stores -- usually 25% is kept and liquidated in 6 to 9 months, depending on who negotiates and level of power in the negotiation) to get paid. Can your label sustain that kind of commitment or will you run out of money half way through the first project? What is your reputation in the local home base? Do you pay your bills? How hard do you work? Will you continue to work hard or will having a distributor make you lazy? How serious are you about putting out records? What's your vision -- where does your label plan to be next year? In 5 years? In 10? This is why it takes awhile for a legitimate distributor to step in. It takes awhile to analyze your label and decide if you're serious or in over your head. I'm not sure what the ratio is between labels that succeed and labels that fail, but from my personal experience with working with small independent labels, 99% fail before they finish working their first record. I won't even work with a new label anymore unless they have sold at least 50,000 units for this reason. I got tired of wasting my time on people who weren't serious either through laziness or ignorance.

There is a difference between a one stop and a distributor. Southwest Wholesale in Houston and Unique in New York, for example, are one stops. This means they carry a variety of distributors' product for resale to retailers. They are the "middles man." A distributor sells directly to the retail store, cutting out the middle man (and the additional cost). There is a need for both distributors and one stop even though they both get product to the retail stores. Small retailers often purchase Tommy Boy Records from one stops because they can't meet the stringent credit requirements to buy directly from the distributor (Tommy Boy is their own distributor -- they are an independent label). Gerard from Jam Down put it so eloquently when he told me "a distributor (like Select O Hits) has a sales staff that makes calls to sell your records. A one stop (like Southwest, who by the way has done a hell of a lot for independent labels and artists in the South, especially Houston based ones) takes calls from people who want to buy your record." It's important to know what everyone's job is and to have people on your staff to lead the efforts.

If a distributor likes all the answers they get about the record label, they then choose to distribute the records for a period of time (a legitimate national distributor like BMG, RED, Sony, Priority, etc. will want at least 3 years) and set the percentage they are willing to split (80-20 is great, with 20% going to the distributor and 80% to the label). Some other areas to think about to negotiate they are willing to liquidate reserves, and the amount of advance they are willing to part with, if they advance monies at all -- most do not. The more risk they take and the more they give up front, the less you will receive on the back end split. The skill in securing a banging distribution deal is how badly they want you and how much power you have when approaching them. With Cash Money we held all the power (I didn't start shopping the deal until we were in a position of strength and was VERY planned, I assure you) which is why the deal is so outstanding. It all came down to timing. They did their part and I did mine and both sides excelled at the exact same time, creating an illusion of a very serious on-point record company that had been overlooked by the industry for the eight years they had been in business independently (a word I fought very hard to keep in the equation at all times). I wrote a business plan, a corporate marketing plan, and a marketing plan for each artist and group to be released, do that the distributors we targeted would see Cash Money was serious. Their success was not luck, it was planned. We were very patient. We turned down all of the original offers that were front loaded deals (meaning a large amount of cash up front, but no value or ownership on the back end) until the distributors realized we were not stupid. The company had a very tight business plan (even if I do say so myself), a track record of consistent sales that increased with each release in terms of market penetration, target area, market share, (the amount of sales taken away from other labels in order for the consumer to buy Cash Money product), and an incredible buzz, (BIG Hype, thank you very much) in their local market and in the industry. And the rest is history. Cash Money has proven they are more than just hype. Now if they would just pay their bills...

This series will continue in every issue of Murder Dog and will contain information on pressing, street teams, distribution, foreign licensing, overseas distribution, artist development, flow of product, retail and radio, artist imaging and more. Each issue will also answer two specific questions sent in by our readers. Although questions cannot be answered individually, they should be directed to Rap Coalition at 111 East 14th Street, #339, New York, NY 10003. And remember, if you don't own your own shit, you're just a sharecropper.

Q. How do I get my record into the local retail chain stores? (From Eric at Laidback Records in Gary, Indiana)

A. It ain't easy. Start by visiting the local chain stores and talking with the manager. Find out who the rap buyer is and who influences that person's choices of what to buy. Sometimes it's a store manager and sometimes a regional manager who have input. In certain cases, like Wherehouse for example, there is one rap buyer who buys for the whole country. Violet Brown (a truly amazing person) is responsible for all the rap product that sells at all 3,500 Wherehouse stores. And guess what! They will be in business tomorrow even if they miss out on your record. Remember it all comes down to risk. If you can prove that they sell records with minimal risk, you have a better chance. Stores want to carry records that sell well. Know your area, develop strong relationships, and treat everyone with respect even if they are unable to take your record at first. Once your record sells units at other retail stores everyone will come to you. And hopefully your sales will eventually justify cash on delivery (C.O.D.) so you won't have to wait to get paid.

Q. How do we convince our artists that we're doing right by them when we don't have a multi-million dollar deal the first week we come out? Our artists are getting nervous because they want to be stars and we can't afford to shoot a video yet. (Anonymous from Houston, TX)

A. This is another hard one! Because so many shady labels have come through in the past promising the world to artists and fulfilling those dreams, it makes it difficult for all labels. An informed artist is a strong artist. It's hard to be patient, especially if all the other artists in your area are blowing up and getting signed to million dollar deals (by the way, most of those "million dollar deals" are bullshit -- the average deal for a new artist is between $300,000 to $500,000 and 12 to 18 points, even after selling 50,000 records). As long as an artist understands and is down with the plan, and as long as they are informed along the way of what steps are taken, it should all be good. All of the artists I know just want to know the truth and be informed of what's happening with the project. Keep the artist happy!! Remember, without the artist, there is no product to sell.

REALITY CHECK:

So what's new this month with out boy Reality in Atlanta? He has pressed up 10,000 more copies of his No Apologiez video and in the past 3 weeks sold over 4,000 copies just in Georgia (bringing the total sold over 8,000 videos since July). Although his street team had been traveling all through the south in May, June, and July, he has kept them in Atlanta to saturate that market. His street team has been to Macon, Augusta, and of course all around the ATL. He has spoken with Too Short and UGK about some video and film projects. He has put together a marketing plan and a budget of about $75,000 for advertising and promotion and is currently shopping a distribution deal for the video. He has been performing sporadically in Atlanta but is focusing more on shows this month. He has finished the No Apologiez soundtrack and will release it soon. He has sold out of Federal Indictment CDs, putting him well over the 100,000 sales mark since April 1997. All repressing will go directly to retail in Georgia, Alabama, Louisiana, and Texas. He has also signed his first artist from New Orleans, Lucky Luciano. Dope muthaphukka!!

Reality has delicately balanced selling units on the streets for instant income to finance repressing and advertising (the billboards and cable TV ads on Rap City are about to start), with moving units in retail stores to attract a distribution deal that will take him to that next level. He is phasing out the sale of units on the streets to focus solely on selling units at retail stores. His now legendary street team has also been taking on promotion of other independent projects in Atlanta, including Jam Down's most recent release, Lil Keke, and Reality is helping another independent label in Atlanta use his blueprint for success on the streets to build their label. He has started a web site design firm which rebuilt his web site www. revolutionaryrecords.com and has started a clothing company called Reality Survival Gear. The baby blue leather shorts and tank top set are bangin'.

WHAT'S UP AT JAM DOWN:

Lil Keke's latest release is currently at 43,000 units sold (SoundScan). They have actually shipped 130,000 units and really sold 113,000 (even though Soundscan only picked up 43,000) through the Southwest Wholesale (where their deal is non-exclusive), Select O Hits, and ARC. He's selling about 5,000 units (Soundscan) a week right now in about 13 markets, His first single, Southside Part 2, which featured 8Ball, got plenty of radio play from Atlanta to Houston and as far north as St. Louis. Jam Down is about to release the second single, Everyday All Day. They just shipped the single to radio and anticipate it will get picked up quickly.

They have received calls from Atlantic Records, Def Jam, Elektra, and Universal. MCA Records has even flown them to Los Angeles for a meeting and is about to make an offer. DJ Screw's album is at 36,000 SoundScan(it release 4/13/99). It has received no radio or club support but has an incredibly strong underground fan base. Jam Down has finished the Mob Figgaz' next album which should release in the last quarter. It will surprise me if they aren't scooped up before they get top release this record. I can't believe no one has picked them up yet, all that's happening is their value is rapidly increasing. Fortunately they haven't saturated all of the markets in terms of sales so that when a larger label or distributor picks them up they can release Lil Keke's album and still maximize the sales potential. I have just written Jam Down's business plan and marketing plan for a few artists and am aggressively shopping them a distribution deal. Jam Down is also working with smaller labels and artists in the South to help put their records out to build the next generation of independent labels.