Distributors are the go-between entities that transfer product from the record label to retail outlets. They are wholesalers insofar as they distribute the product to entities other than the final consumer-in other words, to other businesses in the distribution channel. There are a number of different types of distributors, some of which are wholly owned divisions of established record companies, and some of which are independent operations. There are also sub-distributors-companies that buy from distributors and then service off-the-main-path retailers. Major-Label Distributors Just as sales in the music industry are dominated by major record labels, so is the record distribution system dominated by a handful of distribution networks directly affiliated with those major labels. As of this writing, there are five of these major-label distributors: Bertelsmann Music Group (BMG), Universal Music Group, Sony Music Entertainment, EMI Music Distribution, and Warner-Electra-Atlantic (WEA). They store product from record manufacturing plants and distribute it to large chain record stores, one-steps and, rack robbers. The major-label distributors handle the product of each label’s subsidiary companies and partners. Universal, for example, handles Geffen, A&M, Island Def Jam, MCA, Motown, Philips, Polydor, and Verve. BMG distributes Arista, J Records, RCA, Windham Hill and the Zomba Label Group. Sony distributes Columbia and Epic. WEA handles Warner Bros., Elektra, Atlantic, and Rhino. EMI distributes Capitol, EMI, and Virgin. Independent Distributors Independent distributors are just that: businesses that are not necessarily affiliated with the major labels. Independent distributors vary in size. All of them specialize in smaller, independent record labels, taking delivery from the labels manufacturers and then distributing product to many of the same entities reached by the major labels: one-stops, chain stores, and smaller mom-and-pops. Some independent distributors offer specialization in particular musical genres, or in specific types of products. There could be a “boutique” distributor handling alternative rock, hardcore, ska, and roots music. Another might focus on oldies, classical music, or ethnic music. There are indie distributors that specialize in imported product, and Indies that claim expertise in children’s and educational music. The point is that, in aggregate, they offer retailers a more diverse selection that can be ordered from the five major-label distributors. Most important, the Indies provide distribution services for the smaller specialty labels that don’t have access to the major-label network. Because indie distributors have close ties to small, specialty retailers, major labels have been known to buy or partner with these distribution firms. This provides the majors with access to “fringe” audiences they wouldn’t otherwise have the expertise to reach. For an informative introduction to the workings and procedures of an independent distributor, visit the Web site of Redeye Distribution at www.redeyeusa.com. The company’s “Label Handbook” provides details about preparing for and following up on distribution. ONE STOP DISTRIBUTORS One-stops are essentially sub-distributors-they buy in bulk from the majors and large Indies and then sell in small numbers to mom-and-pops and specialty stores. One-stops provide “one-stop shopping” for retailers looking for a range of products that they can by in small quantities-quantities too small for the large distributors to be concerned with. They may also fill back-catalogue orders for major record chains, and may service the record departments of large book chains like Barnes & Noble. One-stops also provide musical product to jukebox operators. Rack Jobbers Some chain general-goods stores like Kmart and Wal-Mart sell musical product. Rather than maintain their own staff to stock and manage a music section, these retailers may obtain such service from independent entities called rack jobbers. Rack jobbers purchase records from large music distributors. They sell them by leasing sales space in department stores, discount stores, and other outlets, essentially setting up and managing a record department in a store that wouldn’t otherwise have one. They pay the store rent and/or a percentage of sales income and then keep the profit. The records chosen by rack jobbers are the most mainstream, broadly popular titles available-the ones currently situated high in the airplay and sales. Rack jobbers play an important role in the distribution system: they specialize in retailing beyond the sphere of music specialty stores, and thus help to get records to a wider audience. Chain Stores The large chain stores-Tower, Virgin, and others-can also be considered sub-distributors. They run central offices through which they buy product from the major labels and distributors. These central offices then ensure that the product is distributed to all the individual retail outlets in the company chain. Naturally there are going to be differences in the inventory requirements of different local stores due to varying regional tastes. The companies deal with this by using centralized, computerized inventory systems that track individual stores sales and automatically order new stock in product categories that are selling well in those stores. For further information please refer to “The Business of Music” by Tad Lathrop.