Christmas is coming, and the record shop racks will soon be stacked with “product” geared to fly out of the door during the crucial fourth quarter of the financial year. But more than ever, traditional retail outlets are finding themselves crowded out by the big supermarkets. Tesco, who announced record half-year profits of £1.09bn, have made big inroads into the home entertainment market, particularly in the sale of CDs and DVDs. This is good news for the fan who wants to pick up a cheap copy of Oasis’s Stop The Clocks album or the latest Lionel Richie collection, Coming Home – currently on sale at Tesco for an eye-watering £6.97. But it is tough luck for new and less-established acts, often from the independent sector, who face an uphill struggle even to get their CDs into the shops.
“As the supermarkets take a greater share of the physical music market, it’s harder for the indies to get a share of the retail cake,” says Paul Williams, managing editor of Music Week. “The supermarkets are only going to be stocking chart product and very popular back catalogue, which may include the odd indie title. But they’re not going to be bothered about an up-and-coming band unless they’re signed to a major company and it’s obviously going to be the next big thing. If you’re an indie label with a new act, or maybe even an old act that isn’t selling as much as it used to, the chances are Tesco are not going to be that interested.”
In such a harsh marketing climate, the role of the distributor becomes more crucial than ever in deciding the commercial fate of artists and labels in the independent sector. Distributors are the companies that sell in and physically deliver stocks of CDs to the high-street retailers. While the major labels either have their own distribution companies or use a particular company to handle all their releases, most independent labels aren’t big enough to do this and instead go through third party distributors such as Pinnacle, Proper or Cargo. And while the bigger indie labels will have their own sales and marketing teams who will be working to persuade shops to stock their records, most indie labels won’t be able to do this, in which case some distributors, such as Vital, will take on the sales and marketing role as well. “Vital will be persuading the retailers to stock CDs on behalf of the labels they are distributing,” Williams says. “And then they will make sure that the CDs physically get to their destination. So distribution is obviously a crucial link in the chain. Absolutely fundamental to selling records.”
For many independent retailers the arrival of the supermarkets has forced a strategic rethink in what CDs they stock and where they get them from.
“I’ve basically boycotted the major record companies for the last two years or so,” says Bev Nipps, an independent record retailer who founded the Sound Machine record shop in Reading. “It’s pointless trying to compete any more when it comes to big chart albums. The supermarkets have such phenomenal buying power, they can virtually dictate what price they want to pay for those kind of records.”
Instead Nipps now meets the needs of a more specialist market, concentrating on genres like Northern soul and heavy metal and catering for the resurgent demand for vinyl recordings.
“Distributors like Pinnacle and Vital are really good,” Nipps says. “They can see the importance of the small retailer for stocking a range of records that the supermarkets wouldn’t bother with and for stocking smaller acts that then get bigger.”
But not everyone is thrilled with the arrangement. “Distributors have become a lot more powerful than they used to be,” says Dave Robinson, co-founder of Stiff Records in the Seventies and now a record industry consultant. “If you say you’ve got a new label, people will now ask you ‘Who distributes you?’ Because that really tells them that if you’re with Vital or Pinnacle then you’re something and you’re somebody, because they’ve already accepted you, and they’ve decided that you are an act that is going somewhere, perhaps.”
But according to Robinson this situation is not necessarily good news for the independent artist or label. “There was a time when distributors were very happy to get your business, even if you were quite a small label, but now they’re very picky and choosy,” Robinson says. “The emphasis has gone off the independent record company, and onto the distributor – the people supplying the service so to speak – and as a result they’ve put their prices up. They charge a lot. When we started Stiff, we were paying around 12 per cent, and if we had large turnover, it went down. Nowadays some of them start at 26 per cent. And a lot of very small labels are giving away more than a quarter of their income, their dealer price. “I’ve long thought that the contracts they offer are too expensive and too restrictive. Some of them will try and tie you in for five years with lots of small print. For example if your records are returned to you [unsold] you pay distribution costs on them going out, and when they come back you pay another percentage on them coming back. It’s punitive.”
But like it or not, securing distribution is one of the key hurdles that any independent artist must now clear in order to get their CD into circulation. There are dozens if not hundreds of companies to choose from: Absolute, Nova, RSK Entertainment, Cadiz and many others. “Trying to pitch a CD by a new artist is a nightmare,” says Alan Levermore, line manager of distributor Proper Access. “There is so much product out there now that the retail industry is not really interested unless it is an artist that has got some kind of sales history.”
Levermore is unlikely to take on any album for distribution unless the label or artist has already organised some press and promotional activity and is, preferably, out on the road playing gigs. Once Proper Access have agreed to take you on, sales are by no means guaranteed.
“We start off by sticking a box of 25 CDs on our warehouse shelf,” Levermore says. “If they sell through in a week then we’ll order maybe another 100. If they’re still sitting there gathering dust eight months later – and it happens – then they’ll continue to sit there until such time as something does happen or we send them back.”
According to Levermore, driving people into shops to buy a record is now the hardest part of the commercial process.
“Acts are far more likely to sell albums at their gigs than at retail – I would say the ratio is about 25 to 1. It is only when something significant happens in the media – if one of your songs was to get stuck on the front of a TV programme or used in an advert – that’s when the high street retail aspect of it kicks in. Even one great review in the right place can help to kickstart sales. For instance, a Scottish band we distribute, called Logan, got a really positive review in Powerplay magazine. They went from selling two or three copies to selling 1,000 copies in not very long.”
Derek Chapman, distribution manager of Backs, based in Norwich, accepts that the big players are squeezing the market harder than ever, but feels that the independents can compensate by playing to their strengths. Backs and its sister company Shellshock in London will take on just about anything which comes under the independent banner – apart from dance music (“There’s no money, you can get people not paying their bills, it’s a nightmare”).
“We have to be a bit nimbler on our feet, which is where the independent distributors have got the advantage, really,” Chapman says. “We don’t have to operate the huge cumbersome machine that the majors have to crank up when they start the new Il Divo campaign. We can move quickly at the first sign of interest. There are still a lot of independent shops out there that are curious about new acts.”