After working for an established distributor that was purchased by EMI, Damon Evans decided it was time to launch his own distribution company. In 1998, he founded 101 Distribution to provide traditional music distribution services to independent labels. This included the facilitation of titles to both independent and major retail outlets. Today, what makes 101 Distribution distinct in an environment of a growing list of music distributors that offer mostly digital delivery, is that they provide their clients much more. During the last several years Evans’ company has added a slew of options, including digital distribution, to their robust repertoire of services. The company touts itself as “North America’s only independently owned, full-service music and film distributor.” In this interview, Evans provides a great amount of insight regarding how his company assists labels, artists, and independent filmmakers compete in the new and evolving music and film industries.
When did you enter into the digital side of the music industry?
Damon: We started selling digital files on our own site probably in 2003, and truth be told, we really didn’t get aggressive about setting up direct accounts with the iTunes, Napsters and Amazons of the world until probably ’05. Up until that point we had used different aggregators and tried to build different relationships to understand how that business worked and what was involved with it. And once we figured it out, our catalog kind of allowed us to make some direct connections. With iTunes being in the US in particular, the largest digital download storefront, it kind of afforded us the opportunity to take time to develop relationships with new up-and-comers, new concepts and it ultimately led in to us developing our own platform that we use exclusively now.
In regards to the artists, labels or filmmakers that are distributing through 101, are those deals exclusive?
Damon: Everything is non-exclusive. For example, we have a lot of artists who may have a project set up with a Tunecore or they have a CD listed with a CD Baby for example. But because so many of these other service providers specialize on one or just a few aspects, there’s a lot of gaps that we end up filling for artists that are selling to other companies. So an artist may come to us and maybe they have their digital set up and are pleased with the company they are working with and they just need us for mobile. We can carve out all the others aspects and just focus on mobile. Maybe an artist just wants some additional support when it comes to mail order or merchandising. We can carve off the digital and physical retail, and just focus on whatever items that artist is missing.
On the mobile side, what services are you offering, and also are there unique opportunities that have presented themselves recently?
Damon: The value of mobile is really building a database that you can continuously market; release two and three new singles or albums that you can continuously market through. In addition to selling ring tones, voice tones and mobile wallpapers, two of the aspects that artists really like are the mobile fan clubs and the text to win campaigns. A lot of times with conventional retail, the mobile aspect is real supported because after you do a certain amount of promotions through your mobile fan clubs for example, you build a database of numbers and then what we do is come a Tuesday release date, once you’ve collected a database of numbers we’re able to send individual text messages to those subscribers based on area code telling them what Best Buy, or FYE or Wal-Mart to go pick up the CD’s.
In some cases if it’s a “mom and pop” shops we’ve been able to deliver mobile images that work like coupons. So for example, music might coordinate a campaign where the first fifty people who come in on Tuesday and buy this CD, show us the coupon and we’ll give you two dollars off. So it’s a way to kind of still maintain some sort of promotion in the physical world while making sure you do everything possible to develop your digital database.
Interesting. So a lot of it is mostly support on the marketing side.
Damon: That’s a good question too because a lot of our labels come to us and your marketing, especially in this day and age, is absolutely critical. You’re trying to figure out how to capture the attention of that one consumer who has an unlimited amount of options when it comes to buying singles, albums or even the videos they watch for free on YouTube.
So in other words, you’re helping them collect information and compile those databases and of course fulfillment in regards to promotion.
Damon: Yes, that’s it. I guess I was leading into that as a distributor, our function is to supply demand. So we look for where the product needs to be placed so that that type of consumer can access it whether it be gospel, whether it be metal, whether it be motivational or Latino. We’re the ones that supply demand and we educate our artists and labels that it’s up to them to create demand. The marketing that we do is really more complimentary to anything that the label and artist is already in motion with, whether it be tour promotion, radio promotion, publicity, PR. We just tie all those points of purchases together so that that message is common and carries throughout whatever medium they’re using so that that particular consumer can understand that they can buy the physical, the digital, the mobile or even the merchandise is available.
Those particular services in regards to the marketing side and the mobile, is that something that is an added value to your basic services?
Damon: Well there’s a flat fee per project. So there are two options that an artist has when activating or setting up a project with 101 with both music and film. It’s free to join and free to sign up for you to create a profile. You can build an unlimited amount of projects under one profile and then when you’re ready to actually activate and sell the content, you choose between the “101 Basic” and the “101 Professional” option. The basic option is a one-time fee of $49.95. It includes just a storefront at the 101 site that allows an artist to sell their physical CD’s if they have them, the merchandise if they have items, their downloads and their mobile content while keeping 100% of all their royalties. The professional option is the one that comes with the full mobile suite. (This includes) the fan club, text to win, you get 100,000 banner impressions on the 101 site, we do disc on demand. So in the event that they don’t have retail-ready CD’s we can create individual one-to-one retail-ready copies for physical stores and mail order. And then we provide some basic video support hosting services too.
Are you providing the service of facilitating distribution of digital products to various mobile outlets?
Damon: The mobile aspect is probably the most developed of our channels and that’s because we built a proprietary system that sits on top of a carrier gateway. So what that means is that if you were to come to the site and set up a project and you want to sell one ring tone or thirty ring tones, it’s unlimited in terms of how many different edits or tracks that you can create ring tones out of. Once you’ve edited those tones as thirty second clips and uploaded them, they go through an approval process that might take less than an hour or two just to verify that there’s no explicit language or verify that the quality of the content is where it needs to be before it’s encoded. After it passes that quality control, we can make a ring tone or mobile image live on any major carrier in the US and Canada, any regional carrier like Cellular One or Alltel, any pre-paid carrier like a Boost or a Cricket. We can make that content live in less than five minutes.
So say for example you are a dance artist or you are a hip-hop artist and you’ve got a single that hits radio and it gets hot, well, in this day and age the digital life of a single or album is right around four to six weeks. After that, consumers seem to get distracted by other groups, other offerings. But when it comes to music that moves fast like that, it’s absolutely critical that an artist can capitalize on that momentum and so that was one thing that we made sure to definitely focus on when it came to developing our mobile applications is that it makes no sense for content to go through a process where it takes four to six weeks to get on Verizon, or AT&T, or Cricket. You need it up there immediately. Same with the digital. When we activate a single or an album through iTunes or set up the ring tones from mobile it takes less than 12 to 24 hours for that content to be live and purchase-able across the world.
Please explain the splits with mobile.
Damon: Sure. It’s a pretty standard fee that all carriers take. So anything that you sell through the mobile handset is billed to the carrier. So their consumer pays for it through their monthly phone bill. The carriers will always takes 50% and because we bill directly to carriers, that ring tone that we sell for $1.99, instead of having to get it through middle-ware providers like a Thumbplay or a Mixer, we’re able to split that $1.99 price point right down the middle. The carriers are going to take 99 cents and we pay our artists $1.00 for every ring tone sold. We’ve even gotten a little more sophisticated on the reporting side. Everything that is sold through the carrier networks usually report and pay quarterly, but we have this system set up so that we can actually report in real-time when a ring tone is sold.
So if you are sitting there looking at your profile or checking your accounting and someone buys a download, or ring tone, or a physical CD from the 101 site, it would immediately update and reflect in real-time. The key there is to make sure that artists and labels have critical information so that they can make critical marketing decisions. And if an artist is spending money in a certain region and wants to try and understand the results of that effort and if there’s any changes or modifications to the marketing plan that need to be made, well, having that sales data readily available in real-time really helps to make better decisions.
What types of digital distribution are you providing for the filmmakers?
Damon: Film is really exciting because the online presence is starting to grow and I guess what I mean by that is now the trend is the video on demand, the video stream. We built a proprietary network for the film side that allows us to ingest an uncompressed .MOV file, which is very high-resolution file of a feature film or music video. (We) take that file and encode it and we do online HD and standard definition video rentals at the 101 site. And then also aggregate those same files to iTunes, YouTube, Google TV, Xbox, Netflix. We’re starting to get into on demand services through Fox, Warner and Comcast. (It) looks like there’s going to be some great opportunities on the licensing side too.
Can you explain how that works, how long that process takes, and also some of the costs involved let’s say with uploading your film and then ultimately delivering the content? I’m assuming we’re talking for on demand right?
Damon: Right, on demand, correct. The price points are the same for filmmakers. If they want to simply set up a presence and create a profile that kind of facilitates mail order support or just simple online rental then they would pay the $50 and activate their film using the “101 Basic” option. Most filmmakers understand that if you’re building feature films it takes a certain type of encoding process to get that quality compressed for different storefronts. So the only site that really requires additional costs when it comes to encoding is iTunes. Depending upon the length of the film, encoding costs could run anywhere from just over $100 to $450. Filmmakers could actually encode and deliver the files properly encoded, but if that’s something that they don’t want to do or would rather push off and let someone else do it, we could take their movie on a hard drive and encode it for Apple specifically and the other different storefronts and that would be an additional charge. But the price point is identical to live audio. If they wanted to actually sell it through more storefronts than the 101 profile then that’s where they would activate their film or video release through the “101 Professional” option and that’s what would aggregate them to the other digital storefronts. I should say that’s kind of like how there’s a big different between film and music with iTunes. With iTunes, as long as the project and files are properly formatted they’ll take anything and everything when it comes to audio. But on the film side they are very selective and we kind of take control of that process by preparing the application that the artist and the filmmaker need and submitting that through and managing that quality control for the artist just so that it can ensure that they have a better chance of getting approved to sell on that store.
Can you explain the process of submitting video content through 101 Distribution for delivery to Netflix streaming?
To submit a feature film or music video to Netflix and other online rental storefronts, register free at www.101d.com to create a filmmaker profile where the details, storefronts and reporting for all movie projects can be managed. After the cover art, trailer, feature playlist and administrative details are provided, the “Ready for Activation” button will take you to a list of the service options. Choosing the “101 Professional” option will give you access to all third party online rental and streaming storefronts including Netflix. The cost is a one-time fee of $499.95 per film project. From user-supplied details, 101 will create the application needed for Netflix. We can also provide the specs needed for encoding SD and HD files or film makers can send their uncompressed .mov file to 101 and we’ll encode the movie for NetFlix and others for $250-$450 depending on length. Once we have received the encoded file, we send both the application form and production files to Netflix. From the date of delivery, processing can take two to three weeks for approval and upwards of 90 days for live sales to begin. Netflix will accept most all content (factoring in the guidelines for explicit content) that is properly encoded. In all instances, Netflix will want to purchase a two-year non-exclusive license for the film. We see normal Netflix licensing agreements that payout between $2,000- $5,000 per film. Pay per rental payout options are currently being discussed.
Can you discuss channels of distribution for that content?
Damon: Apple TV, Boxee, Roku – these are great technologies that more or less use an enhanced search feature to aggregate the requested content that got on the net. So Google TV, Apple TV and Boxee are probably the three bigger. The only difference with Apple is that they’re going to be exclusive to the content that is on iTunes; whereas, if you were to do a search for a certain TV episode or movie through Boxee, it would pull in all of the different storefronts that are selling the rental or the physical copy and give you the option of purchasing the lowest priced content. Apple again kind of pioneered digital media sales. They’ve got a very sophisticated system, but they keep it very proprietary in terms of what they let their users access through their Apple TV network.
If a filmmaker were to get their film into iTunes, would that also appear for rent on Apple TV or is that a totally different process?
Damon: No, it would. You’re right. If you do submit a movie to iTunes and it is approved and is on the iTunes storefront then yes, it would be accessible through Apple TV.
Whether it be Google TV, Boxee or Roku, how is content monetized through those platforms?
Damon: The main objective at that point is to make sure that you as the filmmaker or production house have not placed your content on Youtube… In that sense, the best and only way to protect the ability to earn revenue from the content that a filmmaker would have created is to just ensure that it’s not out there being hosted for free, and that way when the services go out to the net and scour by name or keyword, it will only reflect the options that are available for purchase.
If they don’t put it on Youtube, Vimeo, or another free streaming site, the searches would result in content on 101’s platform.
Damon: Yes, exactly. So, in that instance the results might show iTunes, and iTunes is going to sell a feature film rental anywhere from $2.98 to $5.98. The same thing with Amazon’s new video store. I guess the way to think of it is like selling a movie ticket. You can expect on average that each particular online video rental or video stream is going to net the artist anywhere from $1.98 to $5.98 max. We’ve kind of found that the sweet spot is right around $2.98, and a lot of our filmmakers aren’t necessarily filming and encoding in high def, so standard def at $2.98 a rental is pretty common. I think with regards to the services like Boxee that are scraping the net for all the different impressions that they can find of that specific request, those players just are a middle man service I guess you could say, but they don’t necessarily charge money or take a percentage of the rental. They just look to be a new discovery tool and ultimately pass through connecting that consumer with that piece of content without any charge.
Can people buy digital video directly from your platform?
Damon: They can. We’re not to the point where we’re doing video downloads yet, but they can come to the site and we have our video rental set up for unlimited views for 30 days. So for $1.98, again $2.98 the standard, one can purchase a 30 day rental. The great thing about it is, say you just purchased and you’re watching the movie and you get 30 minutes in and something comes up, you can come back next week and pick up where you left off, rewind it, or fast forward it, or watch it an unlimited number of times.
Do you also distribute to Amazon Digital?
Damon: That’s just something new that we started doing. Amazon Digital just really started to, on the film side anyway, get momentum… It fortunately had a strong relationship with Amazon on the music side and they understood that we also had an extensive library of content for the video and film side and it’s definitely been a relationship that’s worked out well.
iTunes would typically take approximately 30% of the digital retail price. What is the Amazon fee typically?
Damon: Amazon tends to be just a little higher. It’s funny, they take a little higher of a percentage, right around 35 – 37%, and they also sell at the lowest price point. Not that it’s not a great opportunity, but obviously we are always looking at those channels and storefronts that maximize revenue from (artist’s) content sales. At this point in the game, especially for independent filmmakers, any platform that they can get on is to their benefit.
Let’s talk about merchandise. What kind of services is 101 currently providing the users of their service on the merchandise side?
Damon: Merchandise works like our disc on demand service, and I don’t want to confuse the disc on demand with Amazon’s disc on demand. We actually did try to use that service and it wasn’t as effective as we needed to be for the physical, so we created our own service that generates or can create individual, retail-ready CD or DVD copies on demand. If a store in Sioux City, Iowa wants 15 copies of that particular movie or that particular music project, you don’t have to go to Discmakers and press a thousand units. Just apply those 15 orders and we can manage those small quantities.
So the merchandising option works just the same. An artist provides us with their print resolution graphics. We give them garment options by brands. That would be American Apparel, we work with Hanes, Gildan, New Era for caps. They choose the brand of the garment that they want and we give them the ability to kind of configure the placement of the logos and graphics that they’ve designed and we provide them with 12 samples. Most bands like to take those 12 garments and sell them at shows or just distribute them to the band. Then once everything has been locked, it enables the consumer to now come online. Maybe the consumer wants to order a black extra large tee with a label logo on the sleeve and the band photo on the back. We can make that through a made to order type process, so there’s no instance where an artist or label will have to deliver us 100 pieces of inventory. We just manage the production in one-to-one orders… (this) allows an artist to take advantage of another revenue stream without any expense basically.
So, we’re talking about p.o.d. (print on demand) orders. However, you also provide a sample for the flat fee to get it all set up.
Damon: That’s correct. An artist that activates or signs up and activates a film or music project with the “Basic” option, there is an additional fee. We call it the merchandise setup fee, and that would be $199.95. Again, that comes with the setup of all the screens, initial 12 units that are proofs that can be sell-able inventory if you like. (For) artists and filmmakers that activate their project using the “Professional” option, we waive 50% of the setup fee for merchandise, and so that artist can take advantage of that same program for just an additional $99.
Is it sold on the artist or label branded storefronts as well?
Damon: Anytime there is an ability or an instance where an artist wants to sell on their side or through their social networking site, we provide them with a widget they can plug into those different sites that pull from our database, so they indirectly have a micro-storefront on their site.
So let’s say on Facebook, would they just install an app?
Damon: Yeah, it’s an app that will feature a graphic of their merchandise item. There have been a few instances where artists have actually built in the commerce aspect through a third party that we work with into the Facebook page which basically allows an artist to use their Facebook page as their website so the consumer never has to leave Facebook to make that purchase. The older version of this particular widget shows the graphic of the garment, a few other views, if there’s a shoulder print or back print, or other images that come with the graphic and then the commerce function would actually reconnect back to the 101 site for checkout. So there’s two different ways to do it. We aren’t currently offering the embedded shopping cart into the social network space within particular to the general artist public just yet, but we hope to have the functionality finalized for that through the end of March.
Are you also providing physical distribution for some of your clients?
Damon: We do and the physical side is something that we kind of leverage digital and mobile to qualify physical placement. Essentially, the way it would work is if you were to activate your DVD or music project today, you’ve got 60 days to generate 500 full album downloads or 500 online rentals, and if you’re able to accomplish that within that 60 day window, then we move you to physical placement into the FYEs and Best Buys of the world. We’re having to manage the content that we put into the physical world by ensuring that there’s a viable market or interest in that product, and if you are doing the basics of online promotion and you’ve got your Twitter and your Facebook, and you’re really doing everything you can to get the word out, then chances are you’re going to be able to find 500 people around the world that are interested enough in what you’re doing to purchase from the comfort of their home. If you’re not able to accomplish that, then it’s very challenging for us to convince Best Buy that there is going to be a handful of people that get in their car and drive to the store on Tuesday to buy (a) CD.
Physical is still a great revenue stream for artists, but we manage it more by qualifying content or the interest in certain pieces of content through digital and mobile channels first.
Are those physical sales that take place driven by a regional or local demand versus a national demand?
Damon: Absolutely. So if you are an artist based in Austin, Texas and you manage to generate your 500 qualification point, then we’re only going to place the physical product within the areas that you’ve got marketing and promotion available. That basically means that in many cases it starts off in the local market or regional basis. It’s been very rare that we’ve taken a project national or even semi-national without first managing and maximizing sales through the local and regional levels first. The other side of that is that same band from Austin who qualified, if a consumer were to walk into a Seattle Best Buy and for whatever reason request or want that product, it is listed in all the retail databases, so those stores in other territories, other regions or other continents could order the physical product if they wanted it. The real key here is to take advantage of these existing revenue streams, but try to maintain a certain level of conservative approach just to ensure that an artist isn’t losing money from the effort.
You have some fairly significant artists that were once on major labels using your services, for example Young Buck, Chamillionaire, and Frankie Beverly. Are those clients specifically on the digital side or are you handling some of the physical distribution as well?
Damon: Those artists are both physical and digital, and have been distributed worldwide. The Maze and Frankie Beverly projects are one of our biggest releases of 2010. Just a great project because obviously Maze and Frankie Beverly are an older demographic and had a terrific track record. That particular project did extremely well in physical retail. A lot of consumers that are fans of Maze still don’t have iTunes accounts and aren’t really doing too much when it comes to music consumption on their phones, but they do walk into the retail stores to buy the physical product. On the side of the younger generation, what the label did with that project was get modern artists like Mary J. Blige and Musiq Soulchild to rerecord those classic hits, so that brought in the younger demographic on the digital and mobile side, and that project did extremely well worldwide. In the instance of some of the others that you named, for example, we do all of Chamillionaire’s independent distribution, but physical and digital are a non-exclusive basis. A lot of the artists have certain relationships and do self-distribute through certain channels and stores, but it’s a perfect example of an artist that has a lot of relationships and can get his music wherever he wants, but still needed some support when it came to mobile and physical retail in particular.
There are obviously other players in this space, specifically on the digital side. What would you say is probably one of the most significant reasons why an artists or an independent label should use or look at 101 Distribution?
Damon: That’s a great question. I should first explain that 101 is the nation’s only full service distributor. What that basically means is that if you are an artists that has a discography or an established fan base or you have been a previous platinum seller, you need a service that is going to cover multiple channels for you. That again is conventional retail, it’s mail order, it’s merchandising, it’s mobile, and it’s digital. I would say that’s probably the biggest defining aspect between 101 and the other service providers out there, but then that also creates opportunity for us. We never view 101 as competitive to a CD Baby or competitive to Tunecore. Each of these sites feature different store sets. We offer to take you on the digital side. We can aggregate to upwards of 120 different digital storefronts around the world depending upon your content.
We try to encourage and make sure an artist understands that he should be focused on making sure that his product or his music or song is available across as many storefronts and services as possible. If you’re a Tunecore artist, or CD Baby artist, or if you work with ReverbNation there’s still going to be some gaps that 101 can fill for you. The more visibility an artist can create for themselves, the better chance an artist has of capturing sales. I don’t know if I would ever call us competitive or call any of the service providers that do aspects of what we do competitors. I think that all of us are pretty focused on accomplishing the same goal, and that’s making sure that independent artists can continue to make music or filmmaking a viable career for themselves. I think that disposition has worked pretty well for us.
To clarify, mail order pertains to consumers ordering physical products online?
Damon: That’s exactly it. When I say mail order, most of the content that we set up is sold directly through our site, but of course there are sites like Best Buy.com, FYE.com… Tower Records still exists, but it’s Tower.com, and all these sites focus only on mail order. So, being a conventional distributor, that gives us the opportunity to set up physical products. It may not be on the shelf of every Best Buy in the nation, but we still make it available through that retailer’s website in the instance that a Best Buy customer wants to order the physical product online for Best Buy, for example, they could do it.
-Israel Vasquetelle
