Manufactoring and Distribution Deals

M&D is short for manufacturing and distribution and refers to a kind of deal between a record label and a music distributor. Under an M&D deal, the distributor pays for the manufacturing of the album, and then recoups those costs from sales. These kinds of deals are getting harder and harder to find in the face of falling music sales and increased digital distribution, but from a record label's perspective, especially an indie label, an M&D deal can be a lifesaver.

Some pros of M&D deals for record labels:

* You can press records without any up front expense, meaning when the bank account is a little light, the business does not grind to a halt. Bridging this cashflow gap can be one of the biggest challenges facing a small label.

* You pay less for manufacturing. Because the distributor manufacturers albums in large quantities (on behalf of all the labels with which they have M&D deals), you can cash in on their preferential rates.

* Because the distributor has invested in your release, they will be motivated to get it into the stores and make some sales.

Of course, where there are pros, there are cons. Some things that labels should keep in mind about M&D deals:

* You don't get any money at all for your releases until the distributor has recouped the manufacturing costs, which could make your cashflow problem drag on.

* If your release schedule is fairly busy, you could end up in serious debt to the distributor, pushing that pay day even further away (especially if each release is not treated as a separate account).

* You could end up ceding some control over your releases to your distributor - for instance, they may object to the cost of printing that 16 page color booklet you want or that clear vinyl 10".

On balance, however, a carefully managed M&D deal can be like striking gold for an independent label.