After publishing and mechanical royalties are covered (sometimes a frustrating thing to get past, but usually workable), there's the subject of distribution.
Selling through your own website, Ebay, Amazon, etc. will reach a certain amount of people, but if you want to get your CDs in stores, it's not as easy as people think. If you want to sell directly to the stores themselves (and I'm referring to indie stores, not chain stores), that's a lot of phone calls to make. And even then, they get calls all the time and may or may not spend any quality time with you on the phone. With the chains, they won't even bother taking your phone call unless you have a substantial catalog of releases...and then, they have to decide whether they think that the product will sell well enough for them to open you up as a new vendor. Even if a release is sure to sell hundreds, if not thousands, of copies, the buyer for the whole chain may not think anything of it and pass on it until they recieve substantial requests for the title.
Distributors themselves are similar. They may be able to get the CD into stores for you but they also recieve so many calls on a daily basis that they have to pick and choose (and often make the wrong choices).
Case in point: I spearheaded a benefit CD for victims of the tsunami that hit Southeast Asia in December of 2004.
http://allmusic.com/cg/amg.dll?p=amg&sq ... 867uu040jg
The distributor I worked for was pretty powerful in the industry, but they couldn't even get this benefit CD into Tower, Virgin, Best Buy, Amazon, etc until we sold it to a competitor who was direct with those companies! It was a nightmare trying to get this thing out onto the market even though it was a quality CD, cheap price, great cause and released by a legitimate distributor that had been in the business for 20 years!
Distribution is very important, whether it's through one-stops like Super D or AEC or through distributors like Burnside, Ryko or whomever else. But also remember that if/when you go through a distributor, you don't make as much per piece and they will withhold some part of payment towards future returns....yes, returns! You, as a label, have to accept returns. Not just defective items, but unsold items as well!
So, hook up with a good, reputable distributor, but bear in mind that you may come across more closed doors than you'd expect. All indie and new labels deal with this so don't let it discourage you....
SPAZ
Born of innocence. Free of ignorance.