34 MusicWeek 27.04.12 FEATUREDISTRIBUTION
PHOENIX FROM THE FLAMES HOW SONY DADC WILL TACKLE THE BIGGEST CHALLENGE OF ALL
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From this last August...
LAST YEAR SONY DADC’s Enfield distribution centre was one of a handful of sites completely destroyed during the London riots. Just like the rest of our distributors though, Sony DADC is determined to overcome adversity even if it is on an almost inconceivable level. Plans for a new, enhanced distribution centre
to rise from the ashes of the Enfield site are already firmly in place. Containing three office floors (one more
floor than previously) stretching over 24,000m2 the new building will be two metres higher than its predecessor and incorporate high technology investment needed to support “a strongly growing business.“
‘Sony DADC is determined to overcome adversity even if it is on an almost inconceivable level’
The new Enfield centre will offer enhanced B2C
distribution and retail services in addition to its existing B2B services. A so-called super structure holding more weight, will set a new standard in warehouse and distribution services. Most importantly, the new hub will call on the
skills of the Sony DADC staff that worked at Enfield before the blaze. “We are determined to keep this fantastic team
together, to strengthen their resources and to create a great place to work while supporting our current client base in their growth strategies,” said general manager Distribution UK at Sony DADC Natasha Tyrrell.
...to this, a newly planned distribution centre
ABOVE Distribution men: Markus Schmücker (Arvato), Richard Sefton (PIAS), Brad Navin (The Orchard) and Jonas Stone (EPM)
How exactly can distributors manage both
physical and digital product under one roof when there is continued talk about the latter ‘cannibalising’ the former so viciously? Sefton offers a structural solution: “It’s important that you have the same team of people looking over both areas so they have a more rounded view. If they’re involved in both aspects it motivates them to see that whole picture. “It’s key that you don’t separate the two,
otherwise they could lock horns,” he explains. “At the end of the day, it’s about getting as much music to the market as possible. There are people who like buying their music from indie shops, there are people who like downloading and there are people who like picking it up in supermarkets: you have to provide those different options.” Arvato MD Markus Schmücker agrees with
Sefton’s assessment in terms of the challenges posed by digital evolution, implying that if distributors don’t adapt in order to remain appealing, their role could begin to slip. “With the advent of
digital and e-commerce platforms supporting the traditional retail market, the industry is being forced to look at new, innovative routes to market and new ways of working – either by developing new sales channels with existing customers or developing entirely new revenue streams,” he says. “By moving to a multi-channel e-commerce
digital distribution, retailer sales, retail marketing and co-op campaigns. Working with multiple physical distribution partners across the world, the company recently established their own US based sales and marketing team. Labels distributed by Essential include Cherry Red, Tru Thoughts, Snapper, Astral Music, Lojinx and No Sleep. “We offer a fully integrated physical and digital
service - but we’re not a tech company,” explains MD Mike Chadwick. “We’re still a music company and we’re run by people who’ve seen music evolve. We’ve embraced digital wholeheartedly because it’s a great area for the music business. We’re constantly looking at digital, how we can develop it and the partners we can reach. You look at some of the Scandinavian countries where digital is 50 or 60% of overall market revenue. Some might see that as scary - but you’re actually seeing financial growth in those markets. That’s got to be taken as positive, and one that offers opportunities to those companies who keep up with the changes.” Of course, while digital
“Our core business is digital distribution so its rise has greatly improved our business
and allowed us to significantly expand our global reach. It’s certainly given
independent artists and labels a more level playing field” BRAD NAVIN, THE ORCHARD
distribution has accelerated in recent years, it’s not exactly new - and there are companies that have always focused solely on the non-physical. “Our core business is
digital distribution,” says The Orchard CEO Brad Navin, “so the rise of digital distribution has greatly
improved our business and allowed us to significantly expand our global reach. “It’s certainly given independent artists and
approach and selling via websites where traffic already exists, such as eBay and Amazon Market Place, labels are able to capitalise on existing consumers at a relatively low cost.” Like Sefton, Schmücker believes distributors can
remain in demand by embracing these new routes to market rather than resisting them. “Distributors need to be able to support the
music industry by developing new service offerings to help drive growth while controlling costs,” he advises. “For example, with multi-channel fulfilment held at a centralised warehouse, a single inventory can be leveraged for both business-to-business accounts and direct-to-consumer channels. “By focusing on robust planning, flexibility and
communication, all parties will continue to ensure that they deliver quality levels of customer service to retain loyal customers in a difficult time.” Essential Music & Marketing offer a range of distribution services including global physical and
labels a more level playing field,” he continues. “The fact that all digital retail placements are based on merit, rather than co-op advertising budgets, gives developing and niche artists a discovery platform and a much greater chance of exposure.” EPM is another distributor for which the rise in
digital has seen business continue to sustain strong growth over the last five years. Does that mean that, while traditional physical distributors may have trouble sleeping, their digital brothers are kicking back without a care in the world? Not exactly. EPM’s Jonas Stone points out that more digital product will generate more complicated sales data. “This will need to be integrated and assimilated
quickly and efficiently to all distributors’ label partners,” he explains. “This will make transparency between distributors and labels and labels and artists an even bigger issue over the coming 12 months.” For The Orchard’s Navin, there’s still reason to keep a close eye on the state of physical affairs, even
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