A distribution fee is the percentage a distributor takes for delivering recordings to streaming services and stores and collecting the resulting revenue.
The mechanism
It is deducted before the artist's share is calculated, which places it ahead of almost everything else in the chain. Models vary between a flat annual fee with no percentage, a percentage of revenue, and a percentage plus recoupable services.
A worked example
On a 15% distribution fee, $10,000 of streaming revenue becomes $8,500 before any label split, recoupment or publishing is applied. The same $10,000 through a flat-fee distributor leaves the full amount less the subscription.
What it is confused with
- A label deal A distributor delivers and collects. A label typically also funds, markets and takes a far larger share, and usually takes rights.
- Recoupment A distribution fee is taken off the top continuously. Recoupment is repayment of a specific advance from the artist's share.
Why it matters
It comes off the top, so it compounds against every other percentage downstream, and it is the single easiest term to compare between competing offers.
Sources: US Copyright Office
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Related: Recoupment · Black box royalties · 360 deal