20 years after iTunes, moving past the ‘Pick, Pack & Ship’ distribution model

This post – by Edward Ginis, co-founder and Chief Client Officer of OpenPlay – is Partner Content.

Twenty years ago, when iTunes was first launched, the music industry needed a new digital distribution system, and they built one based on what they knew: the physical distribution “pick, pack, and ship” model. That approach has largely persisted throughout the evolution from downloads to on-demand streaming and everything in between. But throughout these past two decades, there has been little innovation.

Twenty years later, we find ourselves attempting to bring the industry forward while still relying on an outdated model. This model charges the same fee structure for digital transmission that was previously used to support physical distribution, with its attendant costs of manufacturing, warehouses, shipping, and regional sales offices. That infrastructure is gone, but the revenue-sharing fee structure remains. Where’s your digital dividend?

Unfortunately, the systems that replaced the physical infrastructure were built with the same concepts – highly custom, highly centralized “closed gardens” of data intended to keep clients in the fold and make switching costs as high as possible. I believe that labels and distributors should compete based on the music and their ability to reach audiences through expert marketing and promotion. Everything else is an unneeded distraction that prevents labels from fully leveraging their content and making the most money they can.

Delivering music to DSPs can and should be seamless, without friction or proprietary data barriers. So how do we modernize digital distribution to help make that happen?

The Glaring Data Problem

First, we need to create systems that allow us to organize and manage the exponential increase in digital releases. Moreover, to better serve users and labels, DSPs have required more and more metadata to be delivered by labels and rightsholders with their music – and more data equals more complexity. More complexity means that if you’re a publisher ingesting newly purchased catalogs or a label that needs to change distributors, the transfer of data becomes extremely difficult and sometimes impossible, delaying your ability to monetize tracks or forcing you to stay in place. Labels also have seen this complexity bleed into hiring practices and headcounts, forcing them to hire more staff who understand or need to be trained to properly handle data with DSPs.

It’s my belief that handling or moving data should be as easy as moving from one bank to another, not take months to transfer properly and fully. I’ve known from the beginning of my career, both in and out of the music industry, that if you don’t control your data, it’s not really yours. And with the industry just beginning to embrace Web3, AI, and other innovations, the demands for data are only going to grow. We need to make it our mission to manage this complexity, making it easy for labels and rightsholders to organize and utilize their own data and information because, at OpenPlay, we have seen over time that when data is closest to those who own it, the care and quality of its content is much improved.

Last-Mile Delivery Is a Commodity

At OpenPlay, we’ve come to recognize that the technology of delivery has matured — it’s well understood and just “getting it there” is no longer a competitive advantage. Luckily, over the last ten years, the industry has also started to embrace the idea that labels should be able to handle all their assets and data on their own terms and all in one place. Labels need to deliver comprehensively and accurately, yes, but delivery won’t make an aria out of a crow’s call.

There’s a fierce new independence in digital distribution. The rise of Merlin has been a huge benefit to independents who want to deal directly with DSPs and submit their music on their own. Those who are a member of Merlin or have their own deal flow should be supported in delivering their content to DSPs seamlessly on their own, provided they are able to manage and deliver high-quality data. We need to empower those with that ability to do so, easing the delivery pipeline and allowing labels and distributors alike to focus on promotional support, positioning, playlisting, radio, and other essential services.

The Future of Digital Distribution

Moving forward, we need data management and digital distribution processes to scale alongside the complexity of our industry, to make data flows as seamless as credit card clearinghouses. That means leaving the proprietary philosophy and structures of “pick, pack, and ship” behind. At OpenPlay, we have been loud and clear about our mission to help labels and rightsholders understand and manage their assets and data easily and efficiently without friction, and we will continue to evolve our platform to meet the needs of modern music businesses. We hope the rest of the industry will follow suit, allowing all parties to focus on what they do best.

With over 15 years of experience in the finance, music, and technology arenas, Edward Ginis has built a reputation for developing effective legacy technology modernization strategies, incubating new business models, and successfully managing large-scale global software system implementations. Ginis currently serves as Chief Client Officer at OpenPlay, a company he co-founded in 2013 after serving as the CTO of Concord Music Group. In his current role, Ginis heads planning and development of new features and products for OpenPlay’s diverse client roster while driving client growth and acquisition. For more information on OpenPlay, visit openplay.co.