I’ve watched dozens of local bands get excited about their first distribution deal, only to regret it six months later. It’s not that all distributors are dodgy - most aren’t - but musicians don’t read contracts the way they should.

Here’s what I tell bands when they come into the shop asking for advice.

Exclusivity Clauses Are Everywhere

Most distribution agreements include territorial exclusivity. That means you can’t sell your records through anyone else in that territory. Sounds reasonable until you realize “Australia and New Zealand” locks you out of selling directly at gigs or through Bandcamp in those countries.

I’ve seen contracts that define “territory” as “the world” but only commit to distributing in Australia. You’re blocked from working with a European distributor even though your current one won’t ship there.

Always check if there’s a performance clause - something like “if the distributor doesn’t place X units within 6 months, exclusivity ends.” Most won’t offer this unless you ask.

The Return Problem

Physical music distribution works on consignment. Stores like mine can return unsold stock. Your distributor eats that cost, then passes it to you.

A band I know pressed 500 copies of their debut. Their distributor placed 300 with stores. After three months, 180 came back as returns. The band never saw money for those, but they’d already paid the pressing plant.

Read the returns policy carefully. Some distributors charge you a restocking fee on returned items. Others reduce your royalty percentage to cover “anticipated returns” even on stock that sells.

Digital Often Gets Bundled In

Modern distribution deals increasingly want digital rights too. They’ll handle your Spotify uploads, which sounds convenient until you realize they’re taking 15% of streaming revenue for a service that costs them almost nothing.

If you’re signing for physical distribution, see if you can exclude digital. Most bands are better off using DistroKid or CD Baby directly for streaming - it’s cheaper and you keep control.

Payment Terms Matter More Than Royalty Rates

A 70/30 split sounds great until you read that payment happens “90 days after the end of the quarter in which sales occurred.” That’s potentially six months between a record selling and you seeing money.

Compare that to selling direct at gigs or through Bandcamp, where payment is immediate. The distributor’s cut might be worth it for reach, but understand you’re also paying in cash flow.

I’ve seen bands plan tours based on expected royalties, only to realize the money won’t arrive until after they need it.

Ask About Unsold Stock

What happens to records that don’t sell? Do they come back to you, or does the distributor pulp them after 12 months?

Some agreements let you buy back unsold inventory at cost. Others charge you storage fees if stock sits in their warehouse too long. A few distributors will just destroy excess stock without asking.

If you’ve pressed limited editions or colored vinyl with resale value, you want those records back. Make sure the contract allows it.

Manufacturing Buyback Schemes

Some distributors offer to fund your pressing in exchange for deeper royalty cuts. This sounds helpful - they pay the pressing plant directly, you owe them nothing upfront.

The catch is usually that they own the physical stock until it’s sold. If you want to terminate the contract early, you have to buy those records back at full wholesale price. I’ve seen bands trapped in bad distribution deals because they couldn’t afford the buyout.

Get Everything in Writing

Verbal promises from distributors don’t count. If they say “we’ll feature your release in our newsletter” or “we’ve got strong relationships with JB Hi-Fi,” that needs to be in the contract with specific commitments.

I’ve had distributors tell bands they’d get prominent placement, then ship records to stores without any promotional support. The records sit in the back room because shop staff don’t know they exist.

Consider Direct Distribution First

Before signing with anyone, try direct distribution to a few shops. Email stores in your city, offer sale-or-return terms, deliver the records yourself.

It’s more work, but you’ll learn what sells, build relationships with shop owners, and keep 100% of the margin. Some bands find they don’t need a distributor at all - they just hit up 15-20 shops directly and move enough stock to justify the pressing.

Distribution deals make sense when you’re trying to reach nationally or internationally. For local releases, going direct often works better.

Melbourne-Specific Advice

In Melbourne, you can reach most relevant record shops yourself. There’s maybe 25 stores that stock new local indie releases. That’s a day’s work to visit them all.

I take local releases on consignment all the time. Bands drop off 5-10 copies, I scan them into inventory, and we settle up monthly. No contracts, no minimum orders, no returns headaches.

If your goal is just getting records into Melbourne shops, you probably don’t need a distributor. Save their cut for when you want to reach Brisbane or Perth.

The contracts aren’t designed to screw you over, but they’re written to protect the distributor. Your job is to make sure they protect you too. Read every clause, ask questions, and get a musician friend who’s been through it to review the terms.

And if it feels too complicated, start by selling direct. You’ll make more per record and learn the business without risking your rights.