Distribution Waterfall
The sequential order in which streaming and sales revenues are distributed among various stakeholders including platforms, distributors, labels, and artists.
Definition
The distribution waterfall outlines how music revenue flows from streaming platforms and retailers through various intermediaries before reaching artists and rights holders. Each party takes their contractual percentage before passing remaining funds down the chain.
This structure determines payment timing and amounts, with platform fees, distribution costs, label shares, and producer points all deducted before artists receive their portion of generated revenue.
Why It Matters
Understanding the distribution waterfall helps artists and managers accurately project income and evaluate deal structures. Each additional party in the chain reduces the final payout, making simplified distribution paths more profitable.
Transparency in waterfall structures enables better financial planning and contract negotiation, as artists can identify where their revenue goes and negotiate more favorable terms with full knowledge of industry standards.
Examples in Practice
Independent artists using services like DistroKid typically see simpler waterfalls, with platform fees and distribution costs deducted before artists receive 85-100% of remaining revenue directly.
Major label deals involve complex waterfalls where streaming revenue flows through the platform to the label, minus distribution fees, label costs, producer points, and recoupment before reaching the artist.
Publishing revenue follows separate waterfalls through collection societies and publishers, with mechanical and performance royalties taking different paths to reach songwriters and composers.