What do Thievery Corporation, Universal Music Group and Dolly Parton have in common? They all use INgrooves to distribute their music to more than 600 digital stores worldwide, including iTunes, Amazon.com, eMusic, 7Digital, Verizon Wireless and countless others.
San Francisco-based INgrooves has been in business for 10 years, but few people have heard of it or its chief executive, Robb McDaniels. That’s beginning to change, in part because the company earlier this year purchased Fontana, a Los Angeles distributor of physical albums for more than 200 independent labels.
INgrooves is turning the most heads, however, for its role in the new digital economy. Last year, INgrooves distributed songs that rang up roughly $1 billion in digital revenue. And while it's true that distribution isn’t the kingmaker it once was, as only a handful of labels have the resources to ship albums to thousands of physical stores, it's an interesting perch from which to witness the digital tidal wave that has permanently transformed the music industry’s retail landscape.
As a sign of how much things have changed, McDaniels, 37, is scheduled to deliver the keynote address on Wednesday at the annual Music Biz conference of the National Assn. of Recording Merchandisers, the 54-year-old group once dominated by the likes of Tower Records, HMV and Virgin Megastore.
We spoke with McDaniels, a former financial analyst for Marsh & McLennan Securities, about the next wave of technology to hit the mainstream music industry in the solar plexus -- on-demand streaming services such as Spotify, Rhapsody, MOG, Rdio, Slacker, Muve and others.
Now instead of getting pennies per download, artists are having to wrap their heads around building their careers on fractions of pennies per play. Here’s an edited version of the interview.