# A surprising shady tale regarding DistroKid



## BradHoyt (May 25, 2020)

Just saw this recent video... Looks like you may not want to use DistroKid if you're outside the USA since they can, on a whim, withhold 30% of your earnings for tax reasons.


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## gamma-ut (May 25, 2020)

Is this one of those situations where it turns out all that was needed was a W8-BEN form to be filled in?


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## BradHoyt (May 25, 2020)

gamma-ut said:


> Is this one of those situations where it turns out all that was needed was a W8-BEN form to be filled in?


Doesn't look like it. lol 
If that were the case, seems they could have told the guy in a reply to his emails.


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## Beluga (May 25, 2020)

It looks awfully like an 8W-BEN situation. Actually any business in the US can withhold the 30% taxes if you can't prove you pay taxes within a country the US have a tax treaty with. They should have informed him though and requested clearly this form. I believe CDBaby was pretty clear they needed the form when I signed up there. It probably is possible to reclaim the taxes retroactively.


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## gamma-ut (May 25, 2020)

Not very long on the search engine pulls up these:









How to claim tax treaty benefits (if applicable to you)


DistroKid cannot give tax advice, so we must state that this is not tax advice. Please consult a tax professional if you have any questions about the information here. If your country of tax reside...




distrokid.zendesk.com













Information about tax withholding for non-U.S. residents


DistroKid cannot give tax advice, so we must state that this is not tax advice. Please consult a tax professional if you have any questions about the information here. If your country of tax reside...




distrokid.zendesk.com





Brazil doesn't appear to have a tax treaty, or at least one I can find - this is where this guy is, right? I'm not up for having to sit through 20-odd minutes of him ranting at the camera just to find out but there was someone saying it was Brazil in the comments. In which case, this is stuff that goes on his tax form at the end of the year rather than getting sorted upfront with a W8. Imagine my surprise to find out this probably didn't happen randomly or as the result of some scam.


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## Beluga (May 25, 2020)

Well if there is no tax treaty it's a difficult position to defend then.

Talking about shady, since this guy only does covers, does he pay the composers for their work? Do the streaming services make the difference between the composers and performer as the PRO do?


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## Polkasound (May 25, 2020)

BradHoyt said:


> If that were the case, seems they could have told the guy in a reply to his emails.



I agree. It looks like DistroKid is being unnecessarily unhelpful. If a tax form is required to avoid having money withheld, that makes sense, but DistroKid is being suspiciously evasive when it comes to conveying that information.




Beluga said:


> Do the streaming services make the difference between the composers and performer as the PRO do?



Yes. Once you digitally distribute your cover song, you are no longer responsible for paying digital mechanical royalties (unless you also make the song available on your own website, in which case you are acting as an independent distributor which would require a license.)


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## midi-et-quart (May 25, 2020)

I always wondered in the end if anyone in the film music realm (or any kind of pop music) makes some decent money by featuring themselves on spotify and the likes through Distrokid.

Seems most of so called "artists" just want to be present on a platform which by the way seems over saturated... 

Thanks for sharing this guy's experience. Most of people I know publish everything through this service, as it's still pretty much the reference.


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## Polkasound (May 25, 2020)

midi-et-quart said:


> I always wondered in the end if anyone in the film music realm (or any kind of pop music) makes some decent money by featuring themselves on spotify and the likes through Distrokid.



I'll share part of an article I'm writing. I'm discussing the polka music industry, but the info applies universally to a lot of independent artists in all genres:

_"Twenty years ago, if someone wanted to hear all 18 songs on a band's album, they'd pay the band $15 for the CD. Today, if someone wants to hear all 18 songs a band's album, they'll stream it on their favorite subscription service and the band will earn about 5¢ in royalties. That's a profit reduction of approximately 99.6%. At this rate, a band would need to achieve about 5,000 song streams to equal the sale of just one $15 CD. To recover their recording expenses, they'd have to achieve anywhere from 350k to 1.5 million song streams."_


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## reimerpdx (May 25, 2020)

Polkasound said:


> I'll share part of an article I'm writing. I'm discussing the polka music industry, but the info applies universally to a lot of independent artists in all genres:
> 
> _"Twenty years ago, if someone wanted to hear all 18 songs on a band's album, they'd pay the band $15 for the CD. Today, if someone wants to hear all 18 songs a band's album, they'll stream it on their favorite subscription service and the band will earn about 5¢ in royalties. That's a profit reduction of approximately 99.6%. At this rate, a band would need to achieve about 5,000 song streams to equal the sale of just one $15 CD. To recover their recording expenses, they'd have to achieve anywhere from 350k to 1.5 million song streams."_


...and the effect compounds. Not often will people stream the entire album, and listen to it on repeat, like they would have a physical album.
Streaming is not going to make as plebs rich


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## Tim Clarke (May 25, 2020)

Polkasound said:


> I'll share part of an article I'm writing. I'm discussing the polka music industry, but the info applies universally to a lot of independent artists in all genres:
> 
> _"Twenty years ago, if someone wanted to hear all 18 songs on a band's album, they'd pay the band $15 for the CD. Today, if someone wants to hear all 18 songs a band's album, they'll stream it on their favorite subscription service and the band will earn about 5¢ in royalties. That's a profit reduction of approximately 99.6%. At this rate, a band would need to achieve about 5,000 song streams to equal the sale of just one $15 CD. To recover their recording expenses, they'd have to achieve anywhere from 350k to 1.5 million song streams."_


I wonder what the solution could possibly be to this situation. Once consumers are used to paying a low monthly fee to services like Spotify, where can you go from there, other than Spotify willingly paying a much higher percentage per play, which I don't see happening. The old model was definitely flawed as has been detailed in various media, but at least the money-making potential was reasonable for professional musiclans. Sounds like there's never been a better time to leave the music industry.


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## Polkasound (May 25, 2020)

Tim Clarke said:


> I wonder what the solution could possibly be to this situation.



It's unfortunate, but it's technically not a problem that requires a solution. Interactive streaming is just another form of radio, and radio royalties were never intended for independent artists to earn much money from. The sad truth is that the music industry has changed so dramatically in the last 15 years, that the days of music sales as a source of profit are over for 99.9% of artists.


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## GNP (May 25, 2020)

It's shit like this that is why I prefer commissioned music projects, rather than entrusting production music to some label.


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## Beluga (May 25, 2020)

Polkasound said:


> I agree. It looks like DistroKid is being unnecessarily unhelpful. If a tax form is required to avoid having money withheld, that makes sense, but DistroKid is being suspiciously evasive when it comes to conveying that information.
> 
> 
> 
> ...


I see! But his videos on YouTube are monetised. When I upload a video on YouTube Im only allowed to monetise it if all of the content is mine. So does Youtube distribute the income from ads to the authors of the songs?


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## Polkasound (May 25, 2020)

Beluga said:


> When I upload a video on YouTube Im only allowed to monetise it if all of the content is mine. So does Youtube distribute the income from ads to the authors of the songs?



This is not at all my area of expertise because I do not even have a Google account, but I believe YouTube gives content creators the option to monetize their own videos. A lot of people do that, and it's how some vloggers have become millionaires. If you upload a video with a cover song, YouTube's Content ID system will determine the rights to the audio are owned by someone else, and will automatically monetize the video with the ad revenue going to the rights holder. The rights holder also has the option of telling YouTube to take down or mute the video.


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## MartinH. (May 25, 2020)

Polkasound said:


> If you upload a video with a cover song, YouTube's Content ID system will determine the rights to the audio are owned by someone else, and will automatically monetize the video with the ad revenue going to the rights holder. The rights holder also has the option of telling YouTube to take down or mute the video.



Afaik that system has a flaw: you can put two copyrighted songs in the same video and when more than one is claimed by content ID, that will create a deadlock and I think no one gets any money if they don't take any further legal action.


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## robgb (May 25, 2020)

gamma-ut said:


> Is this one of those situations where it turns out all that was needed was a W8-BEN form to be filled in?


Sounds like it. I vaguely remember the 30% thing from when I was considering using a couple Canadian authors for a project I was working on.


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## StevenMcDonald (May 25, 2020)

GNP said:


> It's shit like this that is why I prefer commissioned music projects, rather than entrusting production music to some label.



... you do realize that Distrokid has nothing to do with production/library music, right?


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## jonnybutter (May 25, 2020)

Polkasound said:


> It's unfortunate, but it's technically not a problem that requires a solution.... The sad truth is that...the days of music sales as a source of profit are over for 99.9% of artists.



I think it does require a solution. I don't know what that solution is, but the idea that the days of making money selling your own music are over (for 99% of artists) has enormous implications. Like I said, I don't have a solution, but I think we need to at least keep thinking about it rather than just accepting things the way they are.


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## Polkasound (May 25, 2020)

jonnybutter said:


> the idea that the days of making money selling your own music are over (for 99% of artists) has enormous implications



Believe me, I don't like it either, but I also recognize that the entertainment industry continually evolves. Just like DJs changed the live music industry, and just like video rentals changed the movie theater industry, streaming is changing the music industry. There are a lot of independent artists out there who have embraced the new medium and have become financially successful with it.

Twenty years ago, I could sell a thousand CDs. Today, I'd have a hard time selling fifty. It stinks, but I don't see it as a "problem" per se. If I wanted to make a profit selling music today, I'd just have to adapt and find new ways of doing it. (My problem, though, is that we now live in a world where music has to be as visually entertaining as it is audibly entertaining, and I don't do videos. I just don't like being in the camera lens. I don't have any social media accounts. I'm a terrible self-promoter!)

But I do have other options. In fact, I'm hashing out one particular money-making idea right now that would not come close to equaling the sale of a thousand CDs, but it would potentially enable me to recover 100% to maybe 200% of my recording expenses.


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## jonnybutter (May 26, 2020)

Polkasound said:


> Believe me, I don't like it either, but I also recognize that the entertainment industry continually evolves.



But that's just a description. The music industry is not a virus which involuntarily 'evolves'. It is a business in which people make choices all along the way. I'm not blaming you of course. I'm just saying that the choices various players make matter. Nothing is inevitable.

I think this needs a solution, and that we have to come up with it. Otherwise, what ultimately happens to the business (and to the art) when 99% of artists can't make money from selling their music? We can't all sell t-shirts or accordian samples, or teach other musicians how to...what? starve? The implication of this model is: no more professional music business going forward. If 99% can't make a living, that means no pro music business, eventually.

Money doesn't care about the music business or about the art - when they've sucked the value out of the music business, they will just move onto the next thing. But some of us do care.


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## Polkasound (May 26, 2020)

jonnybutter said:


> Otherwise, what ultimately happens to the business (and to the art) when 99% of artists can't make money from selling their music? We can't all sell t-shirts or accordian samples, or teach other musicians how to...what?



This sentiment has been echoed throughout history with each technological advancement going back to the invention of the locomotive. The fact is that suppliers in every industry must continually adapt to how technology affects supply & demand.

If you were a drive-in theater owner in the 1990s, you faced a tough decision: close the business, or find a way to remain one of the very few still operating today.

When DJs killed the wedding business for live bands, I re-marketed my band as a cocktail-hour band to work alongside DJs, and that's how I am still being hired for weddings. With streaming killing the concept of profiting from music sales, I face a tough decision: give up recording music, or find a way to keep selling music.




jonnybutter said:


> The implication of this model is: no more professional music business going forward. If 99% can't make a living, that means no pro music business, eventually.



I disagree. The fact that only a very small percentage of indie artists are profiting from streaming music sales doesn't mean the ones who aren't won't be able to make a living. For most indie artists, album sales were just a modest source of supplementary income anyway. It was never their bread and butter.

Regardless, many artists are embracing and adapting to the way things are. For example, instead of spending thousands of dollars producing a studio album, they can spend $0 making a video with an iPhone and uploading it to YouTube, and it may go viral. What it really comes down to is one's level of adaptability and determination.


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## jonnybutter (May 26, 2020)

Polkasound said:


> This sentiment has been echoed throughout history with each technological advancement going back to the invention of the locomotive.



Sorry, but that's not an answer. Why is the current streaming model necessarily an 'advancement'? For whom? I have a feeling we are ultimately going to have to agree to disagree here , but what I'm trying to get across is that calling the streaming model the way it is set up now an 'advancement' is a value judgement. It's not just a natural phenomenon. In some countries live musicians are still paid very well, and a DJ is not considered a replacement. That's a value judgement too. It's not simply supply and demand.




Polkasound said:


> I disagree. The fact that only a very small percentage of indie artists are profiting from streaming music sales doesn't mean the ones who aren't won't be able to make a living. For most indie artists, album sales were just a modest source of supplementary income anyway. It was never their bread and butter.
> 
> Regardless, many artists are embracing and adapting to the way things are. For example, instead of spending thousands of dollars producing a studio album, they can spend $0 making a video with an iPhone and uploading it to YouTube, and it may go viral. What it really comes down to is one's level of adaptability and determination.



I think there was a time when selling physical product yourself, i.e. CDs or even vinyl, was worth it if you kept the profit. But that's another story.

A large chunk of the very catalog Spotify (and the rest) and big publishers and labels rely on for streaming income wouldn't exist if the current model had been in place in the 60s-80s. No Joni Mitchell, no Velvet Underground, no Taj Mahal, no Randy Newman, no Zappa, no John Prine, no Shalamar, etc etc - no 'midline' or loss leader artists. Actually, this trend started before streaming. It's not really about technology.

As I say, I don't know what the answer is, but the current model isn't it. Just as the advertising model to support content on the internet isn't it.


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## Polkasound (May 26, 2020)

jonnybutter said:


> Sorry, but that's not an answer. Why is the current streaming model necessarily an 'advancement'?



You're kind of misconstruing my words. I didn't say streaming was the advancement. The advancement was in internet bandwidth technology. It made streaming possible. And if there was no demand for streaming, it never would have become the industry standard. I agree with you that streaming itself as an "advancement" is subjective.




jonnybutter said:


> I think there was a time when selling physical product yourself, i.e. CDs or even vinyl, was worth it if you kept the profit. But that's another story.



This has typically been the case for indie artists. You'd pay for the production and promotion, but then you'd keep all the profits.




jonnybutter said:


> As I say, I don't know what the answer is, but the current model isn't it.



If we're talking about overhauling the royalty system altogether, that would be another subject for another day, but one that would be worth having. I'm not entrenched enough into the business end of things to be able to say whether or not my $.003 stream royalty is fair. All I know is that it falls in line with what royalties have always done... rewarded only musicians who have hit songs. Royalties were never considered a viable source of income unless you had a hit song. Nothing has changed in that regard. What's changed is that a royalty-paying system has made direct music sales obsolete.


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## d.healey (May 26, 2020)

Polkasound said:


> _"Twenty years ago, if someone wanted to hear all 18 songs on a band's album, they'd pay the band $15 for the CD. _


What percentage of the $15 did the label/publisher take? I've heard that in years gone by it was possible for a record to go platinum without the artist making any money. So they'd go on tour and use the record as the advertising to sell tickets.


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## jonnybutter (May 26, 2020)

Polkasound said:


> And if there was no demand for streaming, it never would have become the industry standard.



Is there demand for the entire history of recorded music for $10 a month, or semi-free? Gee, what a surprise. You were talking about artists adjusting to technology, from the locomotive onward. I don't argue for fun, so I don't want to misconstrue, but I didn't think I did. 




Polkasound said:


> If we're talking about overhauling the royalty system altogether, that would be another subject for another day, but one that would be worth having. I'm not entrenched enough into the business end of things to be able to say whether or not my $.003 stream royalty is fair. All I know is that it falls in line with what royalties have always done... rewarded only musicians who have hit songs. Royalties were never considered a viable source of income unless you had a hit song. Nothing has changed in that regard. What's changed is that a royalty-paying system has made direct music sales obsolete.



This isn't really right. If you were the writer (+ publisher too, especially) of material, you didn't have to have a hit to make a living from mechanical royalties when there was physical product being sold. Performance royalties (radio, muzak) weren't much if you didn't have a hit, yes, (though if you did have even a minor hit, it was worth real money). But today, streaming royalties - both performance and mechanical - are very very low. Forget about making a living from those. I'd say they do indeed need to be re-thought. 

Artists in the early 70s started to get more savvy and formed their own labels and controlled their own publishing. You absolutely did not have to have a hit (which has always been a slightly vague term) to make a living. You might not get rich, but you could be a full time musician/band who makes records and tours. The labels were like banks (and some artists got loans from actual banks, which was probably a better deal). As long as you could pay your note (literally or figuratively), you could stay in business. All I'm saying is: if you can't make money on tour anymore (even *with* a hit), and you make nothing on recordings either...wtf? The model doesn't work. 

_"What percentage of the $15 did the label/publisher take? I've heard that in years gone by it was possible for a record to go platinum without the artist making any money. So they'd go on tour and use the record as the advertising to sell tickets."_

Aside from the really crappy deals labels offered, they were also very 'creative' about accounting. You owed them whatever they said you owed them. They had many ways to pretend that your recording supposedly never made a profit, no matter how many units were sold, because they decided - creatively - what the expenses charged to your project were. You paid for every expensive pencil you used, every executive's priceless time 'consulting' your project, promotional costs (which could be anything) etc. etc. Yes, artists could sell tons of units and owe the *label* money!


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## Polkasound (May 26, 2020)

Guys, my comments and opinions have had nothing to do with record labels and publishers. I'm discussing the situation strictly from the perspective of the indie artist who has neither. I hope that clarifies.


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## jonnybutter (May 27, 2020)

Polkasound said:


> Guys, my comments and opinions have had nothing to do with record labels and publishers. I'm discussing the situation strictly from the perspective of the indie artist who has neither. I hope that clarifies.



Fair enough, although every master recording has an owner (which is usually a label but would be you otherwise) and every composition has potential publishing rights, which you own if they aren't assigned elsewhere. 

I know I'm veering into the political here, but I think not in the usual sense. As long as there was a certain amount of excess money sloshing around, however small - as long as the music economy wasn't fully 'rationalized' - we could argue at the left-liberal or right-liberal margins. But most of that excess is now being, or has been, siphoned upwards, esp in the US. 

So, we can't escape the question: do people exist to serve 'the economy' or does the economy exist to serve people? Is the music business primarily about *music* or is it primarily about *business*? In the past you could say it was 'kinda both'. But now it seems to be the latter, and if so, it's going to be the end of that business, at least as we know it. 'Investors' will suck the value out and move on - and not think about the replenishment of that value, bc they don't care about that. Those of us who love music will be mostly amateurs in that case, which is not all bad! But we're losing something by giving up professionalism, too.


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## d.healey (May 27, 2020)

Polkasound said:


> Guys, my comments and opinions have had nothing to do with record labels and publishers. I'm discussing the situation strictly from the perspective of the indie artist who has neither. I hope that clarifies.


In that case the article you're writing is comparing indie musicians who sell their own music, to streaming services which are publishers. That's not a fair comparison. A better comparison is to compare an indie musician selling their own music on CD to an indie musician selling their own music through their own website or something like a gumroad page.


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## Polkasound (May 27, 2020)

jonnybutter said:


> every master recording has an owner (which is usually a label but would be you otherwise) and every composition has potential publishing rights



I intentionally left all other potential sources of making money through music out of my article because they were and still are improbable for most indie/polka musicians.




d.healey said:


> In that case the article you're writing is comparing indie musicians who sell their own music, to streaming services which are publishers. That's not a fair comparison.



The one and only point of my article is explain how direct music sales have been rendered obsolete by streaming. Streaming is now how consumers buy music, so the comparison is very fair.




d.healey said:


> A better comparison is to compare an indie musician selling their own music on CD to an indie musician selling their own music through their own website or something like a gumroad page.



When my article talks about CD sales, it's encompassing ALL CD sales... direct, wholesale, retail, etc. An Eskimo is no more likely to buy an air conditioner on Amazon than directly from a manufacturer.


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## amysteriouskeyboard (Aug 31, 2021)

Beluga said:


> It looks awfully like an 8W-BEN situation. Actually any business in the US can withhold the 30% taxes if you can't prove you pay taxes within a country the US have a tax treaty with. They should have informed him though and requested clearly this form. I believe CDBaby was pretty clear they needed the form when I signed up there. It probably is possible to reclaim the taxes retroactively.


Hey - I'm aware this is an old post but when exactly did CDBaby ask you for a tax form? I've just paid for my album to be released on there but was never asked for it. I've noticed on their site they claim that users have to fill one out for pro publishing releases but don't say anything about standard releases and I'm now slightly worried they're going to withhold some of my revenue..


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