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Carving a Niche in Digital Music Distribution

The Orchard's early insight into digital distribution of music is proving bountiful -- and helping independent musicians get on the radar.

This story appears in the May 2011 issue of Entrepreneur. Subscribe »

In the late 1990s, when having a dial-up line wouldn't get you laughed out of the room and was just a glimmer in ' eye, Richard Gottehrer, a distributor of independent music to online retailers like and CDnow, began adding digital distribution rights to the contracts he offered. At the time, no one blinked an eye. The music industry was skeptical that digital downloading would ever usurp CDs and physical media as the kings of music.

They were wrong. Analysts now predict that music downloads will surpass CD sales for the first time in 2012. And Gottehrer, whose digital distribution powerhouse The Orchard has the rights to distribute about 2.5 million tracks from nearly 11,000 clients (roughly 20 percent of the music available on iTunes)--including the records of recent Grammy winner Esperanza Spalding and more than 100 previously unavailable Sesame Street albums--is seen as one of the music industry's visionary entrepreneurs.

"We started in a basement, and now we have offices and reps in 26 countries," Gottehrer says. "The Orchard is really well-organized and has grown from small roots to a significant position in the record business today."

Gottehrer began his storied career as a songwriter, penning hits like "My Boyfriend's Back" and producing albums by Blondie and other artists. By 1997, however, he was more interested in getting music from independent labels into the hands of the public. That's when he and his partner Scott Cohen formed The Orchard, named after the street where they opened their first New York City office.

As download speeds increased and digital music began to look like a reality, The Orchard became more aggressive in licensing digital rights. Now the company ships its sonic code to more than 700 download sites, including iTunes, eMusic and Verizon. It may sound easier than shipping boxes of fragile albums across the country, but it's still a lot of work. Each track has to be aggregated and coded to the specifications of each music service before it's delivered.

"We sit right in the middle of the music industry. We take in the content and deliver it out to an enormous number of stores across the globe," says Gottehrer, who has also begun film and video distribution. "Whatever new concept comes up, we're there to deliver and supply it to those places."

But The Orchard has gone beyond just shipping songs into cyberspace. With music industry budgets for artist development and marketing drying up, The Orchard offers labels a digital marketing service that will feed information and songs to the blogosphere, create promotional mobile apps and get videos placed on TV. Its Artist Builder dashboard lets artists distributed by The Orchard easily publish their music on Facebook or Myspace and provides access to an analytics suite they can use to track regional sales, audio streams and ringtone sales.

Gottehrer takes pride in the fact that he's been able to experience so many pieces of the music world, and is excited to see what the future holds.

"The business of music has always been a labor of love, but it's very much a business," he says. "Still, I don't think you can do these things purely with the intention of making money. There has to be sacrifice and vision."

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