2.   Major Label Branch Distribution:   The major record companies such as CBS, RCA, MCA, and CAPITOL have branch offices which handle the sales to record stores in their respective regions.  These companies search for recording artists whose recordings they produce and distribute through their system.  Much of the record product distributed by the majors comes from independent production companies and labels which find and develop talent and bring it to the attention of the major.  Once a major label decides to "pick up" an artist, the usual arrangement involves payment to the production company of advance royalties (used to recoup production costs), expenditures for record manufacturing, promotion, advertising and marketing.  The major label controls all marketing and promotional decisions and budgets and will have from three to five options for terms of one year each to produce additional records.  All further production will be in accordance with budgets and schedules set forth in the licensing or recording agreement between our company and the major label.  In this type of arrangement, the major label will pay a negotiated royalty rate to the production company who, in turn, will pay the artist and producer a pre-determined royalty rate.

3.   Independent Record Company/Independent Distribution:  There are record companies which do not qualify as a "major" label but produce and sell records with a great commercial success through regional independent distributors.  These companies vary greatly in size and financial stability. It would be possible for us to negotiate an arrangement with one such company to  manage the manufacturing, distribution and promotion of our Master with both companies contributing negotiated amounts to the cost of promotion and future productions.

4.   Distribution of Master Recordings:  Each of the three routes of distributing above described have advantages and disadvantages. Usually, it is advantageous to go with the major label whenever possible in order to utilize their contracts, marketing machinery and financial resources.  The main disadvantage of the major label system for the new artist is lack of attention given to a new artist project by a very busy and overloaded staff contained in a large organization based in New York or Los Angeles.  A smaller label, with a smaller artist roster, can usually make better and more selective use of the same marketing and promotional dollars and consequently be more effective for the new artist's record. Our plan is to consider all possibilities as the project progresses and to budget the project to manufacture and distribute records under our own label through independent distributors.  We will make efforts to explore the interest of the majors in our project and will have a number of smaller labels interested in distributing our records.  Major labels will often pick up an artist on the strength of a successful first independent record release and/or video promo and begin to finance the production and marketing beginning with the second album.  The time required between recording and the shipping of records out through independent system is approximately three months.  If a major label is involved, the time between recording and shipment could extend to four or six months.