The Warner Music Group is folding Ryko Distribution into Alternative Distribution Alliance company.

As part of the move, all labels signed to Ryko will be handled by ADA, with the transition expected to occur over the next 45-90 days. Ryko Distribution has annual sales of about $50 million; Billboard estimates the merged company's annual volume at $200 million. In order to accommodate the extra volume, ADA will add 12 people to its staff.

Meanwhile, the 25-person Ryko staff will be laid off, and those staffers can apply for the new ADA jobs, WMG sources say. Ryko Distribution president Jim Cuomo will serve as a consultant.

The Warner Music Group acquired Ryko Distribution in 2006 as part of its $67.5 million acquisition of the Rykodisc label. The label will continue to operate and will now be distributed by ADA. While it is consolidating the two independent distribution companies into one, the WMG still sees the independent sector as a strategic growth area and it is expanding ADA's capabilities, sources say.

In other moves WEA, WMG's major label distribution company, will cut maybe 10 staffers that call on smaller accounts and service those retailers through tele-marketers, sources say. Some back office functions at ADA and WEA will be combined at WEA.