In distributed marking, the lecturer/tutor awards a set number of marks for the product and lets the group decide how to distribute them.

For example, the product receives 80 (out of a possible 100) from the lecturer. There are four members of the group. Four by 80 = 320 so there are 320 marks to distribute to the four members. No one student can be given less than zero or more than 100. If the members decide that they all contributed equally to the product then each member would receive a mark of 80. If they decided that some of the group had made a bigger contribution, then those members might get 85 or 90 marks and those who contributed less would get a lesser mark.

Sources:

Assessing groupwork by the University of Melbourne
http://www.cshe.unimelb.edu.au/assessinglearning/03/group.html#DesigningGroup

Winchester-Seeto, T. (April, 2002). Assessment of collaborative work - collaboration versus assessment. Invited paper presented at the Annual Uniserve Science Symposium, The University of Sydney, 5th April. http://sydney.edu.au/science/uniserve_science/workshop/fye3/w_seeto2.pdf