Rockol Tracks: The rise and rise of the combative indies

Has no one seen the gradually growing might of the independent labels? They are rising up, screaming they are as mad as hell, and refusing to be treated as the second-class poorer cousins of the major labels anymore. 

As the increasingly influential digital-music services demand content to operate, the small labels have been ratcheting their collective strength to protect the careers and creations of the very artists that feed the once indomitable international music business.

They are demanding the same fairness and transparency the digital services seem to have no trouble offering the majors.
Three factors have contributed to the indies’ surging strength: digital-technology disruption, the global sales-revenue slump, and consumers’ content-is-free mentality.

In terms of digital disruption, independents embraced the Internet more than a decade ago, a period when major-label executives shunned it with skepticism at best, and disdain at worst. For small independents, the World Wide Web opened up commercial doors as those to physical sales remained restrictive. After almost 15 years, they understand its mechanism better than most.

Global music revenue always seems to be begging for the last rites. Just as IFPI, the industry’s international trade body, announces any signs of growth, dissenting voices question the viability of new income sources, such as those from streaming content. Dedicated independents will point out that while the money is more than welcome, the love of the music more than makes up for the constant financial struggle. They are used to it.

One of the industry’s biggest challenges has been finding monetization models to incentivize young digital natives to pay for music. That generation of consumers assumes the ability to copy content on the Internet for free means the actual product is also free. The small size of independent-label enterprises has made them flexible enough to get around that conundrum by adding inventive uses of social media, physical distribution, and live gigs without feeling beholden to shareholders.

Additionally, since the Internet’s emergence, the number of major labels has shrunk to three (Universal Music Group, incorporating EMI Music; Warner Music Group; Sony Music Entertainment) from an almighty five (Universal, EMI, Warner, Sony and BMG) in the industry’s heyday.

Meanwhile, the independents’ have been consolidating their combined influence.

Until recently, they fought one battle at a time whenever digital-music services, from the mighty download store iTunes to the streaming powerhouse Spotify via mega video-sharing platform YouTube, imposed terms and conditions that appear to favor only the majors.

Recently, however, like the military strategists on the battlefield, they are responding from all angles. From the legal courts to comprehensive awareness campaigns, international groups like WIN (Worldwide Independent Network), global digital-rights agency Merlin, as well as local affiliates such as the UK-based AIM and A2IM in the US are ready to fight back any unfairness that adds more obstacles in an already tough business.

Following what WIN says are highly detrimental rates being inflicted on its members by YouTube for its planned new streaming-music service, it openly attacked the derisory treatment of its members. Shortly after, it launched a new but coincidentally related initiative called The Fair Digital Deals Declaration.

“In recent years, a pattern has emerged whereby large rights owners can secure huge lump sum payments, typically for equity, access, administration, ‘breakage’ and other non-attributable charges,” said WIN in the declaration. “The artist community has understandably expressed growing concern about the apparent disparity between the value of the overall deal to the rights holder versus the per-stream rate which is often the only revenue shared with the artist”

More than 1,000 independents signed the declaration less than a week after the 16 July sign-up day.

The declaration’s massive adoption by indie labels, including Beggars Group in the UK; Mushroom Group, Rice is Nice, Sound of Melbourne Records, Inertia and We Are United in Australia; plus Concord/Rounder and Razor & Tie in the US, showed independents are taking their fight to the industry.

Independents have also been questioning the accepted methodology used by the Billboard/SoundScan system to calculate labels’ market share in the US. A2IM pointed out that basing each share on master-rights ownership (as opposed to distribution rights) would give US independents a larger than each of the major labels’ share.

Merlin has been escalating its campaign to ensure independents are entitled to as much respect and royalty rates from digital-music services as their major-label counterparts. In the year to April 2014, revenues doubled to $89 million. Forecasts indicate the amount will soar to $160 million for the next fiscal year.

Furthermore, a study commissioned by Merlin discovered that for almost 50% of the survey’s respondents, digital music represented more than 50% of their total business.

Far from being complacent, Merlin is refining its defense strategy. It has appointed Jim Mahoney, A2IM’s former vice president, to the newly created role of US general manager. The fight is being localized as well, starting with the US, the world’s biggest music market.

The indies’ combat is not about defeating the majors or the digital music services. It is about preserving the value of the artists, without whom no label, small or large, or digital service would exist in the first place. It is about the growing the global market as a whole.

[Juliana Koranteng]