Indie record labels seeing gold

When Don Rose stood to speak Monday night to the 75 independent record label executives gathered at Los Angeles' Knitting Factory club, he had almost an embarrassment of good news.

Earlier that day, New York Attorney General Eliot Spitzer had settled with Sony BMG Music Entertainment over charges of "payola"--essentially that the major label had paid radio stations to play its music. Independent labels had long complained that these under-the-table practices had kept their music disproportionately off the airwaves.

But Rose, who was addressing the first West Coast meeting of the American Association of Independent Music (A2IM), a new trade group for independent labels that he heads, also had more immediate news. After years of small labels being given less money than big labels for their products, both Apple Computer and Microsoft were at last agreeing to provide indies with a greater cut of the profits from online music sales, he said.

News.context

What's new:
Sony BMG's "payola" scandal, plus more money from iTunes and Microsoft, is leaving independent music feeling like the playing field is leveling at last.

Bottom line:
Critics of the payola scheme have said that major labels' ability to pay to have their music played has kept independent music off the air--and that indie labels are now in the best position they've been in for years.

More stories on this topic

"Not to take any specific credit, but I think this does demonstrate the power of a collective approach," Rose, whose month-old group has barely begun work, said in an interview Tuesday morning.

The surge of headlines has left many in the independent label community feeling that they may be in the best position they've been in for years, with the playing fields both online and on the airwaves finally approaching something like level.

"I think we went from being invisible to being very quickly recognized in the market," said Peter Gordon, president of Thirsty Ear Recordings. "If you look at the confluence of factors in the market, you have the majors retreating and trying to develop a strategy, and you have indies being able to expand in the market."

With a direct effect on small labels' often-fragile bottom lines, the pay hikes from Microsoft and Apple's iTunes will be immediately welcomed. The news comes after years in which independent labels had complained about being treated as second-class citizens by the big digital music services. A2IM was formed in part to lobby for more equity with the big labels.

Rose and other sources in the independent music community said Apple was planning to raise indie labels' reimbursement for individual sales to 70 cents per song, up from 65 cents. Some of that money goes to pay publishers, as well as record labels and the artists themselves.

Details of Apple's contracts with individual labels are not made public, but big record labels are generally viewed as retaining a slight financial advantage over independents, due to their bigger bargaining power.

Microsoft has also agreed to bring small labels as close to parity with the majors as possible, both for its existing download service and the subscription service it plans to launch later this year, Rose said.

"The indie music sector represents much of the cultural diversity throughout numerous genres in the music industry," Mike Conte, general manager of MSN Music, said in a statement. "We're working with A2IM to resolve delivery and administrative issues in order to level the playing field for indies in relation to the larger music companies."

According to A2IM, independent labels account for 27.5 percent of music sales in the United States, and up to one-third of online listening on Internet radio and other venues. They've previously seen their reimbursement inch up as a result of working with content aggregators such as the Independent Online Distribution Alliance, The Orchard and the Digital Rights Agency.

Leveling the airwaves?
Sony BMG's settlement with Spitzer's office will have a less direct, but potentially valuable, effect for some independent labels that see their music as a candidate for exposure on mainstream radio stations. Critics have said that major labels' ability to pay to have their music played has kept indie music off the air.

"I think we went from being invisible to being very quickly recognized in the market."

--Peter Gordon, president, Thirsty Ear Recordings

Much of this criticism has been conjecture in the past. But the Sony BMG documents made public by Spitzer's office Monday expose a wide range of payoffs to stations, often in what seem to be trivial amounts for individual DJs, but amounting to potentially millions of dollars over time.

The payments often came in creative forms, such as providing the station with "contest prizes" such as digital cameras, laptop computers or concert tickets, which sometimes found their way to DJs. In one case, an executive suggested getting a DJ's shoe size, sending one Adidas sneaker right away, and sending the second shoe of the pair

[prestonwily]

Sounds like a good thing

I think it's great thing for the music industry that small independents will finally be able to compete. Hopefully we will see a wave of new talent.

[CharlesJo.com]

Agreed

There are good bands everywhere... like The Shawn Evans Band in Silicon Valley:

http://www.shawnevans.com/

[skeptik]

Industry's lost record sales

Payola. Now we have legally admissable evidence that the RIAA's claim of lost revenue in recent years is not due to P2P, but in fact due to the loss of payola generate exposure for their music. I guess we should let all those gradeschoolers out of jail now and lock up some executives. Of course I'm sure they would argue that they should not be held responsible, that everyone was doing it and they weren't really hurting anyone. ;)

[Len Bullard]

Where The Gigs Are

As the pie thins, it will be entertaining to see what the independents begin to do to get more of it. Will they replicate the tactics of the big guys or will they innovate on means to get ears next to their music?

The smart ones will create artists alliances for multimedia just emerging. Musicians know that gigs are presence and presence is the key to getting fans. The road is expensive and hard, so online gigs count for more. The chat rooms are becoming the nightclubs of the web. Some chat rooms have their own streaming audio radio stations. Chat room members gather at night for online parties while their personal DJ streams music fit to the party and the room. Savvy musicians are teaming with the chat room owners to provide 'fit' music; that is, made to order for the room.

Cheap and global, no air fatigue, no bus butt, no bad food, dress is optional. Make the song; put the mp3 where the DJ can get it to prep it; go to the chat room and sit with the crowd.

Is this lucrative? No. Is it fun? You bet. Will it lead to more business? Stay tuned.

[stephenmeyer]

THE SONY/BMG SETTLEMENT WILL NOT HELP INDEPENDENT LABELS

One of the facts that the media is negating in the rush to print their "Payola" stories, is that many good, hard-working and professional independent promotion people, who have for years played an integral part in breaking new artists, will now be shut out by more radio stations and by more labels.

If independent levels think this means they now have a "more level" playing field, they are delusional. Who will be the voice for them at radio if independent promotion people are diminished in importance? Does anyone really believe that radio is now going to spend a lot of time sorting through the hundreds of music choices they receive weekly before choosing the music they put on the air? It's just not going to happen.

The only thing the SONY/BMG settlement means (and the other major labels will likely settles as well since they all used the same practices)is that major labels will now find new ways to channel money into the marketplace to influence decision makers at radio. And independent labels should do the same...but to think that this setllement will create a new dawn of better music at radio is simply naive.

Steve Meyer
President/CEO - Smart Marketing
Publisher - DISC&DAT - A New Media Newsletter
Editor, Digital Technology: www.allaccess.com
Las Vegas, NV
E-mail: [e-mail]

[Len Bullard]

They Will Adapt New Means

Unless they are profoundly stupid, they will adapt new means. The marketing world now has means to count subscriber interest that did not exist in the days when the independent promoter evolved. Heck, my Windoze player automatically rates plays (it has very bizarre and sometime mediocre tastes, but that's true of independent promoters too) and if I were to let those aggregate, a good rating for what is being listened to emerges.

Tools, old man. Better tools, and cheaper than payola. It might be time to pull your head out of your wallet and look around because that is you market evaporating.

How smart the independents are at finding the online gigs, online promotions, routes to the iPod space, routes to the Sirius space, that will make a difference. This is the day of the geek and you need to figure out where and if you fit in.

Will the bribing still go on? Oh yeah. Always. It simply won't have Foghorn Leghorn, the hapless underpaid over-partied program director by the neck.

[Len Bullard]

Start Here

http://webjay.org/

Not a ranking service, as far as I can tell, but a means to distribute selections by listeners, and that's a good start.

[froppo]

Agreed

I think I'm going to have to agree with you on this one. Reluctantly. I don't think that smothering independent promoters, the way they have, is going to change anything. Also, the radio stations relied on that money for their promotional contests to increase listeners. The radio stations aren't going to give up that money without finding some other way to obtain it. Finally, if the major labels were completely shut off from using indie promoters and their was no way they could "payola" their way into the radio stations, I think that the stations would simply play the same music for the next 20 years rather than go through thousands of records to find that one golden artist. Most stations are run on the corporate level and what was cool to a corporate business man 20 years ago is cool to a corporate business man today.

-Froppo
Sling Slang Records
Indie Record Label

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