Could Indie Labels Take The Lead In The Future?

We have already discussed in a previous article the addition of a possible “fifth major” to the record label family, but could indie labels as a group surpass the top four? Indies from over 12 different countries have now joined Merlin, the nonprofit licensing agency that caters to independent labels. The agency allows online music stores to negotiate licenses for music under multiple independent labels through one transaction with Merlin. According to Tim Bajarin, president of Creative Strategies, “The indies are where we see some of the fastest growth in the next generation of music adoption.” So apparently not all of the record labels are suffering. The indies seem to be doing something right. Although in the past the indies have only made up 30% of the revenues from music sales, this percentage is expected to increase due to the fact that most of the latest music is found by this generation’s listeners through social networks and personal recommendations.

This last fact is too bad for major labels, considering the ways they have restricted the use of their music through various DRM strategies. This would restrict how music from major labels is spread over social networks, or between friends. Most independent labels on the other hand sell their music in MP3 format so that the songs can be passed on. Independents view the sharing as further publicity. The songs can be downloaded, emailed or copied to other computers, cell phones, or CDs without limits. At least EMI is considering taking a lesson from the indies. It is going to offer free streaming music on Baidu.com. This site is where 90% of music is pirated in China. EMI also licensed its music to Qtrax, a site that uses ads to earn money from its music downloads.

The independents might also soon compete on the radio. Due to accusations of payola involving Clear Channel, CBS Radio Inc., Entercom Communications Corp., and Citadel Broadcasting Corp, these large radio-station chains have agreed to help out independent music. The stations will pay a total of $12.5 million, and allow for 8,400 half hour segments of independent music over the following three years. Hopefully this will encourage discouraged independent labels to submit their artists’ music for play on commercial radio stations. FCC Commissioner Jonathan S. Adelstein claims, “If you take payola out of radio, then music gets heard on the basis of merit, not the basis of who’s got wads of cash backing the artist. That’s likely to make radio fresher and restore its vitality.” Could this be true? Perhaps by playing more indie music, Generation Y will turn to commercial radio as previous generations have, and learn about the latest music. By accepting payola in the past, these stations may have been aiding in their own suicide, as they lost listeners due to poor, homogenous content selections. Although payola will most likely always be present, maybe stations will get a small glimpse of how diversifying content selections to include music from independent labels could help out the station’s popularity.

Majors also seem to be following independent labels steps with podcasting. Warner Brothers has also in a sense disguised itself to appear to be an indie podcast. The podcast is called Bands Under the Radar. The controversy it is causing is due to the description which claims the podcast focuses on unsigned artists and indie bands. In fact, the podcast is created by a Warner Brothers employee, plays Warner Brothers music, and is delivered from Warner Brothers servers. There is also a button on the site to donate money. It will be interesting to see the other new schemes the major labels have in store, and whether strategies that have worked for independent labels will be feasible for major labels too.