Independent Labels

By Diane Rapaport

Virtually every town in America and Canada has at least one artist or band that puts out their own CDs. Artists with local and regional followings can sell as many as 5000 recordings a year at performances;; artists with followings in several states can sell many more recordings.

Record labels that focus on particular genres of music can have gross incomes of up to several million dollars a year. According to SoundScan, sales of indie recordings in the United States accounts for over a billion dollars annually or approximately 15% of the sales of all recorded product.

The actual income generated by sales of indie recordings may be much higher. Many indies do not bar code their recordings because they sell them at performances, by mail order to fans and on the Internet. And, SoundScan statistics do not include sales generated in many nonrecord retail stores.

If you add consumer purchases of concert tickets for indie performances and sales of promotional merchandise, it is easy to realize why independent recording is a multi-billion dollar industry.

Other benefits for indie artists and labels:

• Training Ground for Major Labels.
  Artists, such as Loreena McKennitt, bands like Pearl Jam, and whole labels, such as Windham Hill and Interscope have signed deals with major labels. Indie labels have spurred major labels into marketing genres of music they previously spurned, such as hip-hop and Latin.
• Control of their Careers.
  Artists that make and sell their own recordings profit from their careers, without surrendering their passion and artistic control.
• Revitalization of Regional Economies.
  Indie labels hire employees, contract services from local vendors and buy or rent musical and audio equipment from local retailers. As artists expand sales beyond their communities, they import money, which further increases the community's economic base.

Indies Under Siege

For all its successes, the indie record industry is increasingly under siege.

• Competition for the Leisure Dollar
  Consumers are bombarded with advertising, largely from business giants, for an array of entertainment and leisure products, which compete for their leisure dollars. Indie recordings have difficulty competing for consumer attention.
• Control of Access to Popular Media
  The large conglomerates that own major labels, television networks, popular magazines, publishing companies and many heavily trafficked Internet sites are exercising increasing control over popular entertainment media. Many people are exposed only to the music and videos that these conglomerates own.
• Retail Store Consolidation.
  The increasing consolidation of retail stores and the loss of mom-and-pop stores make it difficult for indie artists to have their products available. Moreover, major labels pay stores for floor, wall and bin space and for selections featured in listening booths and in-store play. Few indies can afford to pay the prices.

The Internet: A New Ally

The Internet is an ideal medium for serving niche interests. Accessibility to hundreds of genres feeds a public that is increasingly interested in music that is not available on popular, large entertainment mediums. Although there is a great deal of hope that the Internet will compensate for the increasing consolidation of retail stores and radio stations and help indies expose and sell their music, there are some potential pitfalls.

The proliferation of Web sites means that indie artists and labels must find methods for getting people to them and returning. The competition for audience share and the increasing presence and dominance of large Web sites by entertainment conglomerates does not make this an easy task for indies. Their sites can easily get lost in cyberspace.

Indie labels have spurred a music renaissance and revitalized music by enriching and widening the spectrum that is available to the public. The advantages that indies have are their decentralization, flexibility and small scales of operation. While the major label industry continues to homogenize and narrow its focus to only a few musical genres, the independent label industry has diversity, passion, vitality and creativity.

Nevertheless, new strategies must be adopted to maintain and increase the gains indies have made. By taking steps to counter the new challenges that confront them, independent bands and artists can continue to prosper.

Excerpted from Diane Rapaports book, A Music Business Primer, published by Prentice Hall. © 2003 by Diane Rapaport. The book is available on Amazon.com and at major book stores. www.dianerapaport.com