An independent record label (or indie record label) is a record label operating without the funding of or outside the organizations of the major record labels. A great number of bands and musical acts begin on independent labels. Overview – The boundaries between major and independent labels, and the definitions of each, differ from commentator to commentator. In practice, however, the traditional definition of a ‘major’ record label is one that owns its own distribution channel. Some independent record labels, in particular those with successful performing artists, sign dual-release agreements (and make other deals) with major labels and may rely to some extent on international licensing deals, distribution agreements, and other arrangements with major record labels. Major labels may also wholly or partially acquire independent labels. Other nominally “independent” labels are started (and sometimes run) by major label artists but are still owned at least in part by the major label parent. These spin-off labels are also frequently referred to as vanity labels or “boutique labels” and are intended to appease established, powerful artists and/or to give them latitude in discovering and promoting new talent. According to Association of Independent Music (AIM) “(…) A “major” is defined in AIM’s constitution as a multinational company which (together with the companies in its group) has more than 5% of the world market(s) for the sale of records and/or music videos. The majors are (currently) Sony BMG, Warner, EMI, and the Universal Music Group (which incorporates Polygram).(…) If a major owns 50% or less of the total shares in your company, you would not (usually) be owned or controlled by that major. In that case, you can join AIM.”
History
Independent labels have a long history of signalling developments in popular music, stretching back to the post-war period in the United States. Disputes with major labels about publishing led to a proliferation of labels specializing in country, jazz, and blues. Sun Records played an important part in the development of Rock ‘n’ roll as well as country, with artists such as Elvis Presley, Carl Perkins, Johnny Cash, Jerry Lee Lewis, Roy Orbison, and Charlie Rich. The independent labels usually aimed their releases at a small but devoted audience, not relying on mass sales for success, giving artists much more scope for experimentation and artistic freedom. In the United Kingdom during the 1950s and 1960s, the major record companies EMI, Philips, and Decca had so much power that independent labels struggled to become established. Several British producers launched independent labels as outlets for their work including Joe Meek (Triumph), Andrew Oldham (Immediate), and Larry Page (Page One). Chrysalis Records, launched by Chris Wright and Terry Ellis, was perhaps the most successful from that era, and continued to expand. Several major rock stars set up their own independent labels – The Beatles with Apple Records, The Rolling Stones with Rolling Stones Records, and Elton John with Rocket, but they generally failed as commercial ventures or were swallowed up by the majors. The punk rock era brought about a turning point for independent labels, the do-it-yourself ethos of the time seeing the emergence of a plethora of independent labels. In the US, independent labels such as Beserkley also found success with artists such as The Modern Lovers. Many of the UK labels ended up signing distribution deals with major labels to remain viable, but others retained their independence (e.g. Warp, Wax On, BlancoMusic) and the factor that came to define independent labels was distribution, which had to be independent of the majors for records to be included in the UK Indie Chart, which was first compiled in 1980. The term ‘indie’ and the chart itself was unrelated to a specific genre of music, and the chart featured a diverse range of music, from punk to reggae, to MOR and mainstream pop, including several hits from the likes of Kylie Minogue and Jason Donovan on the PWL label. The late 1970s had seen the establishment of independent distribution companies such as Pinnacle and Spartan, giving independent labels an effective means of distribution without involving the majors. The situation improved further with the establishment of ‘The Cartel’, as association of companies such as Rough Trade Records, Backs Records, and Red Rhino, who helped to take releases from small labels and get them into the shops nationwide. The ‘Indie Chart’ became a major source of exposure for artists on indie labels, with the top ten singles regularly aired on the national television show The Chart Show. By the late 1980s, the major labels had identified an opportunity to break new acts via the indie chart, and began setting up subsidiary labels that were financed by the majors but distributed via the independent network, thereby being eligible for the chart. With the major labels effectively pushing the genuine indie labels out of the market, the independent chart became less significant in the early 1990s, with ‘alternative’ increasingly being used to describe artists, and ‘indie’ often used to describe a broad range of guitar-based rock and pop. The Offspring’s 1994 album Smash is the highest selling independent record of all time. The album sold more than 16 million copies worldwide. In music, independent music, often shortened to indie music or “indie”, is a term used to describe independence from major commercial record labels, subsidiaries and an autonomous, Do-It-Yourself approach to recording and publishing.
Independent Record Labels
Independent labels have a long history of promoting developments in popular music, stretching back to the post-war period in the United States, with labels such as Sun Records, King Records, Stax, etc. In the United Kingdom during the 1950s and 1960s, the major record companies had so much power that independent labels struggled to become established. Several British producers and artists launched independent labels as outlets for their work and artists they liked, but the majority failed as commercial ventures or were swallowed up by the majors. During the punk rock era the number of independent labels grew. The UK Indie Chart was first compiled in 1980, and independent distribution became better organized from the late 1970s onwards. In the late 80′s Seattle based Sub Pop Records was at the center of the grunge scene. In the late 1990s and into the 2000s as the advent of mp3 files & digital download sites such as Apple’s iTunes changed the recording industry, an Indie Neo-soul scene soon emerged from the urban Underground soul scenes of London, NYC, Philadelphia, Chicago & L.A., primarily due to commercial Radio & the major label’s biased focus on the marketing, promotion & Airplay of Pop & Hip Hop music during this period. Independent Labels such as Dome Records & Expansion Records in the U.K. and Ubiquity Records in the U.S. and a plethora of others around the world as well as various “online stores” such as www.dustygroove.com, www.soultracks.com, etc, support the Nu soul movement today. Independent artists and technology – Internet technology allows artists to introduce their music to a potentially enormous audience at low cost without necessarily affiliating with a major recording label. The design of digital music software encourages the discovery of new music. Sites with larger libraries of songs are the most successful. This, in turn, creates many opportunities for independent bands. Royalties from digital services could prove to be an important source of income. If an artist has already paid to record, manufacture, and promote their album, there is little to no additional cost for independent artists to distribute their music online. Digital services offer the opportunity of exposure to new fans and the possibility of increased sales through online retailers. Artists can also release music more frequently and quickly if it is made available online. Additionally, artists have the option of releasing limited edition, out-of-print, or live material that would be too costly to produce through traditional means. No limit is the largest independent record company in the US with sales of over 75 million records. Some independent artists have used the Internet (and an established fan base) to successfully fund new recording projects, relying on services like ArtistShare or using their own sites. For instance, singer-songwriter Jill Sobule released “California Years” in 2009, an album for which she’d raised nearly $90,000 online. Sobule explained her telethon-like fundraising approach thusly: “The contribution levels went from $10, which got you a digital download of the record, to $10,000, which gave you the chance to sing on the record.” (One generous donor did contribute at the $10,000 level.) With the arrival of newer and relatively inexpensive recording devices and instruments, more individuals are able to participate in the creation of music than ever before. Basically, a so-called tracker music require no equipment, except for an ordinary home computer such as ZX Spectrum, Amiga or PC. Studio time is extremely expensive and difficult to obtain. The result of new technology is that anyone can produce studio-quality music from their own home. Additionally, the development of new technology allows for greater experimentation with sound. An artist is able to experiment without necessarily spending the money to do it in an expensive studio. A complete proof of concept that a whole ‘Do it yourself’ CD production process – from beginning to end (including: recording, mixing, graphics, page layout, prepress, etc.) – can compete with professional quality, using exclusively Free Software, was made by the Austrian band ‘XBloome’ in November 2010. Most artists maintain their own websites as well as having a presence on sites such as Myspace.com or Audimated. Technological advances such as message boards, music blogs, and social networks are also being used by independent music companies to make big advances in the business. Some sites rely on audience participation to rate a band, allowing listeners to have a significant impact on the success of a band. This eliminates new talent search and development, one of the most costly areas of the music business. Other sites allow artists to upload their music and sell it at a price of their choosing. Visitors to the site can browse by genre, listen to free samples, view artist information, and purchase the tracks they want to buy. Acts such as Wilco have chosen to make their new albums available for streaming before they are released. Many bands have chosen to forego a record label and instead market and distribute their music only on the Internet. Digital marketing firms such as CDBaby, Magnatune and iTunes offer opportunities such as podcast creation and promotion and video hosting. In the case of digital distribution, musicians lend a company the right to distribute their music. The contract is often non-exclusive, and the rights to the music generally remain with the artist. The non-exclusivity of the contract allows many artists to have an online presence while continuing to sell directly through their local independent music stores. A more recent trend is seen in artists who give their music away for free, such as the “record label” Quote Unquote Records, featuring bands such as Bomb the Music Industry!, Radiohead, with their 2007 album In Rainbows, The Go! Team with their single “Milk Crisis” and Trent Reznor of Nine Inch Nails with the 2008 albums Ghosts I–IV and The Slip. Going major versus staying independent – Some bands choose to never go to a major label even if they are given the opportunity to do so. Similarly, others may choose to be an independent artist after having already experienced recording on a major label, such as pianist Bradley Joseph. As an independent, business is a prime concern and can take over if not controlled, Joseph said. “A lot of musicians don’t learn the business. You just have to be well-rounded in both areas. You have to understand publishing.
You have to understand how you make money, what’s in demand, and what helps you make the most out of your talent.” But some artists just want to be involved in the music and don’t like the added problems or have the personality to work with both. Joseph suggests newer artists read and study both courses and pick one that best suits their own needs and wants. If a band moves to a major label, it does not necessarily guarantee the band’s success. Only about 1 in 10 CDs released by major labels make any profit for the label. It is possible for an artist to make more money producing and promoting their own CDs than signing with a major label. However, an independent label that is creatively productive is not necessarily financially lucrative. Independent labels are often one-or two-person operations with almost no outside assistance and run out of tiny offices. This lack of resources can make it extremely difficult for a band to make revenue from sales. A testament to this could be the fact that since 1991, only twelve independent records have been able to reach the top spot on the Billboard 200 chart; although a few have been able to reach Platinum status in the U.S. Some major labels have created an opportunity for Independent artists to be featured on a distribution/ marketing CD project with no strings attached in an effort to help boost awareness of the Independent Music community. One thing an artist can consider doing if they want to be noticed by a major label is starting their own independent label. A successful independent label with a strong musical reputation can be very appealing to a major label. Major labels rely on independent labels to stay current within the ever-changing music scene.Independent labels are often very good at discovering local talent and promoting specialized genres. The difference among various independent labels lies with distribution, probably the most important aspect of running a label. A major-label distributed independent label allows the independent label to find, sign, and record their own artists. The independent label has a contract with a major label for promotion and distribution. In some cases, the major label also manufactures and releases the album. Independent labels that are owned by a major label distribute their records through independent distributors but are not purely independent. A purely independent label is not affiliated with a major label in any way. Their records are distributed through independent distributors. It can be very difficult for independent bands to sign on a record label that may not be familiar with their specific style. It can take years of dedicated effort, self-promotion, and rejections before landing a contract with either an independent or major record label. Bands that are ready to go this route need to be sure they are prepared both in terms of the music they offer as well as their realistic expectations for success. The three main ways for an artist to make money are record deals, touring, and publishing rights. Major label contracts – Most major label artists earn a 10–15% royalty rate. However, before a band is able to receive any of their royalties, they must clear their label for all of their debts, known as recoupable expenses. These expenses arise from the cost of such things as album packaging and artwork, tour support, and video production. An additional part of the recoupable expenses are the artist’s advance. An advance is like a loan. It allows the artist to have money to live and record with until their record is released. However, before they can gain any royalties, the advance must be paid back in full to the record label. Since only the most successful artists recoup production and marketing costs, an unsuccessful artist’s debt carries over to their next album, meaning that they see little to no royalties. Major label advances are generally much larger than independent labels can offer. If an independent label is able to offer an advance, it will likely fall in the $5,000–$125,000 range. On the other hand, major labels are able to offer artists advances in the range of $150,000–$300,000. Instead of offering an advance, some independent labels agree to pay for a certain amount of the artist’s recording costs. This money is recoupable. There are advantages and disadvantages of an advance. If an artist gets no advance, that means they owe their record company less money, thus allowing them to earn royalties more quickly. However, since the label recoups so many costs, an artist’s advance might be the only money they are able to make for quite some time. In a contract, options are agreed upon. Options allow the label to renew their contract with the artist and release more of their albums. Options lie with the label, and the label has the choice whether or not to record more with the artist. Some artists consider this unfair because the label has the right to not distribute an artist’s project and extend their contract by one more album if they deem the music as commercially or artistically unacceptable. Record labels effectively own the artist’s product for the duration of their contract.
Independent Label Contracts
Independent label contracts typically resemble contracts offered by major labels because they have similar legal liabilities to define before representing an artist. There are slight differences, usually with regards to royalties. Independent labels typically offer higher royalty percentage because production costs are usually significantly lower than those of a major label. For example: most independent labels tend to focus less on marketing than major labels. It is becoming increasingly more common for independent labels to offer a profit-sharing deal in which as much as 40–75% of the net profits go to the artist. In this type of contract, the net gain after all expenses have been taken out are split between the label and artist by a negotiated percentage. However, deals in this form can take longer for an artist to gain any profits since all expenses – such as manufacturing, publicity, and marketing – are also taken into account. As an independent artist becomes more popular, deals of this type are more advantageous. Independent labels can rely on “word of mouth” to expose their artists. This of course is to attract a distinct audience. Independent labels tend to avoid high budget marketing, which is usually criticized as “over kill” and attracts an audience commonly found following major label artists. This of course contributes to the lack of production cost, and helps artist to receive royalties sooner. Publishing – If a band or artist writes their own material, publishing can be one of the best ways to earn a profit. It is one of the few guaranteed ways to earn revenue for artists. Even touring is not a sure way to make money because it is possible that no one will attend the shows. Basic copyright law protects songwriters by giving them exclusive rights to grant or deny the reproduction, distribution, or performance of their work. The majority of a band’s publishing income comes from its mechanical and performance rights. Mechanical rights cover the reproduction of a song on a record. In the standard contract between a band and a label, the label is required by law to pay the composer a fixed rate per song simply for the right to use the composition on commercially sold recordings. The mechanical licensing rate in 2006 for the U.S. and Canada is 9.1 cents per song. With the performance rights, a song’s copyright covers every time it appears on radio and television. Increasingly the internet is making new methods of publication accessible to independent musicians. Services have been set up to distribute independent music over the internet with many different types of payment models. This often allows artists to reach a much wider audience than would normally be possible as a local band.