Indies unite to challenge Big Four digital deals

MidemNet The world's biggest record label, albeit a "virtual" one, emerged today at the Midemnet conference in Cannes.

Indies have found themselves treated as second class citizens or ignored altogether in the era of digital music. The new organization Merlin will act as a global rights licensing agency, and represents the growing influence of the independent sector acting collectively. Members hope that collective action will lead to better deals with online stores such as Apple's iTunes, and music-oriented sites such as MySpace.

"Merlin came together to license the individually unlicenseable," said Beggars Group chairman Martin Mills. "It's the virtual fifth major."

No individual Merlin member label claim as much as one per cent of the world's market share, but collectively they add up to 30 per cent of the global music market - and 80 per cent of the world's new releases.

"We're the largest company in the world if we act together," said Martin Lambot of the PIAS Group, and former president of Impala, the global indie labels' association.

Mills told us that the move to a one-stop licensing agency for indies began 18 months ago, but had been accelerated when Universal Music cut deals with YouTube and MySpace as 2006 drew to a close.

Alison Wenham of the UK-based Association for Independent Music (AIM) confirmed that indies would demand the removal of content from sites such as YouTube if they didn't cut Merlin a similar deal to the one negotiated by Universal Music, the world's biggest label.

Indie labels who strike deals with online stores such as Apple iTunes and Napster are disappointed to discover they receiver lower royalties than artists represented by the Big Four: Universal/Vivendi, Warners, Sony BMG and EMI. And others, such as MTV, pay majors but not indies.

"Majors broke no new genres, and none the major artists started on majors," said Tommy Silverman, co-founder of legendary New York hip hop label Tommy Boy Records. Silverman pointed out that Elvis Presley had started on an indie.

Indie representatives also pointed to the cultural contribution of the sector:

"A lot of music around the world would not exist without the efforts of Indies; without payment you're saying it's not worth the effort," added AIM's Alison Wenham.

Earlier in the day, Universal Music eLabs president and digital strategy chief Larry Kensil indicated a sea change in the company's approach to doing business.

"The box is getting smaller, so if you don't think outside of the box you're company is going to get smaller." Kenswil said UMG was now a licensing company rather than one that counted unit sales.

"Indies have always been the lifeblood of the industry," said Kenswil. "It will fall on indies even more than before to find talent".

Such words were unthinkable a year ago, Mills agreed. Here's Larry speaking last February. You can judge for yourselves. ®