Luddite and paranoid - why the big record labels failed at digital

Midem Interview This is the second of four interviews on the State of Digital Music from this week's Midem event in Cannes. We'll hear from AIM's Alison Wenham next, followed by a view from the songwriters and composers.

It's the conventional wisdom amongst some Reg readers that "the evil record labels" are dying, and deservedly so. But such a simplified view of the world overlooks the contribution of the independent sector – which operates very differently to the Big Four.

Independents have a different business model, and have embraced digital networks as an opportunity, not a threat.

In the past few years the indies have organised, and successfully fought mega-mergers in the European Courts; they licensed the original Napster, and shunned DRM en masse. More recently, the indies have pioneered a one-stop stop for global digital licensing, Merlin, something beyond the organisational abilities of the RIAA.

So after hearing from IFPI chairman John Kennedy here this week, you'd expect a very different view of the music business from Martin Mills, chairman of British indie the Beggars Group - and you'd be right.

Radiohead recently signed a deal with Beggars' label XL to release the In Rainbows CD. [history]. Mills helped create IMPALA, the indies' European trade association, which successfully challenged the Sony BMG merger in 2006, and the proposed Time Warner-EMI merger in 2001. He was awarded an MBE in the New Year's Honours list.

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If the industry made a single mistake or strategic error in the last ten years, what would it be?

Well, where do you start?

There are many, many of them. I think the major record companies have been obsessed with control, understandably, as almost any industry in their position would be, but to their ultimate detriment. They've been very defensive.

I think the whole "DRM as a policeman" policy was doomed to failure – the independent companies never supported it to any extent whatsoever. We have never believed in putting obstacles into what the consumer wants to do.

So I think that the industry determination to segment the market, and try and maintain a price per unit consumption model, has proved absolutely disastrous. Obviously suing Napster out of business, well, even EMI now agrees that was short-sighted. Clearly it was – the independents didn't think so. Those are the big things.

The big part of the industry has, frankly, been Luddite. The independents less so, because quite frankly we have the opportunity not to be. We license every day of every week, and we're not used to the level of control the majors have enjoyed, and want to continue enjoying.

What's the biggest consequence of the consolidation to a Big Four?

It's access to media and access to retail. Clearly, if you own the amount of the market that Universal do, you can twist people's arms for those few extra spaces that may go to independents or even to EMI.

If you had a magic wand now what it would be – a single agreement or piece of legislation that would benefit Beggars and the independents?

I'm not sure there's a single piece or agreement. We inhabit a mature industry that's grown on a multi-territorial basis. And, frankly ,if you were reinventing it today you'd reinvent it way differently. It would be global, not territorial. All of the ways music is licensed are bogged down in territorial interests. Eventually, they're going to disappear and it would be great if you could wave a magic wand and make it easier to license. We want to make it easier to get a license at a decent price.