Small Music Labels Unite to Fight Uphill Battle

Recent reports of renewed payola in the music industry simply underline a much larger issue. Small record labels are looking for ways to wield power against the major labels, which control concert deals and much radio play. One way: an affiliation.

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This week, New York State Attorney General Eliot Spitzer announced a $10 million settlement with Sony-BMG overcharges of payola. It was encouraging for independent record labels who have long complained that they just don't have the kind of money to bribe radio stations to play their songs. Certainly, they don't send any this way. The indies also got another bit of good news in the online world. NPR's Neda Ulaby reports.

NEDA ULABY reporting:

Don Rose has had enough. He's run a couple of small record labels, and he says based on his experience, payola is just the tip of the iceberg.

Mr. DON ROSE (The American Association of Independent Music): It's not so much the bags of cash being dropped off at the programmer's back doors. There's a web of relationships between the big radio conglomerates and the concert industry and the major record companies, of course.

ULABY: Rose now heads a new trade group called The American Association of Independent Music. The AAIM, as it's called for short, was founded last month. Its goal is to address the inequalities resulting from an industry dominated by four major labels. When you talk to indie reps, they repeat one phrase like a mantra.

Unidentified Man #1: What our organization is about is leveling the playing field.

Unidentified Woman: We just need to get more of a level playing field.

Unidentified Man #2: And anything that has a potential to level the playing field is going to benefit independent music.

ULABY: To level this all-important field, the AAIM needs a pretty big bulldozer. But Steve Gottlieb, who heads the indie label TVT, says right now, indies seem to have an advantage.

Mr. STEVE GOTTLIEB (TVT): ...whether you look at independent label Concord, who won all those Grammys with their Ray Charles record, whether it's V2 with the White Stripes. When I first started in the music business 20 years ago, it was once in a blue moon an independent label would get into the top 100. These days, you see independent labels striking out for the top of the charts almost on a weekly basis.

(Soundbite of music)

Mr. RAY CHARLES: (Singing) Here we go again...

ULABY: Back in Ray Charles' early days, many hit-making labels were independents. But in an age of consolidation, indies say they have to band together. Most of them lack the money for the kind of marketing and advertising that can drive a hit. Leslie Bleakley is the CEO of the large independent label Beggars Group. She says she and her colleagues put out more records than the majors.

Ms. LESLIE BLEAKLEY (Beggars Group): We're 80 percent of the releases in this country and we probably get, at the most, 10 percent of any mainstream radio.

ULABY: And how does that translate at the cash register?

Ms. BLEAKLEY: Twenty-eight percent, approximately.

ULABY: Bleakley says until now, indies have gotten little help from the powerful trade group, the Recording Industry Association of America.

Ms. BLEAKLEY: Even though we have got seats on the board of the RIAA, I don't think we can be represented as much because it's a majority interest over there.

ULABY: Majority interest means major labels. RIAA CEO Mitch Bainwol is not shocked by the discontent.

Mr. MITCH BAINWOL (CEO, Recording Industry Association of America): I mean, I can't speak for how they feel. Indies, by definition, are smaller and when you're smaller, it's harder to have representation. We think it's a good idea that they move forward with the representation. It is reality.

ULABY: Of course, indies themselves are not created equally. Some have alliances with the majors, says AAIM president Don Rose.

Mr. ROSE: Many of our members are distributed by major record companies and many are distributed by standing out on their front porches and throwing them as far as they can.

ULABY: One frustration they all share is their treatment by some digital music services. There's no small irony in the indies who were the first to adapt to the online world, but the majors got better deals as the Internet got bigger and more corporate. TVT's Steve Gottlieb.

Mr. GOTTLIEB: We have not been able to put our music up on iTunes precisely because they want us to accept that our artists would be compensated substantially less than artists on Universal. And we don't think our artists should be treated that way.

ULABY: Gottlieb says indies generally are reimbursed 10 or 20 percent less than majors like Universal. MSN is Microsoft's online music service. Mike Conte, general manager of Marketplaces and Digital Media, says there's a reason for the inequality.

Mr. MIKE CONTE (Marketplaces and Digital Media): Just to put it in perspective, we have something like 3,500 agreements today with independent labels. And it's a lot of work to do those agreements.

ULABY: Still, this week, Microsoft and Apple announced they will start equalizing what indie labels are paid when you download or stream their music online. Most people buy their music off line at big box stores where small labels can be harder to find. And some online music stores see that as an opportunity, says Jack Isquith. He's executive director of music industry relations for AOL Music.

Mr. JACK ISQUITH (AOL Music): There's tiny, tiny labels that are sold through the AOL store and played on AOL music. One example I can think of is a band called Sherwood.

(Soundbite of music)

SHERWOOD: (Singing) I must say it's a nice day...

ULABY: AOL's support is appreciated by James Cho. He runs Sideshow Records, which is Sherwood's label. But Cho says he looks forward to a time when the Internet supplants traditional media outlets now dominated by the majors.

Mr. JAMES CHO (Sideshow Records): I think we could definitely at least have a voice out there where we could reach the fan base without radio maybe or without MTV.

ULABY: Meanwhile, Cho says he's pleased that the American Association of Independent Music has started to, well, level the playing field. Neda Ulaby, NPR News.

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