What is Indie music? Independent music (often shortened to indie music or indie) is music produced independently from major commercial record labels or their subsidiaries, a process that may include an autonomous, do-it-yourself approach to recording and publishing. The term indie is sometimes also used to describe a genre (such as indie rock and indie pop); as a genre term, “indie” may include music that is not independently produced, and most independent music artists do not fall into a single, defined musical style or genre, and usually create music that can be categorized into other genres.
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, and Stax.
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 and were swallowed up by the majors.
In the United States, independent labels and distributors often banded together to form organizations to promote trade and parity within the industry. The National Academy of Recording Arts and Sciences (NARAS), famous as the organization behind the Grammy Awards, began in the 1950s as an organization of 25 independent record labels including Herald, Ember, and Atlantic Records. The 1970s saw the founding of the National Association of Independent Record Distributors (NAIRD), which became A2IM in 2004. Smaller organizations also existed including the Independent Music Association (IMA), founded by Don Kulak in the late 1980s. At its zenith, it had 1,000 independent labels on its member rosters. The 1990s brought Affiliated Independent Record Companies (AIRCO), whose most notable member was upstart punk-thrash rock label Mystic Records, and The Independent Music Retailer’s Association (IMRA), a short-lived organization founded by Mark Wilkins and Don Kulak. The latter is most notable for a lawsuit involving co-op money it filed on behalf of its member Digital Distributors in conjunction with Warehouse Record Stores. The adjudication of the case grossed $178,000,000 from the distribution arms of major labels. The proceeds were distributed amongst all plaintiffs.
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. From the late 1970s into the 1980s, certain UK independent labels (such as Rough Trade, Cherry Red, Factory, Glass, Cheree Records and Creation) came to contribute something in terms of aesthetic identity to the acts whose records they released.
If an act moves to a major label from an independent, they are awarded greater opportunity for success, but it does not guarantee success. About one in ten albums released by major labels make a profit for the label. Some artists have recorded for independent record companies for their entire careers and have had solid careers. Independent labels tend to be more open creatively, however, an independent label that is creatively productive is not necessarily financially lucrative. Independent labels are often operations of one, two, or only half a dozen people, with almost no outside assistance and run out of tiny offices. This lack of resources can make it difficult for a band to make revenue from sales. It can also be more difficult for the indie label to get its artists’ music played on radio stations around the country when compared to the pull of a major label. A testament to this fact could be that since 1991, there have only been twelve independent label albums that have reached the number one spot on the US Billboard 200 Album Chart. There have, however, been dozens of independent albums that have reached the top 40 of the US Album Chart.
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. The difference among various independent labels lies with distribution; this is probably the most important aspect of running a label. Examples are:
Independent label that signs and distributes its own acts. These independent labels find and sign their own acts; then the label manufactures, distributes, and promotes its own product.
Independent label distributed by a major label. These independent labels are similar to the type mentioned above in that they find and sign their own acts, but they have a separate contract with a major label to handle manufacturing, distribution, and/or promotion. The major label has no control over the independent label, simply an agreement to distribute its product. Either the independent or the major can terminate the pact at the end of the contractual agreement if they so choose. The independent provides for its own financial stability, and has no outside monetary assistance from a major label. -If signing to an independent label, this type of venture probably affords the better benefit. This is because the act’s contract is actually with the independent label, which may offer more creative control, yet the act is having its album distributed by a major label, which also has an interest in seeing the album become successful.
Independent label owned by a major label. Some major labels have started independent labels or purchased an existing independent label outright, and have these labels use, or continue to use, independent distribution for their product. The reason for this is because independents usually are on the cutting edge of new sounds and potential hit artists, and signs acts and releases albums for less money than would have otherwise been spent if the acts were signed directly to the major label. One benefit of this scenario is that if the act eventually proves successful enough on this type of independent, and is seeking a major label deal, it may see its subsequent albums released directly on the major-label owner of its independent label. The moniker “independent” is sometimes associated with these major-label owned independent labels because they use independent distributors to distribute their albums instead of their affiliated major-label distribution system. However, these labels are not true independents, the differences being: a) these independent labels can seek the financial backing of their major-label owner should they ever fall on hard financial times. b) the major-label owner can sign acts itself, and then place acts on its independent label if it chooses, even though the independent label signs acts itself. c) the major-label owner can potentially steal away any act from its independent label at any time and bring that act directly to the major-label owner, regardless of if the act is still under contract to the independent label. d) the major-label owner could completely shut down the independent label entirely or sale it off for financial reasons or for restructuring of the overall conglomerate. None of these are circumstances that pertain to true independent labels like those in the first two examples. A record label needs more than independent distribution to qualify as an independent label, otherwise it is an arm of a major label.
It can be very difficult for independent bands to sign to 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.
Major label contracts
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–$100,000 range. On the other hand, major labels are able to offer artists advances in the range of $150,000–$500,000. Some smaller independent labels offer no advance at all; just recording cost, album packaging, and artwork, which is also recoupable. If an artist gets no advance at all, they owe their record company less money, thus allowing them to start receiving royalty checks earlier; that is, if sales warrant any royalty checks at all. However, since the record label typically recoups so many different costs, it’s actually to the artist’s advantage to get the largest advance possible because they may not see any royalties checks for quite some time; again, that is, if sales warrant any royalties checks at all. Another advantage of getting an advance; the advance money the artist owes the label is only recoupable through the artist’s royalties, not through a return of the advance itself. Most major label artists earn a 10–16% 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 may carry over to their next album, meaning that they see little to no royalties.
In a record contract, options are agreed upon between the record company and the act. Options allow the label to request additional albums from the act if they so choose. Major labels tend to ask for more options in a contract than independents. For instance, a contract may state “one album, with an option for four”. This would mean a total of five possible albums. This means that if the first album was recorded and released by the label and was profitable, the label is going to pick up its option for a second album. The act, therefore, must deliver a second album to the label. If that album is successful, the label will pick up its option for a third album; and so on and so on, depending on how many options are stated in the contract. Picking up the option for another album lies strictly with the label, not the act. The label can pick up as many options as it wants, up to the amount stated in the contract, it does not have to pick up all the options. That means, although a contract may state it has an option for four albums, the label does not have to pick up all four of these options. The reason for this is, say the act’s first album is successful and the label picks up an option for a second album, but that second album fails miserably. The label could decide it is not about to spend more money on another album, and not pick up any more options and drop the act from its roster. Another ploy the label could utilize is to pick up an option for another album, even after a failed album had been released. If the label doesn’t like the finished product of the new album the act has recorded, the label may not release that album, and then pick up its option for yet another album! The label then may not release that album as well! But the money spent for recording these unreleased albums may still be recoupable from the albums that have already been released. Because the act is under contract with the label, it cannot record music for another record label without permission. This scenario could potentially tie an act down to a label for years, even though the label has no intentions of releasing any more product from this act, in a career that guarantees no success, and if so, typically only sees a few prime years of prosperity. Some acts consider this unfair because the label has the right to not distribute an artist’s work, yet legally keep them bound and prevent them from recording elsewhere. In effect, the label could continue to demand more albums through the options clause until it deems one commercially or artistically acceptable. Record labels also effectively own the product recorded (released or not) by an act during the duration of their contract with the label.
Options are only beneficial to the record label. The fewer options allowed in the contract, the better for the act. An example: if an act’s first and/or second album is successful, but there are no more options left, the label will re-sign the act all over again anyway. This time it will most likely be with a much better royalty rate and more creative freedom than the previous contract stated. Or, the act can decide to move to another label altogether, one that is offering a better royalty rate or creative freedom. However, when the label holds a clause for lots of options for additional albums, it has the advantage. Besides the scenario in the above paragraph of the label requesting albums it may not release and preventing the act from recording elsewhere, the exact opposite could happen instead. The act could release a blockbuster album on their very first release. The label will surely pick up its options for future albums and distribute them, but the act will continue to see all its royalty checks and recoupable expenses calculated under the same contract it signed many years ago. When its contract is finally up (with all those options), the act may have declined considerably in music popularity and may not have the same bargaining position that it had so many years ago when it released that blockbuster album. Had there been fewer options on the initial contract, the act could have negotiated a new and better contract while in its prime.
Independent label contracts typically resemble contracts offered by major labels because they have similar legal liabilities to define before representing an artist. There are differences, however, usually with regards to less advances, lower studio costs, lower royalties, but fewer album options. Due to financial constraints, independents typically spend much less on marketing and promotion than major labels. But with lower royalties rates typically paid to artists and lower production and promotion costs, independent labels generally can turn a profit off lower volumes of sales than a major label can.
Although not common, there have been instances of profit-sharing deals with independent labels in which an act can get as much as 40–50% of the net profits. In this type of contract, the net gain after all expenses have been taken out are divided between the label and artist by a negotiated percentage. However, deals in this form can take longer for an artist to gain any profits, if at all, since all expenses – such as recording, manufacturing, publicity and marketing, music videos, etc., are also taken into account. Only if an independent artist becomes vastly popular are deals of this type more advantageous.
Independent labels rely heavily on personal networking, or “word of mouth”, to expose their acts. Independent labels tend to avoid high budget marketing tactics, which usually does not fall in the budget of an independent label. This of course contributes to the overall lower production cost, and may help the artist to receive royalties sooner, if warranted. Major labels tend to watch indie label artists and gauge their success, and may offer to sign acts from independents when their contract is up. The major may also request to buy the contract of the act from the independent label before the contract is up, giving the independent label a hefty financial payment if they choose to sell the contract.
Competition between independent and traditional publishing
Independent music sales volume is difficult to track, but in 2010 independent retailer CD Baby claimed to have sold over 5 million CDs during its lifetime. CD Baby no longer reports its number of CDs sold, but in 2010 claimed to have paid a total of $107 million to artists over its lifetime and currently claims that this figure is now over $200 million.
Apple has announced that they have sold over 16 billion songs through their iTunes service. Most of this is “mainstream” music, and doesn’t reflect access by new content producers to the market, but it does indicate significant competition with traditional CD sales.
Whether the sales from non-traditional sources come mostly from tapping into an expanding market or from siphoning sales away from traditional CD distribution is difficult to assess in the face of the RIAA’s claim that music piracy causes 12.5 billion dollars damage to the US economy annually.