Digital Services, Looking to Clean Up for Their Customers, Are Hurting Independent Labels and Artists

One year ago, independent labels started to learn of a new practice at iTunes and other digital services, which had begun weeding out -- hiding or even removing -- some covers, re-recorded songs and live performances from their powerful digital platforms. When Billboard first reported on this nascent “editorial curation,” independent labels expressed worry that their recordings could get swept under the rug by iTunes and others' house cleaning, a worry that was understandable -- some labels core business is releasing or licensing cover songs, re-recordings and lesser-known live recordings.

Since that first report, the impact of this change has become clear. As one indie label head put it to Billboard: “We've lost 50 percent of our business.” Another label head, whose company specializes in re-recordings and cover versions, tells Billboard that sales are down 60 to 70 percent from three or four years ago, mainly from lost iTunes sales, but also lost streams from services like Spotify.

Some of the affected independent labels feel like they’re caught in a no-win situation. They say their recordings often run afoul of iTunes’ constantly changing style guide and are thusly removed or hidden behind major label titles. But when they make the appropriate changes, the recording might again be rejected with no explanation, they say. “You understand what the goal is, but getting to that can be really difficult,” says a digital distribution executive.

A request to Apple for comment wasn't returned at press time.

What’s more, there could be unintended consequences to these practices. A label whose recordings are often rejected by digital services cause their distributors to re-think doing business with them, says one digital distribution executive. Distributors are always looking for clients -- but not ones that hurt their standing with digital services.

In many cases, recordings don’t ever make it onto a digital service due to these mercurial editorial policies. Based on its past experience with iTunes and Spotify, digital distributor The Orchard no longer even bothers to send Apple some well-known recordings it is charged with making available to listeners. One "black list" of rejected recordings, shared with Billboard by an independent label, has roughly 400 artists on it, including B.B. King, Frank Sinatra, John Coltrane and Pete Seeger.

Independent labels tell Billboard that less-familiar released can lose their search rankings on digital platforms like iTunes in favor of more familiar recordings -- usually from the larger labels. Re-recordings by legacy artists are regularly caught in services’ colanders. Familiar live versions can take precedence over more obscure live recordings. A common end result, some labels contend, is older artists becoming victims of policies that often favor larger labels over smaller labels.

RE-RECORDINGS: FOR FUN AND PROFIT

Re-recording a song is a common practice, and tactic, in the music business. A typical recording contract restricts an artist from re-recording any releases until three to five years after that contract's end. After this three-to-five-year grace period an artist can re-record and sell their older songs, as well as live recordings.

“The reason an artist wants to re-record their hit song years or decades later is because they want to own and monetize it, rather than having a label do so,” says attorney Bill Hochberg of Greenberg Glusker Fields Claman & Machtinger. “Very often, the original multitrack masters were tossed out, taped over, burned, buzzsawed or decimated.” This was the case with Aerosmith's “Dream On” and three others from the group's Columbia Records days, which it wanted to include in the video game Guitar Hero: Aerosmith. Columbia Records, Aerosmith’s home until 1982, threw away the multi-track recording as soon as a stereo master was made -- a standard practice at the time -- forcing the band to re-recorded the songs. Recently, Jeff Lynn of Electric Light Orchestra, Coolio, Salt-N-Pepa, Europe and, because of a royalty dispute with Universal Music Group, Def Leppard have released re-recorded versions of their well-known works.

Hiding re-recordings, or simply rejecting their even being listed, poses an obvious problem then. Despite an artist's legal right -- often decades after being on the charts -- to re-record their work and own 100 percent of the rights to that new recording, they are unable to capitalize on them because of these editorial policies. iTunes accounts for roughly 70 percent of download sales. Billboard estimates Spotify represents roughly accounts for roughly two out of five subscribers globally.

SOUNDALIKES, OR PIGGYBACKING ON SUCCESS

A less honorable target of digital services' vacuum cleaners is "soundalikes," which are exactly what they sound like: recordings purposefully created to mimic another song. Kid Rock’s “All Summer Long” is perhaps the best example of a soundalike invading a digital service. Kid Rock was still a digital holdout when his song “All Summer Long” became a hit in 2008. With the original recording unavailable at iTunes, a group called Hit Masters filled the void with a soundalike, landing in iTunes' top 20. The unavailability of another digital holdout, “American Boy” by Estelle, also put a soundalike, by Studio All-Stars, into the iTunes top 20. While soundalikes are legal, and find their way onto digital services like Spotify, they aren't necessarily welcomed with open arms.

In the end, labels are confused by the lack of consistency. “In some respects I understand the problem with a cover version of a hot song. But making classic songs for compilations, I don't understand why they would clamp back,” says one independent label head.

Steve Savoca, Spotify's global head of content, explains that with "soundalikes and covers, there’s often not a respectful intent. Some soundalike artists are trying to [place] tracks not even released and not yet in the catalog.”

HOPING TO SERVE LISTENERS

“It’s easy to see why" digital services are culling duplicates from their databases, says one distribution executive, who sympathizes with listeners seeing "eighteen versions of the same song” on various platforms. (That executive isn't exaggerating; a cursory search of Spotify reveals some popular songs can be found from many, perhaps dozens, of different sources.) And many sources agree the user experience can be hurt by too many entries of the same song, too many greatest hits collections and too many compilations.

Savoca says Spotify’s main targets are public domain recordings and soundalikes that are “trying to game the system." He doesn’t think there’s anything wrong with a cover, and points to a Spotify playlist with acoustic cover songs as proof of their popularity on the service. “But frankly,” he adds, “there’s quite a bit of garbage. We’re trying to separate the wheat from the chaff."

Rhapsody is also applying a heightened level scrutiny to its content. “We regularly review our song catalog to weed out select songs and albums that may, for instance, be placed in our service by gamers, or be considered malicious content,” a company spokesperson tells Billboard. ('Gamers' is the company's term for songs that try to generate a large number of streams in order to make money and move a song up the chart. 'Malicious content' is unlicensed content disguised as a popular song which generates revenue for a fake artist.)

It’s not impossible to play by the rules and make money, however. After Merle Haggard’s death, a collection of his re-recordings released by Entertainment One sold better than higher-priced, major-label titles. The release succeeded due to a low price and a breadth of catalog that resonated with buyers -- even though re-recorded music is not given editorial placement on the iTunes homepage or in its “Hot Albums” sliders, as per its policy about re-recordings, as sources tell Billboard.

In spite of Entertainment One’s feat, re-recordings are at a disadvantage, says one critic of Apple’s policies. “Over time, iTunes started requiring re-recordings to be labeled as such. This does not help. Any of my clients will tell you that it hurts sales a vast majority of the time because certain people have a bias against anything but the original version.”

“We’re really caught in the middle,” says one distribution executive.