Indie Sector Solidifies Ranks at 10th Annual A2IM Indie Week Conference

Courtesy of A2IM
    

The Association of American Independent Music (A2IM) held its 10th annual Indie Week conference in New York City this week, as members of the indie sector celebrated their growing impact on the music marketplace.

Registrations for the conference had doubled since last year, A2IM CEO Richard Burgess said during the group's annual meeting on Tuesday. He also noted that the overall organization had added 128 new member companies since June 2018, bringing total membership to 560 labels, 182 associated members and 53 dual members (i.e multi-sector companies), and reminded attendees that indie labels had 220 Grammy nominations this year and 31 wins.

"Indie week began 10 years ago in the shadow of the great recession," Burgess said. "At the time, I attended the first meeting as a member and I remember how energized the meetings were. This was a time when the industry was taking a dive, so to walk away thinking about the possibilities and opportunities" showed the value of the event.

"While the music industry has enjoyed many successes, challenges remain; and indie week is the perfect opportunity to discuss them," Burgess continued. "We hope you come out of this week with more purpose, more united and more committed to the indies than ever."

With the rise of streaming, the music industry back in a growth phase, Hopeless president Louis Posen earlier noted, "With growth and success, comes great opportunity." But he stressed it's also a time for the indie label and distributor community to stick together in order to insure that sector of the industry is treated equitably. Quoting the famous Ben Franklin quote, "We must, indeed, all hang together or, most assuredly, we shall all hang separately," Posen said, "Lets not hang separately, let's hang together."

Later that day, Songtrust showed off its wares to attendees -- mainly label and distribution executives -- pointing out that it's now easier to diversify into publishing and thus a new income stream, thanks to their company.

"Historically, it's been easy for other parts of the industry to ignore music publishing: It's complicated it has a different language and requires a different way of thinking," Songtrust director of business development for North America Anna Bond said. Yet when you look at how much work goes into putting new music out, she continued, the record label world can be a frenzied place.

Likewise, artist songwriters often don't think too much about publishing, she added: "Usually, they sign a pub deal get the advance, buy a van and stop thinking about it."

One of the hard parts of music publishing is collecting royalties from around the globe before they go in the black box, she said. Black box revenue occurs for many reasons: maybe the song is not registered in all countries or maybe there is incorrect data. When those things happen, there are only a couple of years to collect that money before it is put in a "black box" for distribution to the top earners in those territories and then the money can never be claimed by the songwriter who should have received it.

Even if the song is correctly registered and the songwriter is registered with a U.S. performance rights organization, it can still take as long as two years for money to work its way back to the songwriter that earned it, she added.

"We don't want those artists to have that money; we want the creators to get it," Bond said, noting Songtrust's "relationships with 45 digital service providers and societies in 170 countries," covering about 90% of the global music market with direct relationships. In total, the company represents 170,000 songwriters and 20000 publishers, representing 1.5 million song copyrights, she added. 

Addressing the labels in the room, Bond said they might want to consider starting a publishing company. "Some artists don't have a publisher or management team that can help them get their publishing revenue," she pointed out and then asked, "So why not start a publishing business and get another revenue stream for your company and help them get their revenue."

In touting the advantage of signing with Songtrust for publishing administration, Bond said, "We collect globally quicker and can combine mechanical and performance data in the same place."

Later on, Merlin CEO Charles Caldas presented the company's financial results for the yearlong period ending March 31, 2019, in which it distributed $845 million -- a 69% increase from the prior year's $518 million. A panel moderated by Kill Rocks Stars' Portia Saban followed on what Merlin offers its label and distributor members in exchange for the 1.5% it charges for its services.

Merlin, which claims 12% of the digital marketplace operating in 63 countries around the globe, acts as an agent for indie labels, collectively negotiating licenses with the major digital services around the globe. It then offers its members -- 850 labels and distributors -- an opt-in to each deal. 

The one thing that Merlin does is truly help its members attain a global business, Caldas said. For example, its Japanese label members are now seeing a big chunk -- as much as a 25% -- of their streaming business coming from Latin America, he said, "something they thought they would never see."

Meanwhile, Brazil is now the fifth largest market for Merlin members. That is a welcomed change, Caldas said, "If you think back to the physical realm and how much business we got out of Latin America then."

While Merlin helps labels and distributors expand their global footprint, the organization's U.S. GM Jim Mahoney says Merlin doesn't do deals with all the digital services. "There are more services out there that we don't license, than we do," he said. "If a DSP wants to do business with Merlin, we tell the DSP they have to go out and do their legwork with our members." If Merlin does a license for a DSP and the members don't know anything about that service, they might all opt out, he explained. 

On the other hand, for its members, "Merlin is not an all or nothing proposition," Mahoney said. "Whatever rights you want us to represent, that's what we do. We don't care about what you are doing with the rest of the [DSPs]."

Moreover, the marketplace has changed significantly with streaming, panelists said. In the old days, a label might have gone to a brick and mortar retailer, telling them about a big sync coming up and asking for a comparable buy-in, Mahoney said. "Nowadays, telling a digital service about the sync is not enough," he added. "But if you go in and say you have a synch license and this has happened at other DSPs], and therefore you should try it on other lists at your service," that is taking advantage of the data being generated."

Another way, the marketplace has changed, Symphonic Distribution CEO Jorge Brea said during the Merlin panel, is that most distribution companies have evolved into becoming the back-office for record labels due to the complexity of streaming micro-transactions. Moreover, his company has built up a team to help record labels in other areas too.

Reach Records senior vp operations Katie Alberts said that when the label switched to Merlin from Sony's The Orchard, revenue increased by 10%. 

Some labels and distributors are still looking at the physical marketplace too. Secretly Distribution managing director Chris Weiz reported his company had recently changed distribution companies because "we wanted a partner which still had physical as their core business," so it moved from the Alternative Distribution Alliance to AMPED, the indie distribution arm of Alliance Entertainment, the largest music and DVD wholesaler in the U.S. That switch "has resonated very well for us," Weiz said.

Looking ahead to the second decade for Merlin and -- for that matter -- A2IM's indie week, Merlin's Caldas noted "a whole range of innovation and new revenue streams from thing we are not expecting" would be coming. Already, the international growth provided by streaming, he said, "has allowed [indie labels] to pivot in ways they never thought they would."