Two powerhouses in independent music took an opportunity to criticize the business practices of major labels at the Recording Academy’s Entertainment Law Initiative luncheon, an annual gathering of the country’s entertainment attorneys to discuss music issues and, mostly, take a rare opportunity to network on a large scale.
Martin Mills, founder of Beggars Group, and Darius Van Arman, head of Secretly Group, turned an otherwise staid event into a platform to challenge, chiding their larger competitors. “The major labels failed the industry they were supposed to lead,” said Martin Mills, founder of the Beggars Banquet label and later the Beggars Group family of independent labels.
Both Mills and Van Arman pointed to numerous instances of major labels attempting to tilt power in their favor. Both singled out the majors’ attempt to gain a preferable royalty rate in the recently concluded Webcasting IV proceeding. They pointed to a lack of transparency that prevents artists from seeing how their digital royalties are earned and criticized the majors for using their significant leverage to secure better terms from, and equity in, digital companies like Spotify.
Mills began with a story of an “outspoken singer and a tribe of indie labels” challenging Apple Music to pay royalties during the free trial period of Apple Music. The major labels, “with all their scale and power, had not managed — or chosen not — to achieve,” he said. To Mills, the incident encapsulates the majors’ attitude to artists and approach to the music community. “We are not a community any more,” he lamented.
Their accusations — not all of them new — were followed by challenges to modify their behavior.
Van Arman followed by providing a new definition of independent creators. “You are independent if you are pro-competitive. I’ll repeat, you are independent if you promote competition in the marketplace.” His statement echoed those in a 2014 op-ed for Billboard. “In the end, all the independent sector wants is a free market with a level playing field,” he wrote.
Both Mills and Van Arman see solutions to the problem of what they see as a monolithic recording industry. Mills made specific suggestions for fair treatment of artists in the digital era. He called for labels to provide a royalty of at least 15 percent, a common rate now but higher than some older contracts.” Legacy contracts with provisions for deductions like packaging and reduced prices “mean that digital payouts, even on contracts as recently as the 90s, can be in single figures,” he later told Bllboard.
Mills also called for labels to write off an artist’s balance after 20 years. With the terms of artist contracts and labels’ heavy investment — including advances — artists often owe labels more than they’ve earned in royalties. A fresh start and an empty balance, he explained, would allow older artists to enjoy royalties from sales and often lucrative synchronization licenses for the songs’ use in film, television shows and advertisements.
“Our industry is built on top of creative works, made by human creators,” said Van Arman. “They deserve fair and equitable trading terms and transparent accounting. They also deserve their fair share of revenues and other compensation — including equity stakes from digital services.”
Mills also encouraged major labels to invest in independent organizations that “are the most effective lobbying voices” for all rights holders. He later argued the industry would benefit from this kind of unification. “An industry with all component parts in harmony would be an industry with persuasive political strength.”
Other suggestions focused on parity amongst labels. Mills called on labels to support independent organizations in order to create a healthier food chain. Equality of rates was also addressed. “A track is worth a track,” Mills said, referring to labels’ argument that larger labels deserve a larger royalty. “That is no way to be part of a community.”