Heads of prominent independent record labels, including Mom+Pop, Downtown, Dualtone and the Beggars Group, met to discuss the future of the indie sector Tuesday at the New Music Seminar in New York.
The discussion began with prospects for digital and streaming, which remains one of the fastest-growing segments of the industry as a whole. Matt Harmon, president of Beggars Group U.S.A., said streaming services were particularly attractive to independent labels because the barriers to entry are lower than at physical retailers.
“The digital market is flatter,” he said. “On Spotify we can get coverage for not only our top level bands but for our small bands as well.”
Josh Deutsch, president and CEO of Downtown Music, said he was optimistic about streaming and other digital businesses because of the added value they bring to masters. He said Downtown’s digital revenue has grown in double digits every year for each of the last three years. He cautioned however, that labels should be patient with regards to streaming royalties while usage in the U.S. grows to a scale that can support the industry.
“There’s friction between what it takes for a subscription service to survive and what it takes for a label to survive,” he said. “But I think we want Spotify to survive. I don’t want to see us cut the same deals that killed imeem.”
Scott Robinson, co-founder of Dualtone, is feeling the impact of lackluster streaming royalties more than most. He said The Lumineers recently reached 100 million streams on Spotify but revenues from the milestone represented a much less impressive figure. He also raised the age-old question of whether streaming cannibalized digital and physical sales.
In response to a question about how indies have managed to thrive in a turbulent time for the rest of the industry, Harmon said Beggars bands like Vampire Weekend — who recently earned their second Billboard No. 1 album — grew without the use of expensive campaigns to radio or retail. He said XL used grassroots marketing and got smart about touring in order to build the band’s fan base.
Deutsch said the rise of licensing and sync businesses has had a democratizing effect on the industry. He said brand partnerships and TV programming provide a highly effective way to market and monetize artists without relying on traditional methods.
Robinson said indies are able to spend more time developing artists than major labels, who are under more pressure to generate hits quickly.
“We have a project that’s 17 months in market and selling more now than it did 9 months ago,” he said. “And we’re still developing that project. We take our time.”
As far as challenges faced by indies, Harmon said he worries about the efforts of major labels to control all aspects of distribution. Robinson said independent labels need more bargaining power with big technology companies like Apple and Google.
“With something like iTunes Radio, Apple is going to come to us and say ‘sign the deal.’ But with Sony and Warner there was a negotiation process,” he said. “That’s a big challenge for us. We need entities to help make inroads in that process”
Cliff Chenfeld of Razor and Tie said he was concerned about overly negative portrayals of the music industry in the media. He said that, while record sales are down, looking at sales as the sole important measurement of the industry’s health is “a very ‘90s attitude.”
“I worry that there are aspiring artists out there who see all the negativity and decide not to go into music because they think there’s no way to make it work,” he said. “But the fact is we are optimistic. There are so many opportunities in this business now that never existed before.”
