“We’re kicking their ass,” says a fiery Rich Bengloff, the president of the American Association of Independent Music (A2IM), about the state of the indie labels in comparison to the majors. The trade group’s seventh annual Indie Week kicks off today and runs through Thursday. The event allows the non-profit a chance to meet with its board, discuss the big issues facing label membersl and honor their own at the third annual Libera Awards (“The Libbys”).
Bengloff notes that since A2IM launched in 2005, the indie label market share has grown from 27.2% to 34.6%, which includes the loss of their two largest members, Road Runner and Univision (to Warner and Universal, respectively) and would have represented an additional two percentage points of market share.
“Think about that — we’ve grown by ten points,” Bengloff says. “That means the majors went down by ten points, and that’s why they’re constructing these licensing deals this way, to try and remain relevant and [to try] and get an unfair amount of the compensation.”
The indie label rep goes on to allege that some major labels engage in digital streaming strategies that he believes are patently unfair. “Universal Music makes the per-stream rate as low as they possibly can so they have to give the artist very little money,” he claims. “Then, on top of that, they have something called a ‘listener hour guarantee,’ which they know is going to up their compensation by about 40% — since it’s per listener hour, not per track, the artist gets screwed because it’s not attributable to a track, so the artist doesn’t get a royalty. That’s not fair, that’s not the way we do business. The third thing they do is get a minimum annual guarantee or an advance if they know the service isn’t going to reach that level of business and be able to recoup — it’s what’s called [digital] breakage and they also don’t share that with the artists.”
But at this year’s Indie Week the main focus this year will be on a topic much in the music business news these days: licensing, Bengloff says licensing is “broken” and illustrates this by invoking the Beebs. “Who said that if Koko Taylor, who is an eight-time nominated Grammy artist, and Justin Bieber release a song, that they should get paid differently?” A2IM favors a compulsory statutory license that treats every copyright the same, not a free market solution as was often mentioned in recent congressional hearings.
2014 is the year that licensing became a hot button issue as the House Judiciary Committee held hearings, the Copyright Office considered consent decrees and the FTC fielded complaints from indies claiming YouTube is strong-arming them. “We filed our paper with the copyright office two weeks ago and we got a lot of reactions from that. I filed papers [against YouTube] with the FTC a week ago.”
This doesn’t mean A2IM isn’t open to working with music streaming services it deems fair. “We are treated equitably and fairly by Rdio, Spotify, Rhapsody and about 20 other services,” Bengloff says, “but obviously not YouTube.” He also calls Amazon licensing terms inequitable. He also says most of A2IM’s membership treat the artists on their labels equitably. For example very few A2IM members signed SiriusXM’s direct licensing offer in 2011 and 2012, which would have enabled the music label as the sound recording owner to receive the artist share of royalties now directly paid to artists by SoundExchange.*
For the 700 attendees expected to attend Indie Week, the main focus for the third year in a row is how independents can increase revenue. Panels will include such topics as neighboring rights, pre-clearing songs for easier licensing, and, of course, a talk on the always exciting world of metadata.
Thursday night are Indie Week’s Libby Awards which will feature Alligator Records’ founder and CEO Bruce Iglauer receiving the A2IM Lifetime Achievement Award from last year’s recipient Tom Silverman. In addition to Iglauer’s many music accomplishments, Bengloff mentions the label head’s humanitarian streak. “I remember one of the first times we had Indie Week, this woman from MusicCares came up to me and asked, ‘Is Bruce Iglauer going to be here?’ And I said, ‘Yes, yes Bruce will be here in a little while.’ And she goes ‘I need to meet him. Whenever we have a problem with a blues artist whether they need money for a medical problem or funeral expenses, Bruce is always the person who takes care of it for everybody in the Blues community.’ And it doesn’t matter whether they were on Bruce’s label or not. How great a guy is he?”
This year’s keynote is especially well-timed with the heads of the major global indie associations – Bengloff, Alison Wenham of WIN/AIM, Charles Caldas of Merlin, Helen Smith of Impala slated to speak on the hot-button licensing issue. Bengloff, however, has yet to write his speech. “I’m a pretty spontaneous guy, ” he says. “I wrote that FTC letter in about two hours, because I’m living it.”
Click here for a full schedule of Indie Week events.
*Correction appended: A previous version of this story incorrectly stated that Mr. Bengloff found SiriusXM’s licensing terms inequitable. Sirius/XM pays SoundExchange under a compulsory statutory license set by the CRB and Mr. Bengloff shared no opinion on the merits of SiriusXM’s previous direct licensing offer.