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Indie Labels have Online Representation
August 26, 2003

By John Borland

A new set of services aimed at giving independent music labels online distribution is springing up, hoping to reach companies like Apple's iTunes and the new Napster.
San Francisco-based Independent Online Distribution Alliance (IODA) is the latest to hit the scene. It launched Monday with deals in place to negotiate digital rights on behalf of 50 labels whose music it hopes to place with the growing Net download and subscription services. A few older companies, such as CD Baby and The Orchard, also represent the digital rights of independent artists and labels.

"What we're saying is that this solves problems for both parties, and particularly for the independent labels," said IODA founder Kevin Arnold. "Typically, independents are companies with small staffs that don't have a lot of expertise with digital rights, and don’t have in-house attorneys."

The move towards organization of independent labels could help speed the acceptance of authorized music subscription and download services, most of which have focused so far on acquiring music from the five major music labels.

The "Big Five" labels represent about 80 percent of the music sold in the United States. Independents typically have small but often dedicated fan bases. Some industry reports show that many indies have actually fared better than larger labels through the economic downturn, with sales growing, sometimes substantially, in 2002 while overall industry revenues fell by close to 11 percent.

The digital music services have shown interest in signing and distributing independent label music. EMusic, one of the oldest subscription services, offers a catalogue stocked almost wholly with content from small labels, and has won kudos from its fan base for its eclectic selection. Apple staffers met with representatives from independent labels in June, and are reportedly creating a program to let the labels link up with the company's iTunes service.

IODA and other independent representatives want to give the indie labels more leverage, so they are able to win royalty deals closer to those the major labels get. Arnold said his service is launching with about 10,000 songs in its portfolio, including ones by relatively well-known bands such as Green Day, Cracker, The Donnas and Del tha Funkee Homosapien.

The new services also take care of activities that range from digitizing songs to managing royalty databases.

Some analysts say that the big digital music companies, from iTunes to the retooled Napster, which has not yet launched, need to focus on having strong major-label content deals before worrying about independent music, since their survival will depend on reaching the mass market. But distinguishing themselves with content that appeals to fervent music fans will also be important as the market matures.

Services like IODA "may be a bit ahead of the game," said Jupiter Research digital entertainment analyst Lee Black. "But bringing the independents in is important, because it increases the diversity and breadth of the services, making them more interesting."

Staff Writer, CNET


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