World indie labels sign groundbreaking online deal

Last Updated: Saturday, January 20, 2007 | 3:18 PM ET

CBC Arts

A group of independent record labels from several countries, including Canada, have signed a landmark deal to create a one-stop licensing shop for the online distribution of music from artists such as the White Stripes and Arctic Monkeys.

Jack and Meg White of the rock band the White Stripes, seen here at the 2004 Grammy Awards, will be getting wider online distribution of their music through a new deal their label signed with a Dutch firm.
(Mark J. Terrill/Associated Press)

The deal — announced in Cannes, France, where the music industry is holding a conference — is being hailed as a major move that would dramatically expand the distribution of independent artists.

"What this does is level the playing field between indies and the majors," said Ted Schadler, a music industry analyst from the U.S.

Martin Mills, head of The Beggars Group label, which produces The White Stripes, the Pixies and Basement Jaxx, said the contract with the Netherlands-based company Merlin "will license collectively the individually unlicensable."

The agreement allows Merlin to cut deals with downloading sites and other digital platforms for artists from dozens of independent labels from countries such as Australia, Brazil, Canada, France, Israel, Japan, South Africa, Spain and the U.S.

"Merlin may be the most important move we as independents will ever undertake to secure our mutual prosperity in this rapidly changing business landscape,'' said Brett Gurewitz, owner of U.S.-based Epitaph Records, whose roster includes Tom Waits.

Indies account for 80 per cent of new music

Indie labels have been playing catch-up to the major labels — Universal, Sony, EMI — which have been able to negotiate many deals with online retailers such as iTunes and Napster.

The independents account for 80 per cent of new music releases but only 30 per cent of total revenues, according to 2005 industry data. 

The Merlin deal removes the cost of negotiating and managing individual contracts for each online music site — something smaller labels have been unable to administer.

The International Federation of the Phonographic Industry (IFPI), which represents record labels, recently released its 2007 Digital Music Report. It indicated music downloading soared by 89 per cent in 2006 compared to 2005.

The report said 795 million tracks were downloaded from 500 legitimate websites available in 40 countries.

"The reality is that the majority of good new music being adopted by younger people is mostly spread through social networking and personal recommendations,'' said Tim Bajarin, president of the consulting firm Creative Strategies.

''The indies are where we see some of the fastest growth in the next generation of music adoption."