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Friday, December 14, 2012

Op/Ed Series: The State of Indie in 2013

Welcome to the first of a series of guest Op/Ed pieces on the state of indie in 2013. The state of indie as it affects emerging artists and small/DIY labels is a subject that we all should care deeply about. The struggle of indie artists with the realities of earning a living, while at the same time trying to make innovative music, is an issue of paramount importance. Artists face the devaluation of their intellectual property. They face a new breed of "major" labels, masquerading under the banner of indie, but for all intent and purpose, operating as majors and growing to dominate indie radio, publications and concerts.

A prominent indie radio channel uses a tag line which states "independent, unsigned and under the radar." Nothing could be further from the truth. In reality the tag should be "major indie label dependent, major management firm represented and major PR firm affiliated." The idea that the 10 largest indie labels are really "indie" is not credible. What has been spawned is a dominance of large labels that, unlike the traditional majors, pay paltry or no advances, pay paltry or no tour support and love the 360 deal, which gives them a cut of everything the artist makes.

This is a subject that needs to be discussed. Emerging and independent artists deserve to have the fruits of their labors carry value. They should not be expected to tour 365 days a year to eak out a meager living, while giving their music away for free. Small indie/DIY labels should be able to have a business model that actually sustains them as businesses. They should not be reduced to money losing labors of love.
This blog is committed to being a vehicle for this dialog and has invited knowledgeable contributors to write Op/Ed pieces voicing their views on the subject. Below is the first of these, written by the highly experienced artist/producer Mikael Johnston, the driving force behind FZB Top 20 band The Swerve and the Billboard Top 10 charting Dresden & Johnston. Mikael started his career as the co-producer and songwriter for the Warner Bros. act Mephisto Odyssey. Following his tenure at Warner Bros., he’s continued his diverse journey as an artist, engineer, mixer, remixer and producer working with such artists as; I am The World Trade Center, The Sounds, Smash Mouth, Goapele,  Lily Allen, Nadia Ali, Some Ember, Blondie, Oh No & Chris Keys, among others.
Coming will be articles by Mark Roberts, Founder of Stars and Letters, a small NYC indie record label and other stakeholders in the arena we all call indie. Let us know what you think. Email us at russianwinterrecords (at) gmail (dot) com.

Mikael Johnston: The State of an Indie Artist in 2013:
This article is based on research for a guest lecture I gave at Chabot College in their music business class. I'll break it down into 3 parts. Why digital content delivery killed record sales, the misinformation that the Internet has leveled the playing field in regards to artist exposure, and why major labels sold out their artists to Spotify.

1. Record Sales
Record sales are approximately 1/3 of a band's main source of income. The three main sources of income are record sales, publishing and touring/merchandise sales. People intrinsically don't put a value on intellectual property (i.e music, books, software etc) delivered on non-physical media. This is why we've all been pirating software since the dawn of the PC in the late 70s. Once the digital age hit and people could digitize music and trade it on the internet it was all over for record sales. Record sales have dropped to approximately 40% (for both physical and digital sales combined) of where they were in 2000. The good news is that iTunes sales are slightly up this year from what I've read, which could be a good indicator that the newer generation coming up who where raised on iTunes have accepted this as the way society consumes music. Although, I admit that could be my own wishful thinking. The bad news is that people don't buy albums anymore, they buy songs. So when a band put out an album pre 2000 people generally bought the entire record at about $15.99, which if the band was signed to a label (like I was back then) the artist would have grossed about $1.50 per sale. Some may argue that  iTunes pays roughly 70% of $9.99 (just under 7 bucks) and that artists have it better now. Again the problem is that fans now only buy one or maybe two songs on an album, which only makes the band about $.55 after iTunes and the digital distributors take their cut. If the band is signed to a label, the label still takes between 50-90% of that $.55. So even if a band sells a million downloads of a hit song they're making pennies, as opposed to selling a million albums in the pre 2000 world in which the bands gross profit would have been about 1 to 1.5 million dollars. Labels and iTunes know this is a problem for bands but they don't seem to care, Labels are trying to make up the difference by singing artists to 360 deals and Apple has never denied that iTunes has always been more of a means to sell iPods than making money from actual music sales. I could go on but I think you get the idea...

2. The internet has leveled the playing field for indie artists
This is perhaps the biggest piece of misinformation that is currently accepted by many indie artists and bands. Many of the high traffic music sites (sites that can get a band real exposure) are either owned by major labels and their subsidiaries or the sites, if operating independently, either work on a pay for play system through the sale of adverts, or they are biased towards select labels and artists whom are being represented by specific PR agencies. In other words it's absolutely no different than it was when bands were trying to promote via print media prior to about 2004. In other words the forum may have changed from print to digital but the methodology is still the same.

3. Labels have sold artists out to Spotify
When I was researching this article I found out that it takes something like 4 million plays on Spotify for an artist to generate $1100. I've heard other numbers since my initial investigation that were slightly better, but still ridiculous. It's impossible for artists, or labels for that matter, to make any real money streaming music on Spotify. So why did all the major labels who are supposed to be savvy corporations put their catalogs on Spotify knowing this? Simple, Spotify cut a back room deal with the majors to give them stock in Spotify for the rights to stream their catalogs. So the labels sold out their artists for ownership in Spotify. It's outrageous and perhaps the least publicized and biggest "Fuck You" the labels could have ever done to their artists. And for those who have been convinced that Spotify helps by giving bands free exposure, that's more myth than truth, but that's another story for another day...

In conclusion, my opinion is that artists where far better off prior to about 2002 when major labels and terrestrial radio were still king and music was primarily consumed on small plastic discs. I know we were all screaming back then about how labels were screwing artists but we had it so much better back then in comparison to now. It was actually possible in those days for a good indie band to make a living through the combined revenue of record sales, touring and publishing. Now that record sales have been gutted and are unlikely to recover there doesn't seem to be much hope for the old model. Today you have even more bands than ever, all fighting over a much smaller pie with no feasible solutions, just a bunch of greedy bottom feeders trying to suck the last bit of marrow from the industry's bones. With that said, it's not that I'm all that nostalgic for the past. The past wasn't all roses. Labels were greedy and screwed artists, but there was a lot more to go around so it wasn't so painful. I'm all for change, technology and embracing the future of this digital age. The problem really has to do with the old system refusing to adapt to a new world. It comes down to evolution, and those that don't evolve die. We are all witnessing the slow and painful death of what was once the music industry.

Labels prior to 2004 used to sign bands for ownership of their copyrights while giving reasonable advances, video and tour support. Even a developing act prior to 2002 would often get an advance of $100,000 or more (my band did in 1998). Subsequently, almost all labels now pay very small or no advance money, rarely give video or tour support, yet expect bands to sign 360 deals, which in a nutshell means that the label gets a cut of every possible revenue source a band might have. This is not labels evolving to a new world, it's just greed combined with lack of vision.