Report Claims Major Labels are Paying Out $1.2BN a Year to Independent Artists

Long have prophecies of independent genocide by major record labels circulated throughout the music industry. A recent report from the Worldwide Independent Network (WIN) may prove the opposite. The global market for independent music is actually growing. Despite a mass fear of monopolization and major label control, some $1.2 billion was attributed to independent labels in 2016, according to the WINTEL report.

All of that money wasn’t exactly given to independent artists and labels, however.

See, when a major record label, like Universal, Sony or Warner is under a distribution agreement with an independent label or artist, the major label becomes the first collector of all revenue. When working out a deal, major companies, like Apple or Spotify, typically analyze the global authority of the music copyright market in terms of distribution revenue. This involves including the distributed label revenue in with the major label.

WIN claims the market standard should, instead, base negotiations on copyright ownership, which means placing the distributed label revenue where it should end up, ultimately, anyway: with the independent labels and artists. According to WIN, that hefty $1.2 billion in annual revenue is being unjustly taken by major record labels.

Independent labels such as Big Machine, and Concord Music are among companies expected to generate an up to nine-figure sum from annual revenue, yet both are under strict distribution agreements with Universal Music Group. Although WINTEL’s figures do not account for licensing deals, indie labels working through Sony Music/RED and Warner Music Group/ADA are likewise victimized.

In terms of copyright ownership, as opposed to distribution, the WINTEL report reveals a 38.4% market share claim by the independent sector, in 2016. It was 37.5% the previous year. In 2016, the report estimates that independent labels and artists brought in a total of $6.0 billion, which is 6.9% up from the $5.6 billion accounted for in 2015. Around $2.1 billion came from online music streaming, which rose up to 80.4% compared to indie streaming numbers from 2015.

The entire independent market observed 78% growth in 2016 and, thanks to the internet and a public craving for new music, it doesn’t appear to be stopping anytime soon.

CEO of the Worldwide Independent Network, Alison Whenham emphasized the importance of using ownership instead of distribution as a method of revenue calculation, stating, “The claiming of market share through distribution by major labels distorts the true value of the independent market and creates a false picture of the amazing growth and vitality of our sector.”

“The WINTEL 2017 report tells the story of another strong year for the independent sector,” Wenham went on. “It has seen solid growth overall and an astonishing increase in streaming revenues. Both are trends we are confident will continue.”

Martin Mills, founder of the Beggar’s Group and Vice President of WIN even commented, “it is important when making sense of the global market for independent music that we continue to use ownership rather than distribution as the method of calculation. The claiming of market share through distribution by major labels distorts the true value of the independent market and creates a false picture of the amazing growth and vitality of our sector.”

The entire WINTEL report, written by Mark Mulligan of MIDiA Research and edited by Dave Roberts of MBW, can be read here.

One of the longest standing controversies in modern music, the battle between independent and major record labels, may have very well been put to rest. In the still settling dust of their silent power struggle, the recent WINTEL report from the Worldwide Independent Network may finally solidify independent labels and artists as the heart and soul of the modern music industry.

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