Indie Music Labels See Opportunity in Chaotic Time

[Kooperman]

Indie Music Labels See Opportunity in Chaotic Time

Sat Mar 13, 7:21 AM ET Add Entertainment - Reuters to My Yahoo!

By Sue Zeidler

LOS ANGELES (Reuters) - There's opportunity in chaos, say executives at several independent record labels that are prospering amid the market turmoil that has engulfed the world's largest music companies.

Several of these companies -- whose overhead is far lower than their larger rivals' -- say sales are increasing as they benefit from the chance to hire executives and recruit artists whom big labels have cut.

In the latest industry bloodletting last week, the new owners of Warner Music, led by Edgar Bronfman, Jr., moved to slash 1,000 jobs at the home of Madonna (news - web sites) and Kid Rock.

But independent TVT Records says its artists, who include the Ying Yang Twins and Sevendust, are reaching more people than ever.

"Our market share this quarter is up dramatically from last year, and we expect to have very robust growth this year," said Chief Executive Steve Gottlieb. "And we aren't the only independent that had a record-breaking 2003,"

Bob Frank, president of privately held Koch Records, said consolidation and restructurings at big labels like Bertelsmann AG (news - web sites), Sony Music and Warner Music have given independents an opening to compete for talent.

"We've seen major opportunities for signing acts who have a base and (enabling us) to make money and keep overhead under control," said Frank, noting that Koch generated record sales and profit in 2003.

Clay Pasternack, chairman of the 400-member Association for Independent Music, said so many indie companies open and close that it's hard to keep track of their comings and goings.

BETTER AND CHEAPER

But smaller labels should continue to expand because they looking to do things better and cheaper, said Pasternack, who also heads his namesake consulting firm in Cleveland.

Along with the changes at Warner Music, Sony and BMG are awaiting regulatory approval for a merger they say would allow them to compete more effectively. Both are reeling from three years of sales declines industrywide.

The majors largely blame the downturn -- from which the industry finally started to rebound in late 2003 -- on digital music piracy, online file-sharing and competition from video games.

But music entrepreneurs say the big labels' obsession with profits has led them astray from nurturing the cutting-edge talent that sells records. This has made it easier for independents to get their music onto radio and the charts.

"Now that the major labels are being forced to be more fiscally responsible, they're not spending the wild sums of promotional dollars to get mediocre artists up the charts," Gottlieb said. "I think what you're seeing is more music that appeals to the public breaking through the top of the charts."

Still, he and others say old habits die hard. There is a "bit of a disconnect on how the restructurings will work and the reality of how they'll change the culture that's responsible for the overspending," Gottlieb said.

Independent labels have long perfected the art of operating efficiently with less money. They pay far less for promotions and signing artists, and they keep their staffs relatively small.

An independent needs to sell only 100,000 copies to turn a profit on a CD title, industry insiders say, while a major must sell at least 1 million.

"One of our big strategies is to pick up artists who are not wanted by the majors," said Danny Goldberg, chief executive of Artemis Records, home to the Pretenders and the late Warren Zevon (news).

Artemis President Daniel Glass said artists enjoy working with smaller labels that often stick by them and nurture them because there is less pressure to make big record sales.

http://story.news.yahoo.com/news?tmpl=stor...music_labels_dc

[wingnut2600]

I would love it if the indie labels did persevere in this tumultuous time... unfortunately, I find myself buying less and less CD's, even though I would love to support these smaller bands. I do try to go and see only indie shows, and that is supporting them somewhat, but I (and we) should actually buy CDs from those companies that should be helped by p2p...

Damn, it is difficult to start though...

[method77]

those small labels like the fact that the big ones are dying. Like the article says, sales are up.