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It has become common practice to classify all but the major labels (those having their own distribution systems) as independent labels. Knowledgeable music industry professionals have described independent labels as “the lifeblood of the business.” In fact, in 1995 independents accounted for over 19.2% of the music industry’s market share.
Lacking large budgets for project production and marketing, independent record companies have had to be more resourceful over the years. Such facets of the business as intense talent scouting (Artist & Repertoire) and grass roots marketing campaigns have been utilized to compete with major record companies. Furthermore, independents cannot rely on the occasional “big hit” record, but rather have established and grown music catalogs to provide streams of revenue.
In growing a music catalog it is imperative to compile a reliable group of artists who are dedicated to producing quality music. This enables the company to steadily increase the number of unit sales for a particular artist over a two to three year album process.
Major recording companies frequently invest in independent labels when confidence in the company’s roster and management exists. In these strategic alliances and joint ventures, the lager company may invest money to: a) assist in completing album projects, b) manufacture compact discs and tapes and, c) assist with marketing and promotion plans.
Although independent distribution channels (Johnson, Wallace and Cordoba) exist, many independent labels choose to utilize the independent distribution services offered by major labels. This is an attractive choice for independents, due to the breadth and reach of the distribution in addition to the clout that the majors possess with retailers. In these situations, independents can “piggy-back” on the reputation of the major.
Several U.K. companies that started as independent firms and joined forces with a major include Clover, Maid and Roots. Similar success stories are documented with U.S. based companies such as Nothing, Bad Boy, Appleton, Chatham and Mill Point. From the outset, these companies demonstrated creative leadership, quality product and determination.
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