Andrew Flanagan | June 04, 2016
The global community of independent labels have done their own homework this time. As a counterbalance to the annual, major label-heavy "Recording Industry in Numbers" report from the International Federation of the Phonographic Industry (IFPI), the Worldwide Independent Network (WIN) -- an umbrella organization for various independent label bodies around the world founding in 2008 -- debuted its "Worldwide Independent Market Report" today during a presentation at Midem, the annual industry confab held in the south of France.
"The raison d’etre of major labels is to industrialise mainstream music," the report's introduction reads, "which by definition limits their scope when it comes to signing and developing artists that may appeal to niche audiences. Independent labels play a vital role, globally, in discovering and nurturing new talent."
The report, conducted by MIDiA from data provided to it by member labels, is heavy on qualitative analysis of independents, including a fascinating introduction from Rough Trade founder Geoff Travis and two case studies focused on indies' contributions to sustaining movements in music and the value they provide to two emerging markets, China and Nigeria.
Also, notably, it highlights the benefits of the streaming market -- thought cautions against the longevity of those gains. "It is perhaps unrealistic to expect a complete rebalancing of label market shares because of streaming services, especially as the next wave of streaming users -- especially free ones -- will come from the more mainstream parts of the population. However, the better that discovery and recommendation tools become on streaming services, the more that independent labels are likely to benefit."
But the devil, always, is in the math.
Global independent label revenue stands at $5.6 billion in total. Of that $2.6 billion comes from digital -- $1.1 from streaming, $1.1 from downloads. It generates $2.6 billion from physical sales and $400 from "other sources." The IFPI's annual report -- which includes independent revenue, but also breaks down major label contributions in a way WIN disagrees with and which we'll explain shortly -- shows a $15 billion global industry, $6.7 from digital and $5.8 billion from physical.
A little napkin math on these revenues bears out the report's finding that independents command a 37.6 percent share of the global record market, with country-to-country breakdowns ranging dramatically. In South Korea independents control 88 percent of that country's market (due to the trifecta of independent mega-indies in that country; YG Entertainment, JYP Entertainment and S.M. Entertainment). In Finland, indies control just 16 percent.
Billboard regularly reports label market share numbers using both definitions -- indies as defined solely through independent distribution and through any means of distribution, including majors. Thier most recent figure, using the definition that WIN goes by here, estimated indies' market share at 34.4 percent. That discrepancy is likely due to Billboard's classification of Adele as a major label artist, which she is in the U.S.
"Market share figures are becoming less accurate and thats why we felt driven to come up with our own," said Alison Wenham during her presentation. The report reiterates the point: "The key purpose of this study is to provide the definitive measure of the independent record label market share globally based on ownership, not distribution."
52 percent use major-owned distributors -- "history has shown that controlling your own destiny with an independent distributor ensures that secondary income such as neighbouring rights income is traceable -- and this is vital."