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A few days after the newly appointed President of MySpace Music, Courtney Holt reached out to independent record labels during his MidemNet keynote, Merlin the representative body of 12,000 independent labels were already voicing their concern over terms.

Merlin’s CEO Charles Caldas made clear the reasons for why they have not yet signed a licensing deal with MySpace Music. They key area being that major labels have been given equity within the service and that has not been offered to the independent label sector, which Merlin represents. Reinforcing this has been the concern that major labels have been offered better terms.

TMV agrees with Charles Caldas’s comment that it is a “dangerous precedent” when you have the independent sector being “expected to license to a service which allowed … major [label] competitors on the supply side to benefit from the use of [independent label] repertoire”. We could go further and state the independent sector should on the same reasoning be making money of major label repertoire.

On the flip side Scott Cohen, Founder of independent label aggregator The Orchard, took issue with the view that independents were always locked out of negotiations. Going further Scott mentioned that market share, not independent status dictates terms and that EMI would get less than Universal on this basis.

This all boils down to the issue of parity. Why should the independent sector be treated as second-class citizens when it comes to repertoire licensing in the digital space? If anything, the independent sector represented by Merlin has a larger overall market share than the largest of the major labels…and as such should be getting the best terms under Scott’s reasoning.

Going further TMV would state that there is a time and place for aggregators, but it is our strongly held view that they should not be included in Merlin. Independent labels do have different goals to aggregators and in this case, they are in conflict with each other. Aggregators want distribution outlets regardless of the terms as they have a broad depth of catalogue, which can mean that although not in their client labels best interests, they conclude deals regardless. This conflict necessitates their exclusion from Merlin.

The fact that both The Orchard and IODA did separate deals prior to Merlin concluding negotiation with MySpace Music just serves to reinforce the view that aggregators have degreased Merlin’s bargaining power. It also allows people within MySpace to get the wrong idea that IODA represents the independent sector on a global level (read Myspace’s public statement in reply to my quotes in the media that their current stance and treatment of independents was “morally reprehensible”). If anything, that shows just how out of line internally Myspace Music is in terms of its own knowledge base of the key issues at stake.

With an international digital media conglomerate such as Fox Interactive Media and their own personnel internally giving the wrong information on a public level, TMV has to ask is it even worth doing a deal with myspace music especially when Facebook now has double the number of regular users in comparison to Myspace? Going further, the user experience is dismal on myspace these days. Its newly launched music player is pathetic and has numerous bugs which despite being launched over three months ago myspace has not bothered to address the bugs.

Finishing on a positive note, it is the new start-ups like MUZU.tv who are driving the new frontiers taking on the likes of YouTube in being first to negotiate deals as preferred video player partner with both Indies & Major labels. Is it because they understand the importance of the parity issue? Probably so!

Going further these large digital media players in the space need to start listening more openly and begin to deal with Merlin as the body with the largest market share on a global level. Parity is the issue. Are the digital behemoths beginning to listen? One can only hope so, as the other choice is morally unsustainable both in economic and strategic terms over the medium to long-term.

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