The fact Apple is prepared to pay a reported $150 million USD split between the four major labels, whilst excluding independent labels is quite frankly morally repugnant. Lets examine some recorded music market share facts. Universal 28%, Sony 23%, WMG 15%, EMI 10% and Independents make up 24% globally, according to the IFPI 2011 industry report. According to the Merlin website, Independents represent a massive 30% market share (a 6% difference with the IFPI figures) – which makes them the larger than any major label.
That 6% difference is equivalent to 60% of EMI’s market share or lets say 60% of the money they received from Apple/iTunes in the iCloud deal they secured. The irony being that although EMI is the smallest of the four major labels’ it’s the only one to record an increase in revenues and profit in the last year.
Merlin was established with the goal of placing independents on a level playing field in terms of digital music service licensing. Yet, despite this, both Merlin and the fact Independents have the 2nd largest market share footprint (according to IFPI figures), companies like Apple, Google and Amazon still ignore them. Why is this the case when independents make up the same market share as both EMI and WMG combined? If the rumoured sums Apple is said to have paid out are to be believed, EMI and WMG received some $50 million USD split between them.
Subsequently from that, one should be able to expect that Merlin would also be provided with a similar level of advance to distribute amongst its membership from Apple. If Apple were or are not prepared to come to the table, then TMV would advocate that Merlin give the proverbial middle finger to Apple/iTunes and its iCloud service. There is no way Apple can make a success of the service without independents being on board. As such Merlin does need to have the caljones to play the Mexican standoff game. The situation is no different for Google, Amazon or any other digital music service for that matter.
Apple has a lot more to lose from hardware device sales than do the independent labels, and that is the perspective that Merlin should be bargaining from. This should always be Merlin’s bargaining strategy – use the market share that they represent to ensure parity with the major labels. If digital services will not come to the party then quite simply do not license them until they give terms and advances that are in parity with the major labels.
Even if Steve Jobs were to again threaten to pull all tracks from iTunes as he reportedly did to Doug Morris late last year (for a different reason mind you), then Merlin needs to stand firm and not change course. This is a showdown that absolutely MUST occur for the future of the independent music sector.
The fact is NO digital music service can do without the labels that Merlin represents. They quite simply would not see any serious consumer adoption of their services. As such, its time Merlin started to flex its market share muscle. I’d love to see a new service state they can do without Adele, The Arctic Monkeys amongst many more on their digital music service. It would be a recipe for disaster for the digital music service concerned.
The key to all of this is Merlin being able to stand firm and not give in until true parity is explicitly provided by the likes of Apple, Google, Amazon and others. Yes there will be tension and hardship, but this is about winning the war (not a single battle). To give in on such an important issue will forever condemn independent artists and labels to inequitable deals. If that was to occur then we will be officially living in a 2nd class economy of music. From TMV’s perspective that is not an acceptable outcome.
On a final note independent labels should bombard iTunes, Amazon and Google with questions about parity with the threat of not licensing unless it is on a parity basis. None of the mentioned services could function without independents. It is time to step up and leverage independent market share muscle.