Indie Labels Lost in MySpace

MySpace Music made its debut in September without making deals with the world’s most important independent labels, provoking angry responses from representatives of indie artists. This move will likely affect Santa Barbara’s indie labels, such as Corporate Nightmare Records and Wednesday Records.

While independent and unsigned artists will receive income by selling songs and merchandise on MySpace, they will not see a share of the revenue generated by ads on their pages. Those shared monies will, however, go to the four major labels – Sony BMG, EMI, Warner, and Universal – which all signed equity deals before the launch of MySpace Music.

Mike Echternacht of Corporate Nightmare Records, which represents acts such as Nice: On Ice and Kinothek, expressed mixed feelings about the issue. “I’m not surprised at all,” he said. “We run into the same problems with radio. And so we’re always looking for other outlets for our music.”

He also pointed out that it has become much easier in the last 10 years for independent labels to completely bypass avenues like MySpace and simply sell directly to the customer from their own sites. Small record companies can use the same music-selling systems as MySpace and keep all the revenue for themselves and the artists.

“MySpace has kind of outgrown its usefulness as far as what it originally set out to do,” he said.

Charles Caldas, CEO of Merlin, a licensing agency that represents such independent labels as Koch, Beggars Group, and Rough Trade, suggested in a written statement that MySpace Music has neglected the “constituents” that made MySpace a hotspot for online music: independent and unsigned recording artists. “It is incredibly disappointing that MySpace will launch their new service without having finalized a deal with the world’s most important independent labels and artists. It certainly makes Chris DeWolfe’s public statements that the indie bands are really the heart of MySpace ring extremely hollow,” Caldas said, alluding to a DeWolke quote from April’s issue of Wired magazine.

Merlin is based in London, represents more than 12,000 music labels, and commands a share of the American digital music market equal to that of EMI.

What some find especially disturbing is that some of the ad revenue produced by pages of independent and unsigned artists will go to the four major record companies.

“For us, to think that the majors will benefit via their equity from the utilization of our content is just shocking, mind-boggling,” said Bob Frank, chief executive of Koch Records, in a statement to Associated Press. Koch is the U.S.’s largest independent label and represents such popular artists as DJ Khaled and Hatebreed.

However, entertainment analyst Russ Crupnick said the MySpace strategy is simply good business, but added, “Over the long haul it’s really going to be incumbent on MySpace to provide some kind of equitable solution to” the independent companies.