Independent Distributors Becoming INDI-Minded

What do M.C. Hammer, Run-DMC, Digital Underground, Public Enemy, 2 Live Crew and Eric B & Rakim have in common?

Before they made it big, these rap stars all got their start on independently distributed record labels. In fact, look at any year-end critics’ Top 10 list and you’ll probably find a host of spirited, cutting-edge bands--rock’s future generation--that still make their home on small record companies whose products reach record chains through independent distribution firms.

According to conventional wisdom, these indies are a dying breed, having lost such key labels as A&M;, Motown and Island Records to major-label distribution systems over the past decade.

But Mel Klein believes that he can turn the tide. The former Island Entertainment exec has formed Independent National Distribution Inc. (INDI), announcing plans to build a national network of indy distributors. In recent months, Klein’s firm has acquired two of the country’s biggest--L.A.’s California Record Distributors and the New York-based Malverne Distributors--and is in negotiations with several others.

So far Klein’s deals give INDI a distribution roster that includes Profile, Tommy Boy, Fantasy, 4th and Broadway, Select, Next Plateau and K-Tel.

“With all the amalgamations that have gone on with the major labels, there’s a void in the record business and I think we can fill it,” says Klein, who was a key financial officer at Island for nearly a decade and helped put together financing for Miramax Films in 1988. “I think we can be a magnet for a wide range of independents and musical entrepreneurs who’ve always been the lifeblood of this industry.”

In recent years, indy distributors’ growth has been stunted for a simple reason--lack of cash resources. Having been a key engineer of Island’s sale to PolyGram, Klein thinks he can attract ample financial backing.

“That’s always been my job--finding money,” he says. “The indies’ biggest problem is that when they’ve had a potentially big record, they haven’t had the liquidity to step up to the plate and take a shot with something they really believed in. With our structure, we think we’ll be flexible enough to tailor our services to each independent label’s needs.”

Klein sounds convincing. But can a network of indies really compete on a level playing field with today’s giant record distributors, known as the Big Six, which dominate the marketplace?

“It ain’t gonna be easy,” says Russ Solomon, chairman of the influential Tower Records chain. “But there’s still a slew of independent labels out there, especially with rap music having given them a huge new dose of vitality.”

Still Solomon wonders if the indy labels, which represent about 15% of his business, can function as a unified network.

“That’s the real question,” Solomon says. “In the past, no one’s ever been able to get these distributors to agree on anything. Can these distributors perform well enough to keep the indy record companies happy? Will they want to put all their eggs in one basket?”

So far, no newly formed record companies has aligned itself with INDI, though Klein acknowledges having a “casual conversation” with the new Morgan Creek Records brass.

“I agree that our weakest point will be mass-marketed white rock,” says Klein. “But if you’re talking about our areas of musical strength--rap, R&B;, jazz and ethnic music--I think we’re going to be able to compete pretty well with any of the major labels out there.”